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The public has a right to know how companies that pay no taxes pull it off

592 points by chmaynard 6y ago

8bitsrule 6y ago
tldr; "If corporations are, in effect, U.S. citizens, surely their country is a stakeholder to whom they owe an obligation.... Based on public reporting, we calculate that in 2019, nearly 20 percent of large corporations that reported profits to shareholders of $100 million (or more) paid zero (or even negative) federal income taxes.... "there is no requirement for corporations to make public their taxable profits, or the ways in which they are avoided.... the IRS ... has since 2004 required the annual filing of Schedule M-3 .... this road map is available to the IRS alone, not to the public, who can hold companies accountable, nor to policymakers ...."
dmacedo 6y ago
I wonder how feasible it is for individuals (or groups of individuals?) in the US, to also incorporate themselves and, through the same or similar loopholes, also pay no tax... How would the IRS respond in those instances. Has that been tried? Is anyone aware of anything like that? Is the cost of such a scheme prohibitive for an individual vs. a large Corp? I'd be curious what the challenges and outcome of such an experiment would be.
- jasonv 6y ago
  It’s not expensive to incorporate, but full time employment can’t really be paid to an EIN. You need to be a contractor or a vendor. Lots of people do it. Self employment comes with some risks, but if you own it, and convert your employment towards it, it can have benefits. Its how landscapers drive F250s, for example.
- ryanmarsh 6y ago
  LOL this is primarily why many self employed people eventually incorporate. Tax reduction. You should try it some time.
  - MuffinFlavored 6y ago
    I can’t figure out what to deduct that is more than the $12.2k single filer deductible. I have $500k/yr I’d love to pay less taxes on at the moment due to a booming side business + healthy salary. Can’t find any deductions worth my time and the CPA filing fees.
    - hansvm 6y ago
      To be clear, you are already deducting any and all expenses related to your side business even if you're only filing as self-employed?
    - nmfisher 6y ago
      In Australia, it’s not so much deductions (home office, car, computer, phone, etc), as much as absurdly legal practices like “distributing” income to your family. This means you can divvy up your income so it’s taxed at each family member’s marginal rate (rather than your own top-line consolidated rate). That might sound reasonable, until you realize that those family members never see that money. The “distribution” is a complete fiction. I’m usually fairly conservative when it comes to taxes, but I’m astonished this is allowed to continue.
    - Rebelgecko 6y ago
      If you live in a state with income tax, sounds like you'd be at least $10k of the way there. If you get a mortgage, bobs your uncle
    - ryanmarsh 6y ago
      I bet a CPA could.
      - MuffinFlavored 6y ago
        CPA wanted $3,500 to set up an LLC and turn it into an S-corp + the filing for the year. Said we could deduct 80% of my car and some knick knack stuff. Ran the math, came out to be breakeven. Get $3,500 back to spend $3,500, risk an audit, lots of headache, not worth it to me.
- gscott 6y ago
  People have tried and the problem is when you want to bring the money back to use it on something. Say you setup a licensing company on an island nation that use to then charge yourself $10,000 a month to license the software you wrote... that you transferred there. Now lets say you want to buy a house and you bring back a certain amount of money. That money is taxable and that is where people mess up they don't report it. Big companies like Apple instead of bringing the money back they borrow billions of dollars at low interest rates. This lets them keep their money offshore where they invest it to make a bigger return then their interest rate on borrowing in the US. Apple also has a routine for money in the US. You will find in Nevada Apple has an investment corporation. They will do the same thing, send the ownership of software to Nevada, charge their company in some xyz state (CA) and then they use that money in Nevada to invest it for more money then it costs them to borrow. So apple is covered both ways. https://en.wikipedia.org/wiki/Braeburn_Capital#:~:text=Braeburn%20Capital%20Inc.%20is%20an,McCarran%20Boulevard%20in%20Reno https://en.wikipedia.org/wiki/Braeburn_Capital#:~:text=Braeb.... https://www.businessinsider.com/how-apple-dodges-billions-in-taxes-2012-4 https://www.businessinsider.com/how-apple-dodges-billions-in...
  - redis_mlc 6y ago
    You're partly correct but here's an overview of what's really going on. The money is "brought back" (if it even left) into segregated accounts in the US. Most of that US off-shore money is in New York to avoid currency risks, etc. Then those accounts are used as collateral (if needed. I doubt if anybody says to Apple, "Where's your collateral?") for loans. Also, the biggest money havens in the world are 2 US states, with special privacy laws. All those guys playing games in Panama, etc. were better off just using US state tax shelters.
    - demadog 6y ago
      Which states are those?
      - wolco2 6y ago
        Delaware to incorporate and East Texas to file patents?
- gnicholas 6y ago
  Former international tax lawyer here. This would not be possible because these benefits are largely based on international structures, and any non-US corporation owned by a few US-based individuals would be designated as a Controlled Foreign Corporation (CFC). This would prevent you from reaping the biggest benefits from a taxation perspective. The reason that publicly-traded companies are not CFCs is that a CFC must have 50% of the vote or value of the company owned by US Shareholders. "US Shareholder" is defined as a US person that owns at least 10% of the company. So even if a conglomerate is almost entirely owned by US persons, it would not be a CFC unless the US persons that own it also meet the 10% threshold. The reason for this cutoff is that the CFC rule is meant to prevent small groups of people who can actually exercise control over a foreign company from getting together and colluding to keep profits off-shore. But this is not a risk in the case of companies whose ownership is spread among many small shareholders. As a result, big companies are able to take advantage of complex international structures in ways that small groups of individuals cannot.
  - sooheon 6y ago
    So small groups of individuals can take advantage of this given they are international enough?
    - bobthepanda 6y ago
      Presumably, people who are international enough aren't being taxed by the US in the first place.
      - sooheon 6y ago
        But who would have their own government taxes to dodge.
        gnicholas 6y ago
        Many countries do not tax their residents on a worldwide basis. So if a person from Country X earns money in Country Y, they are simply not taxed on it in Country X. They don't need to set up a complicated foreign corporate structure to avoid immediate taxation, as US residents do.
- vmception 6y ago
  See that’s your first problem, you think everyone has an adversarial relationship with the IRS and that’s simply not true. These structures often require a very collaborative relationship with the IRS with many things approved, elected or notified of in advance. The IRS only cares about compliance, not a hardline on actual revenue collection. The IRS has many doors for compliance.
- fyfy18 6y ago
  As a US citizen it's somewhat tricky as you are taxed on your worldwide income, but the easiest way is probably to become a tax resident in a country with a low tax rate. Even in the UK, as a contractor/freelancer it's fairly simple to pay single digit percent effective taxes on incomes of £100k+. And that's without even delving into what could be considered a 'tax avoidance' scheme.
  - C1sc0cat 6y ago
    Not shure single digit effective is possible nowadays even outside IR35 - and HMRC has unliterally ruled that some professions are in side IR35 eg all it/developer contractors. Actors, film / tv professionals and lawyers etc are for the large part still treated as "self employed"
2Gkashmiri 6y ago
i am not in the US but "many" countries around the world use something called "MAT" or minimum alternate tax, wherein if you calculate taxes which is like zero or even a percentage lower than the limits mentioned, you are forced to pay MAT instead. forced as in, you can claim a loss and all but you still pay MAT taxes which usually are around 18%.
- cryptofistMonk 6y ago
  If you claim a loss what are they taxing, revenue?
  - 2Gkashmiri 6y ago
    yes. the idea of MAT is like you can claim all the "expenses" and the result would be a loss but when MAT is taken up, you get only "certain" expenses meaning you cant just pull expenses out of thin air. you have to prepare an altogether different p&L with only specified expenses and that always results in a profit and you pay taxes on that figure. its like saying to a kid who doesnt want to go to school because his knee is bruised. cry all you want, you will go to school.
deleted 6y ago
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morekozhambu 6y ago
Double Irish with a Dutch Sandwitch https://en.wikipedia.org/wiki/Double_Irish_arrangement https://en.wikipedia.org/wiki/Double_Irish_arrangement https://www.investopedia.com/terms/d/double-irish-with-a-dutch-sandwich.asp https://www.investopedia.com/terms/d/double-irish-with-a-dut...
aww_dang 6y ago
Imagine a world where instead of inventing new interpretations of the concept of 'rights', we respected private property rights.
- Kbelicius 6y ago
  "Lets not argue over the interpretation of the concept of rights, lets just accept my interpretation". Why didn't anybody think of it earlier!
  - aww_dang 6y ago
    Would you agree that a right to property would precede a right to interfere with another's property? Would a right for the public to know the specific steps an entity uses to retain property go even further afield from the original premise? Hopefully this clarifies my intent. https://en.wikipedia.org/wiki/Negative_and_positive_rights#:~:text=As%20such%2C%20negative%20rights%20exist,of%20another%20person%20or%20group.&text=In%20theory%2C%20a%20negative%20right,respect%20to%20the%20right%20holder https://en.wikipedia.org/wiki/Negative_and_positive_rights#:.... Stacking new positive rights upon each other seems like an inferior solution as compared to the original, simple solution of respecting private property. Where does the expansion of positive rights end?
an_opabinia 6y ago
Summers is right, of course releasing M3 would be a no-brainer. Can we ever reconcile accounting and economics? With its excess cash reserves, if Apple paid tax, absolutely nothing about its business would change. The more profound perspective is, who is really the tax collector then? Who is playing that economic role? Obviously these giant tax-evading companies. They are accumulating huge stockpiles of cash they cannot spend, a long-running surplus, they can't even effectively give it back to shareholders, and it's not because of tax policy. It's because they are the tax. That's not controversial, some people call it simply rent seeking, but Summers should be going a few steps further: can we characterize the exact amount of non-tax compulsory payments (NTCPs) we are giving to Apple? Is there a policy process to convert the beneficiary of NTCPs from private ownership to the public, i.e. make it just a plain old tax?
- RhodoYolo 6y ago
  Why does US tax money coming back into the country and at what rate? Wouldn't you want to encourage money to be made elsewhere and brought back to the states for investment? or am i fundamentally misunderstanding economics?
  - vkou 6y ago
    US citizens are taxed on global income regardless of whether they live in the US, or whether any of their money will ever enter the US. It's only right for US corporations to be taxed the same way. Most of these insane financial contortions are done because they aren't taxed on foreign, non-repatriated earnings - creating an incentive to convert domestic earnings into 'foreign' ones, that get repatriated the next time there's a tax holiday. I personally would love to earmark my personal income as foreign-sourced, and to not pay any taxes on it until I get a tax discount... But if I were to do that, I would go to jail for tax evasion.
    - loosetypes 6y ago
      “The only major nation that taxes its citizens (and green card holders) regardless of where they live is the United States.” “Some lists of countries that tax citizens and legal residents on their worldwide income include Libya, North Korea, Eritrea and the Philippines.” Both from the first search result, https://premieroffshore.com/which-countries-tax-worldwide-income/ https://premieroffshore.com/which-countries-tax-worldwide-in.... At least we’re in good company?
ALittleLight 6y ago
I read about tax avoidance schemes like corporate inversions or sending all your patents to a company in some tax free haven and licensing your patents from your company for all your profits, and so on, and it makes me really mad. Companies making many billions of dollars paying no taxes. My intuition is that if I personally came up with a cute "gotcha" like this where I wound up paying zero in taxes because of some loophole, I would go to prison. Why isn't the same standard applied to rich companies? "You're technically owned by an Irish company you invented to avoid taxes? Cool. The c-suite plus your accountants are going to prison for the next five years and we're seizing the X billion you actually owe plus a punitive fine." These tax shenanigans would stop if laws were enforced.
- gnicholas 6y ago
  This is a case of economies of scale. A fairly wealthy person could save maybe $50,000 per year with the advice of the smartest tax lawyers and accountants in the world. But it would cost them $500,000 per year to pay for the structure to be created/updated. When I worked as a tax lawyer, we created structures and defended cases that saved our clients hundreds of millions of dollars. At this scale, paying for our services was a no-brainer. On top of that, big companies lobby lawmakers to make the tax system favorable to them. This makes sense for the same reason: paying a couple million dollars to create/maintain a provision that saves $100M/yr is a no-brainer. I'm not saying any of this is right or good (and I am no longer a tax lawyer; I now build tools that help people with disabilities). I'm just saying this is why it makes sense that companies can walk a fine line on taxes, save tons of money, and you and I cannot.
  - wiz21c 6y ago
    Maybe it's a little too much to ask, but are why are you "not saying any of this is right or good". Part of my brain wishes that law would actually mean justice but somehow, if I trust only what I know, I cleary cannot judge, as you do, if finance engineering is good or bad. I'd like to know what prevents you to choose if it's good or right (as person who have worked inside the business) thx
cblconfederate 6y ago
> The public has a right to know how companies that pay no taxes pull it off Not just that, they need cheap access to the same infrastructure.
- chii 6y ago
  unfortunately, it doesn't exist. Otherwise, if it does, then there's a way to arbitrage the extra money savings into a service that you can pay for (in lieu of tax). The fact that such a service doesn't exist for the pleb individual means that this can't be done.
  - cblconfederate 6y ago
    at least in europe , there is a market for "tax optimization" for middle-to-upper middle class people that is not prohibitively expensive, involving the many tax havens of the EU for certain kinds of businesses, for those willing to go through the hassle.
- stjohnswarts 6y ago
  That doesn't exist and won't as long as corporations can spend unlimited amounts on politicians and said politicians have no term limits.
deleted 6y ago
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ghskskdbbdmdldk 6y ago
I just want healthcare. We pay more than enough taxes to get healthcare. Why do I not get healthcare for the taxes I pay? The government is busy trying to use my wealth to mine asteroids or shoot brown people or some stupid shit. I appear to get approximately zero benefit from the taxes I pay. Unlike, apparently, many americans, I am far more worried about blood pressure than I am about aggressive brown people and our failure to colonize mars.
juskrey 6y ago
Why no one ever mentions how much companies effectively contribute to various salary and employees income taxes? Corporate tax is practically nothing.
- pcurve 6y ago
  Companies that pay billions in taxes also contribute. Why let a handful get away with it?
  - juskrey 6y ago
    Wrong incentives. When basing on salary/personal income taxes, government is interested to raise everyone's income less inflation if it wants more taxes (let's skip 20th century aberrations like > 90% income taxes for now). Corporate tax is an opaque mechanism with unknown corrupt incentives, effectively turns into blackmailing of business and IMO should be dropped whatsoever. Many countries are adopting zero corporate tax (having dividend and salary taxes instead).
- arielm 6y ago
  Solid point, though those on here that don’t run businesses probably don’t get the scope of what companies pay that those big ones aren’t able to avoid.
- chii 6y ago
  > employees income taxes? that's the employee's contribution, not the company's.
  - refurb 6y ago
    Right, but if the company didn't create the job, the income tax collected would be zero. I'm not saying the income tax collected is purely coming from the company, but take Amazon for example - their economic activity creates jobs which pay salaries that are taxed.
    - chii 6y ago
fierarul 6y ago
This will not end until people will all "incorporate" and apply the same tax tricks as major corporations. In other words we need the revolution of the "personal corporation". The startup that offers this will be the next Apple. Or, will be shut down when the law is changed. Either way, it's a win for society. Stripe Atlas is a step in the right direction, but it does only the low hanging fruit. Accounting, handling audits and winding down is where the pros are required.
- gnicholas 6y ago
  Unfortunately, sophisticated tax advice simply does not scale down to the level that would make it applicable to most companies/people. This type of advice is heavily fact-specific, and if you create a complicated legal structure, you can't take your eye off the ball for a minute. Otherwise you can end up blowing the whole thing up, or worse. I would note that the world you describe (where people have tax tricks just like corporations) used to exist. Before the tax reform bill of 1986, doctors/lawyers/dentists/etc. were able to take advantage of tax shelters that greatly reduced their wage income, without actually incurring any real losses. These passive loss tax shelters were heavily marketed by accounting firms because of their general applicability. But in 1986 they were eliminated by a tax reform bill that outlawed perceived abuses and lowered tax rates.
  - fierarul 6y ago
    I have to say I like your replies on this topic here and elsewhere. Almost sounds like these tax avoiding entities are software and there's a big maintenance cost as laws change all the time. I've always thought that a big part of law should be "programable" and I think we are slowly getting there. Next up, imagine a machine learning trained entity just roaming the international law landscape, just trying to survive.
supernova87a 6y ago
I'm not sure I understand (or agree with) his assumption that the full tax returns of corporations are private matters and always must be. That's a choice that Congress can make. If corporations are the way for entities to achieve individual profits without individual liabilities, then surely privacy is not the same concern as for individuals' tax returns. Why are corporations (whose structure is granted by law to reap certain benefits with incorporated protections) then further shielded from their tax returns being public to show how they did it? We can (if our leaders were incentivized to do it) choose to have it be true.
- shadowmore 6y ago
  But our leaders aren't incentivized to do it, because our leaders are incentivized only by the very corporations in question. As in, the corporations, through lobbying, quite literally write the legislation, not the people we actually elect to office. So uprooting corporate tax info transparency rules is something that will never come to pass until other existing systems are demolished, but how do you get the legislators to legislate against their own self-interest?
  - cies 6y ago
    > uprooting corporate tax info transparency rules Also the Big Four are not going to like that, they make a lot of money off this.
  - supernova87a 6y ago
    I just read a story about how in the 1950s some citizens in Appalachia couldn't get their representatives to give a damn about fixing the run-down single bridge to their small isolated town far away from the big cities of importance. So what they did was to ask the Soviet Union's representative office in the United States to sponsor their bridge repair, and they let all the newspapers know about it. Sooner than you could blink, the state politicians reversed course and ponied up the $ for the bridge. Maybe sometimes what you need is your enemies to be shown to be exploiting your weaknesses so that someone cares enough to fix it.
knowingpark 6y ago
As if Larry Summers doesn't know how they do it. Is he trolling? Why doesn't he just write the article "This is how corporations pay no tax"? Maybe it has something to do with un-elected officials, who generally represent the not-public, being Treasury Secretary.
rootsudo 6y ago
It's not really a secret, the laws are public, the methods exactly aren't hidden as they must abide that and people in the profession understand liability mitigation. The challenge here is education the public what assets, tax liability and general liability are for a corporation and what a corporation actually is (basically, almost, kinda a person.) So it isn't shenanigans, it's the general public inability to learn a specific niche field and people whoa are knowledgeable, exploiting a legal loophole, on purpose whether or not the spirit/letter of the law was for that.
known 6y ago
Not possible since TRUTH is suppressed in the name of trust/loyalty/compliance/privacy/conspiracy/discipline/patriotism/sedition/job/national security/intellectual property https://yts.mx/movies/citizenfour-2014 https://yts.mx/movies/citizenfour-2014
blargmaster42_8 6y ago
Taxation is theft, avoiding it is heroic.
29athrowaway 6y ago
The wealthy tax the rest of us. Think about it. Tax avoidance, subsidies, bailouts, stimuli, etc. Want to tax the rich? No. They tax you.
- robertlagrant 6y ago
  That's not taxing us, that's just them (or businesses they, or non-rich people, run) getting some tax relief. They will still be either paying more tax or employing more people or investing in more companies that employ people than I do, that's for sure.
  - mtgx 6y ago
    Many large companies that got tax breaks ended up firing thousands weeks later and buying more of their own stock.
  - 29athrowaway 6y ago
    They make us pay for their convenience. For example, Walmart pays minimum wage and asks employees to use Medicaid while their leadership gets enormously rich.
    - robertlagrant 6y ago
      If you spread that wealth (the non-stocks and shares kind, actual money) per-employee, you will not get very much money. That's why this sort of statement is silly.
lifeisstillgood 6y ago
This is a US specific comment but I was reading the David Shor article yesterday and he pointed out that the (vast) majority of funding (for democrats?) comes from individual (wealthy) donors - ie not the corporations who tend not to own the politicians so much anymore.
simonh 6y ago
As usual The Economist has a lot that’s very sensible to say about tax reform. In particular putting more emphasis on taxing investors (you can shift your profits between jurisdictions but not your investors), property and inheritances. The main target should be rents. https://www.economist.com/leaders/2018/08/09/overhaul-tax-for-the-21st-century https://www.economist.com/leaders/2018/08/09/overhaul-tax-fo...
andromeduck 6y ago
Or we could just focus on taxing the unearned value arising out of land control instead of property. Land tax + VAT would be ideal and difficult to avoid.
- cies 6y ago
  Or just tax pollution and resource (land et al) usage. That will rearrange the economy to overcome one of the biggest challenges of our time. Tax on labour and housing are dis-incentivizing "good behavior".
  - andromeduck 6y ago
    I don't think pollution taxes ought to be treated as general revenue. It should be distributed back as UBi for transparency purposes.
  - stjohnswarts 6y ago
    I think this is the only way to get corporation onboard for pricing in climate change. I don't see it happening though as they have a boot on the necks of almost every member of Congress because the corps essentially fund their careers as politicians.
afrojack123 6y ago
I see so many posts that have the wrong idea. So many of our politicians and lobbyists are former lawyers. Even the accountants are in on it. The laws are written to be purposely complicated so mega corporations keep smaller entrepreneurs down and lawyers/accountants big fees for knowing the rules inside out(they wrote them). Why do you think large companies give stock options as compensation instead of straight cash. It is to avoid taxes. The average American has one source of income a W2. A simple tax filing. Next time you do your tax filing, look at the questions TurboTax or FreeTaxUSA asks you and then look at the offical government tax doc(this is what gets filled out with your answers).
- sokoloff 6y ago
  Most large companies have transitioned to giving shares (RSUs) rather than stock options (NQSOs in the case of large companies) for non-executives. Compliance risks/costs are lower and payouts to employees are more predictable (and therefore valued more highly by employees).
harry8 6y ago
Vague idea: The government can compulsorily acquire the domestic domiciled assets of any company for 50? 100? times that company's declared taxable income with some appropriate average over the previous 5 years. You earn nothing taxable here? Great for your tax bill but now you can worry about the capital loss and loss of control of trademarks & patents domestically. Better to declare the profit and pay the tax like an honest person...
- mhaymo 6y ago
  There are legitimate reasons for a valuable company to make little to no profits. Namely re-investment in growth. Your proposal would make it impossible for businesses to spend todays profits on growth for tomorrow, and would thereby dramatically slow economic growth.
  - iguy 6y ago
    Yes. The whole idea of describing the tax on profits as an involving "declared taxable income" is misleading. Few workers work without a salary, but plenty of companies run without profit... because they are re-investing and growing, or because they are slowly shrinking and dying. Lots of tax can still be collected (on money going out as salaries, and through VAT on money coming in) and their existence can still be useful (making stuff we need, and employing people) even if the books exactly balance at the end of the year.
  - harry8 6y ago
    This is actually incorrect. Investment is not tax deductable. Invest all your salary in an S&P500 index fund as a tax deduction? Business expenses are tax deductable. Investment is not. Yes I'm completely aware that this is one of Amazon's stated defences for tax dodging. Tax dodging is their core competency. I hate that.
    - mhaymo 6y ago
      No you're incorrect, and drawing a false distinction between spending company money on growth instead of profits, and other business expenses. There is no distinction for tax purposes, nor should there be.
whiddershins 6y ago
I don’t fully understand why corporations are taxed in the first place. All the money the corporation takes in ultimately gets spent on operating expenses, or is profit that is then distributed to shareholders who then owe taxes on that income. If it’s annoying and counter intuitive that corporations are in some legal senses considered people, it is even more confusing that they pay taxes. This sets up a crazy situation where employees of the corporations start lobbying and messing with policy and regulations so it favors the organization. Seems like bad piled on top of bad. Increasing the tax rate on investment income is basically the same thing as taxing corporations, but would remove all these perverse incentives.
- Schiendelman 6y ago
  This makes a lot of sense. There’s no way for the money to get out of the corporation without being taxed, we have all these R&D deductions to make many companies able to pay nothing, why not be direct about it? On the other hand, is the status quo ok? Are we getting something out of companies having to do these specific activities to deduct?
  - tim333 6y ago
    >There’s no way for the money to get out of the corporation without being taxed Not totally true. Interest free loan to the owner or his mother in law. Company buys a house / car / jet owner can use. Company buys consultancy services from the owners other company based in the Bahamas etc
    - Schiendelman 6y ago
      Those expenditures aren’t tax deductible; they aren’t r&d.
- etripe 6y ago
  They are taxed because they are beneficiaries of society's investment in infrastructure and people. They benefit directly from a healthy, educated population, enforcement of construction codes, the operation of the legal system, roads and waterways, etc. Companies aren't entirely benign, either, so part of those taxes goes to environmental impact assessment and handling they don't pay for, such as pollution, health hazards, etc. If you were to make the case the healthy, educated employees could be compensated through their wages, then that still leaves infrastructure, externalities and the legal system. While you could privatise infrastructure, I think it would be a bad idea. It could lead to shady schemes where a corporation "taxes" its employees on the toll road leading up to the building. Considering historical examples like company stores, I'm not sure we could rule that scenario out. Also, where does infrastructure stop and what does it include? The last miles of telecoms, power, water and other utilities or more? As to the legal system, it seems self-evident we don't want that privatised. Do you disagree? On the topic of externalities: I suppose it's feasible to create new taxes specifically for what are now considered externalities, so corporations pay for them: pollution, carbon footprint, burnouts/boreouts, etc. Would you be in favour of those?
known 6y ago
Let us make Companies comply with https://en.wikipedia.org/wiki/Freedom_of_Information_Act_(United_States) https://en.wikipedia.org/wiki/Freedom_of_Information_Act_(Un...
bwilli123 6y ago
I would argue that given all the privileges that Society gives to Limited Liability Companies, that there should be one basic demand in return (regardless of profitability, or lack of it) That is, that all company communications be released to the public after a 10 year delay. Governments worldwide manage to do this after 10, 25 or 50 years. I don't see why corporations would rate the same privilege. Transparency is the best defence against corruption.
LatteLazy 6y ago
The behaviour is legal because it was made legal. We choose to do this. Pretending its some magic trick with complex steps is simply a nice excuse to avoid the difficult truth: it's legal and easy for publically traded companies to pay no corp tax and we like it that way.
thysultan 6y ago
Create a "church of the people" non-profit org, where anyone that "believes" can join and give it charity, and the church in its infinite benevolence gives credit cards to the needy(the donors) that they can use as they like or as the gods allows(how much you donated + interest). To avoid taxes you mealy have to find a way to appear poor. In the above scenario both the "church" org and the donors are poor if the church uses all its donations on its donors and vice-versa.
- BlueTemplar 6y ago
  Sadly, "Our Lady of Perpetual Exemption" was shut down... https://www.youtube.com/watch?v=JcPeBAYYuhc https://www.youtube.com/watch?v=JcPeBAYYuhc https://en.wikipedia.org/wiki/Our_Lady_of_Perpetual_Exemption https://en.wikipedia.org/wiki/Our_Lady_of_Perpetual_Exemptio... (Too many people contributed their seeds…)
habosa 6y ago
The lawyers who work at all of these firms who make large-scale international corporate tax avoidance possible should be ashamed of themselves. They are stealing from their fellow citizens. When big fraud scandals occur (Enron, Wirecard) the accountants and auditors are rightfully shamed by their industry. When we find out who paid $0 in corporate income tax the lawyers who made it happen and defended it seem to escape scrutiny. The legal industry will protect its own every time, no matter who they enable or defend. “In every big transaction [...] there is a magic moment during which a man has surrendered a treasure, and during which the man who is due to receive it has not yet done so. An alert lawyer will make that moment his own, possessing the treasure for a magic microsecond, taking a little of it, passing it on. If the man who is to receive the treasure is unused to wealth, has an inferiority complex and shapeless feelings of guilt, as most people do, the lawyer can often take as much as half the bundle, and still receive the recipient’s blubbering thanks.” ― Kurt Vonnegut, God Bless You, Mr. Rosewater
- sneak 6y ago
  If the law can make something not stealing when it fits the common definition (that is, taking money from people nonconsensually and calling it “taxation”), then someone minimizing taxes while complying with the tax law as it is written is not stealing, as the law is thus the authority on what is or is not “stealing”. However, if you think that complying with the tax law is stealing (and thus believe that the law is not the basis for what is or is not “stealing”), then it’s also legitimate to call what the tax enforcers do “stealing”, even though it is permitted by law, because it fits the common definition of “taking without consent via threat of force”. You can’t have it both ways and be consistent. Either the law defines what is “stealing” or it does not.
- jlokier 6y ago
  > They are stealing from their fellow citizens. Yeah, but stealing how much? Almost everyone I know or read about who runs a small business or is self-employed talks with their accountant about how run things in a "tax efficient" way, to pay the minimum tax within the rules while keeping reasonable about it. It would be foolish not to. You have to keep competitive. And the rules are, for the most part, based on fair and sensible principles. Things like if you paid for something to use in your trade, it's fair to subtract that from what someone paid you, so the different is your profit on which tax is based. Scale that up to large international corporations, and it turns out "minimum tax within the rules" is often $0 in a particular country, often because your profit there is also $0. Just because you can structure a complex business of many parts in such a way that those initially fair and sensible tax principles work out that way. The tax rules don't specify a larger, correct amount of tax. So the lawyers, should they be ashamed for advising their clients how to run a large company tax efficiently? Assuming yes, because that's the premise being replied to here, what should they be advising their clients to do instead? A voluntary tax overpayment? Structure the business another way? Guess? Copy other companies? Is "shame" really the right way to control what advice lawyers and accountants give to large companies? It seems to me that "shaming" by itself quickly leads to a lot of uncertainty and unfairness, because nobody can tell what the correct advice or correct tax payments "ought" to be on shame alone. You'll end up with different companies who do exactly the same thing paying wildly different amounts based, essentially, on what they voluntary decide to do for PR or emotional reasons. That has the potential to be quite unfair. It would be highly unprofessional for a lawyer or accountant to give advice based on their personal emotional state, and nebulous targets which nobody has agreed on and different people reach very different views on. So the right thing to do for an ethical professional lawyer or accountant is to resist that pressure, and try to give the most unbiased, knowledgable and reliable advice instead, based on the rules as they are set out, which everyone is supposed to adhere to. That's why I'm inclined more towards ideas like the "General Anti-Avoidance Rule" https://en.wikipedia.org/wiki/Tax_avoidance#General_anti-avoidance_rule https://en.wikipedia.org/wiki/Tax_avoidance#General_anti-avo... which gives companies and their advisors a framework for deciding the correct amounts to pay, with a stick if they don't. Public shaming and campaigning is useful, but the end goal of that is ideally to apply political pressure to improve the rules in a "level playing field" way, so that proper application of them results in proper taxation. Many attempts at closing tax loopholes tend to make the tax code more complex, which requires yet more rules to close yet more new loopholes. Those rules are very "gameable". But general anti-avoidance rules don't have to have this problem, if they are constructed with suitable generality and defer hair-splitting details to fair justice principles rather than ever-finer rules. Getting this right is still difficult, and still a work in progress. It's very contextual too, as the difference between structuring a business to avoid tax and structuring a business because that's how you conduct business is as much about culture and common practice as anything, and these change over time even while the general rule stays the same. But it seems like a better general approach to me.
pge 6y ago
Maybe in the era of multinational corporations, the idea of corporate taxation is outdated. What if corporate taxes were eliminated entirely and replaced with higher taxes on personal wages? It’s far more difficult for a person to game the tax system than a corporation. People can’t move their income to another country, or any of the other games corporations play (or at least, it is much more difficult for them to do so).
- RandomGenerated 6y ago
  Then everyone will become a corp
jokoon 6y ago
"Good people do not need laws to tell them to act responsibly, while bad people will find a way around the laws." - Plato "Life is nothing but a competition to be the criminal rather than the victim." - Bertrand Russell Honestly those are the only nuggets of wisdom I can think about when I look at all the tax havens. The movie The Laundromat was also quite instructive. The end of the cold war moved the ideological cursor "organized economy versus libertarian economy". Governments are struggling hard to save their model so they can function properly. I really have a hard time seeing how this won't create problems, this is globalization at work. Not sure if states/borders will disappear.
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bdcravens 6y ago
"But corporations should be required to publicly account for the gap between the income they report to the IRS and the income that they report to their shareholders." I suspect this is a far greater issue than companies who pay $0; his proposal would apply to ALL with shareholders, and I (as a layperson) believe most companies have some gap there.
cwhiz 6y ago
Just get rid of corporate taxes, and get rid of capital gains taxes. Treat all income the same. Kills the double taxation issue, and removes the incentives for corporations to avoid taxes.
- saalweachter 6y ago
  Double taxation is a talking point, not a philosophical problem. It's like rebranding the inheritance tax as the death tax to make it sound unfair or absurd ("they tax dying in this country!!!"). Double taxation happens constantly in all sorts of contexts, for instance, most of us pay income tax, and then pay sales tax using those already-taxed dollars, and then the seller pays income tax on the money received less sales tax. The reason we tax in so many ways is mostly some combination of "hysterical raisins" and politics (it can be politically easier at different times to raise revenues in different ways, and restructuring the tax code will create winners and losers so maintaining the patchwork status quo is easier), but it's not necessarily a bad thing to tax with a variety of methods. There is a certain amount of administrative overhead in having a corporate and personal income tax, a payroll tax, a sales tax, a property tax, etc etc etc, but doing so also makes it harder for someone to dodge taxes entirely -- restructuring to avoid personal income taxes can put you in line for corporate income taxes and vice versa, for instance. Holding lots of land subjects you to property taxes instead of corporate taxes on the companies you own stock in. Meanwhile all of these separate taxes create paper trails that can be used in the mutual enforcement of all taxes. If you run a business and your sales tax receipts, corporate taxes, and personal income taxes don't roughly line up, it signals that an audit may be called for. The tax system becomes a checksum for itself. Now, this may all just be status quo rationalization, but my point is, "double taxation" is just a shibboleth and not itself a reason to radically reform the tax code.
  - JoeAltmaier 6y ago
    Agreed. Its infinite taxation, as the money goes around and around in a circle. It's all green, and all been taxed many times. As the philosopher said, taxation is the art of plucking a goose so as to get the most feathers with the least squawking.
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easytiger 6y ago
The public also needs to learn about taxation escalation as a heist pulled off in the fog of the world wars that is ever increasing in burden. This as a counter to the increasingly corrupt assertion that tax is a moral obligation.
adeptus 6y ago
I am still confused as to why companies have to pay tax at all? If every single employee including owners already pay income tax, and IVA/GST/purchase taxes, property taxes, xyz additional personal taxes levied by respective governments, why then on top of all that make companies pay tax, doesn't that just detract from people wanting to start companies and/or seek countries with the least taxes/best loopholes? Disclaimer: I own no companies. I don't even own stocks at the moment.
- Icedcool 6y ago
  Because they act as a stand alone entity, and they may make and keep profit that doesn’t get dispersed to the employees.
  - emteycz 6y ago
    They don't make use of it in a way a person does. They use it to make more income, not for food, housing, fun, etc.
    - TheRealSteel 6y ago
      That sounds like more of a reason to tax them, not less.
      - anonunivgrad 6y ago
        You’re just quibbling about how much the total taxation should be. The point is that it doesn’t matter if you tax the company profits at 20% and capital gains at 20% (assume the normal income tax is 40%) or if you tax the company 0% and tax capital gains at 40%. The government already tries to reduce double taxation. There is not supposed to be a penalty for incorporating vs. doing business as a sole proprietor or general partnership. That’s why the capital gains tax is lower than the income tax. This is all about ease of administration and making creative accounting more difficult or impossible. If you’re looking at it through some moral lens, you don’t get it.
exabrial 6y ago
The problem isn't "who's not paying taxes", the problem is "taxes". In the USA we pay extraordinary taxes for extraordinarily small returns. If the US government was on charity navigator, it would have a no-star rating. This money is best left to the distributed wisdom of thousands of companies in millions of individuals who will look after every dollar and see to it's use rather than waste. When I see headlines like this I'm not upset by them I'm sort of thankful they are not fueling reckless spending.
- exabrial 6y ago
  Oh the internet is not without irony. On second page of HN today: https://tunnelingonline.com/why-tunnels-in-the-us-cost-much-more-than-anywhere-else-in-the-world https://tunnelingonline.com/why-tunnels-in-the-us-cost-much-...
sigzero 6y ago
I hate to break it to the author but no, you do not have that "right".
CWuestefeld 6y ago
Although avoiding taxes may be a sort of business "code smell" that makes us suspicious, there's no inherent reason to regard such behavior as evil. The tax code, in all its thousands of pages, is designed (or at least it's supposed to be) to give incentive to certain behaviors that we'd like our businesses (and citizens) to follow. And the more they do this, the less taxes they'll be paying. Thus, to a first approximation, paying very low taxes ought to be indicative of a payer who's doing all the things that our politicians and bureaucrats think they should be doing. A few years ago I replaced all the windows in my house, along with a door and a garage door, with new, energy-efficient ones. This entitled me to a tax credit for that year, allowing me to pay a few thousand dollars less in taxes. I don't think that people should accuse me of being a bad citizen because my tax bill that year was unusually low. If anything, I'd think that the same environmental groups who lobbied for such measures in the tax code would all be shaking my hand for taking advantage of that in order to achieve the goal of lowered energy usage. So yeah, maybe be suspicious of such businesses, but let's not just assume they're evil. That said, the idea that the public has a right to know what corporations are doing this is fully compatible with my claim, so we'd also know who's being a good corporate citizen.
- walto2 6y ago
  Sadly though, capitalism has a way of turning everything into a perverse incentive.
  - stjohnswarts 6y ago
    So does basically every other human effort where one can extract a benefit for an individual. Since communism on a large scale has always resulted in failure of its implementation can you suggest a 3rd path?
- nolroz 6y ago
  I think this point outlines how important it is for the public to know how the taxes were reduced. If the methods create positive outcomes to society then it would seem a lot less shady.
parenthesis 6y ago
Governments should pay the necessary salaries to hire some top tax-avoidance experts to help them close loopholes.
EPiXNiCROS 6y ago
good for them. you have absolutely no right to the labor of another and fuck you for thinking you do.
beagle3 6y ago
They should have AMT for companies like they do for people. After all, corporations are people too! The mechanics would be different, of course, as e.g. the whole point of AMT is to disallow some deductions, and many businesses would be bankrupt without (totally reasonable) deductions. The problem in collecting these taxes is not the ability to do so, it is rather the will to do so.
moneytalks 6y ago
Can't wait to see how http://n-gate.com http://n-gate.com summarizes this one.
Attained 6y ago
Isn't that profit for shareholders taxed as cap gains? Edit: I mean, if I own a share I pay taxes when I sell it and make money
clausewitz 6y ago
but...job creators...and trickle down...and bootstraps
stevenalowe 6y ago
https://en.wikipedia.org/wiki/Gregory_v._Helvering https://en.wikipedia.org/wiki/Gregory_v._Helvering - no obligation to maximize taxes - reinvest profits in company growth is the simplest way to avoid taxes, and arguably better for the economy
neycoda 6y ago
Most of the ways companies avoid taxes now used to be illegal.

592 points by chmaynard 6y ago

tldr; "If corporations are, in effect, U.S. citizens, surely their country is a stakeholder to whom they owe an obligation.... Based on public reporting, we calculate that in 2019, nearly 20 percent of large corporations that reported profits to shareholders of $100 million (or more) paid zero (or even negative) federal income taxes.... "there is no requirement for corporations to make public their taxable profits, or the ways in which they are avoided.... the IRS ... has since 2004 required the annual filing of Schedule M-3 .... this road map is available to the IRS alone, not to the public, who can hold companies accountable, nor to policymakers ...."

dmacedo 6y ago

I wonder how feasible it is for individuals (or groups of individuals?) in the US, to also incorporate themselves and, through the same or similar loopholes, also pay no tax... How would the IRS respond in those instances. Has that been tried? Is anyone aware of anything like that? Is the cost of such a scheme prohibitive for an individual vs. a large Corp? I'd be curious what the challenges and outcome of such an experiment would be.

jasonv 6y ago
It’s not expensive to incorporate, but full time employment can’t really be paid to an EIN. You need to be a contractor or a vendor. Lots of people do it. Self employment comes with some risks, but if you own it, and convert your employment towards it, it can have benefits. Its how landscapers drive F250s, for example.
ryanmarsh 6y ago
LOL this is primarily why many self employed people eventually incorporate. Tax reduction. You should try it some time.
- MuffinFlavored 6y ago
  I can’t figure out what to deduct that is more than the $12.2k single filer deductible. I have $500k/yr I’d love to pay less taxes on at the moment due to a booming side business + healthy salary. Can’t find any deductions worth my time and the CPA filing fees.
  - hansvm 6y ago
    To be clear, you are already deducting any and all expenses related to your side business even if you're only filing as self-employed?
  - nmfisher 6y ago
    In Australia, it’s not so much deductions (home office, car, computer, phone, etc), as much as absurdly legal practices like “distributing” income to your family. This means you can divvy up your income so it’s taxed at each family member’s marginal rate (rather than your own top-line consolidated rate). That might sound reasonable, until you realize that those family members never see that money. The “distribution” is a complete fiction. I’m usually fairly conservative when it comes to taxes, but I’m astonished this is allowed to continue.
  - Rebelgecko 6y ago
    If you live in a state with income tax, sounds like you'd be at least $10k of the way there. If you get a mortgage, bobs your uncle
  - ryanmarsh 6y ago
    I bet a CPA could.
    - MuffinFlavored 6y ago
      CPA wanted $3,500 to set up an LLC and turn it into an S-corp + the filing for the year. Said we could deduct 80% of my car and some knick knack stuff. Ran the math, came out to be breakeven. Get $3,500 back to spend $3,500, risk an audit, lots of headache, not worth it to me.
gscott 6y ago
People have tried and the problem is when you want to bring the money back to use it on something. Say you setup a licensing company on an island nation that use to then charge yourself $10,000 a month to license the software you wrote... that you transferred there. Now lets say you want to buy a house and you bring back a certain amount of money. That money is taxable and that is where people mess up they don't report it. Big companies like Apple instead of bringing the money back they borrow billions of dollars at low interest rates. This lets them keep their money offshore where they invest it to make a bigger return then their interest rate on borrowing in the US. Apple also has a routine for money in the US. You will find in Nevada Apple has an investment corporation. They will do the same thing, send the ownership of software to Nevada, charge their company in some xyz state (CA) and then they use that money in Nevada to invest it for more money then it costs them to borrow. So apple is covered both ways. https://en.wikipedia.org/wiki/Braeburn_Capital#:~:text=Braeburn%20Capital%20Inc.%20is%20an,McCarran%20Boulevard%20in%20Reno https://en.wikipedia.org/wiki/Braeburn_Capital#:~:text=Braeb.... https://www.businessinsider.com/how-apple-dodges-billions-in-taxes-2012-4 https://www.businessinsider.com/how-apple-dodges-billions-in...
- redis_mlc 6y ago
  You're partly correct but here's an overview of what's really going on. The money is "brought back" (if it even left) into segregated accounts in the US. Most of that US off-shore money is in New York to avoid currency risks, etc. Then those accounts are used as collateral (if needed. I doubt if anybody says to Apple, "Where's your collateral?") for loans. Also, the biggest money havens in the world are 2 US states, with special privacy laws. All those guys playing games in Panama, etc. were better off just using US state tax shelters.
  - demadog 6y ago
    Which states are those?
    - wolco2 6y ago
      Delaware to incorporate and East Texas to file patents?
gnicholas 6y ago
Former international tax lawyer here. This would not be possible because these benefits are largely based on international structures, and any non-US corporation owned by a few US-based individuals would be designated as a Controlled Foreign Corporation (CFC). This would prevent you from reaping the biggest benefits from a taxation perspective. The reason that publicly-traded companies are not CFCs is that a CFC must have 50% of the vote or value of the company owned by US Shareholders. "US Shareholder" is defined as a US person that owns at least 10% of the company. So even if a conglomerate is almost entirely owned by US persons, it would not be a CFC unless the US persons that own it also meet the 10% threshold. The reason for this cutoff is that the CFC rule is meant to prevent small groups of people who can actually exercise control over a foreign company from getting together and colluding to keep profits off-shore. But this is not a risk in the case of companies whose ownership is spread among many small shareholders. As a result, big companies are able to take advantage of complex international structures in ways that small groups of individuals cannot.
- sooheon 6y ago
  So small groups of individuals can take advantage of this given they are international enough?
  - bobthepanda 6y ago
    Presumably, people who are international enough aren't being taxed by the US in the first place.
    - sooheon 6y ago
      But who would have their own government taxes to dodge.
      - gnicholas 6y ago
        Many countries do not tax their residents on a worldwide basis. So if a person from Country X earns money in Country Y, they are simply not taxed on it in Country X. They don't need to set up a complicated foreign corporate structure to avoid immediate taxation, as US residents do.
vmception 6y ago
See that’s your first problem, you think everyone has an adversarial relationship with the IRS and that’s simply not true. These structures often require a very collaborative relationship with the IRS with many things approved, elected or notified of in advance. The IRS only cares about compliance, not a hardline on actual revenue collection. The IRS has many doors for compliance.
fyfy18 6y ago
As a US citizen it's somewhat tricky as you are taxed on your worldwide income, but the easiest way is probably to become a tax resident in a country with a low tax rate. Even in the UK, as a contractor/freelancer it's fairly simple to pay single digit percent effective taxes on incomes of £100k+. And that's without even delving into what could be considered a 'tax avoidance' scheme.
- C1sc0cat 6y ago
  Not shure single digit effective is possible nowadays even outside IR35 - and HMRC has unliterally ruled that some professions are in side IR35 eg all it/developer contractors. Actors, film / tv professionals and lawyers etc are for the large part still treated as "self employed"

2Gkashmiri 6y ago

i am not in the US but "many" countries around the world use something called "MAT" or minimum alternate tax, wherein if you calculate taxes which is like zero or even a percentage lower than the limits mentioned, you are forced to pay MAT instead. forced as in, you can claim a loss and all but you still pay MAT taxes which usually are around 18%.

cryptofistMonk 6y ago
If you claim a loss what are they taxing, revenue?
- 2Gkashmiri 6y ago
  yes. the idea of MAT is like you can claim all the "expenses" and the result would be a loss but when MAT is taken up, you get only "certain" expenses meaning you cant just pull expenses out of thin air. you have to prepare an altogether different p&L with only specified expenses and that always results in a profit and you pay taxes on that figure. its like saying to a kid who doesnt want to go to school because his knee is bruised. cry all you want, you will go to school.

deleted 6y ago

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morekozhambu 6y ago

Double Irish with a Dutch Sandwitch https://en.wikipedia.org/wiki/Double_Irish_arrangement https://en.wikipedia.org/wiki/Double_Irish_arrangement https://www.investopedia.com/terms/d/double-irish-with-a-dutch-sandwich.asp https://www.investopedia.com/terms/d/double-irish-with-a-dut...

aww_dang 6y ago

Imagine a world where instead of inventing new interpretations of the concept of 'rights', we respected private property rights.

Kbelicius 6y ago
"Lets not argue over the interpretation of the concept of rights, lets just accept my interpretation". Why didn't anybody think of it earlier!
- aww_dang 6y ago
  Would you agree that a right to property would precede a right to interfere with another's property? Would a right for the public to know the specific steps an entity uses to retain property go even further afield from the original premise? Hopefully this clarifies my intent. https://en.wikipedia.org/wiki/Negative_and_positive_rights#:~:text=As%20such%2C%20negative%20rights%20exist,of%20another%20person%20or%20group.&text=In%20theory%2C%20a%20negative%20right,respect%20to%20the%20right%20holder https://en.wikipedia.org/wiki/Negative_and_positive_rights#:.... Stacking new positive rights upon each other seems like an inferior solution as compared to the original, simple solution of respecting private property. Where does the expansion of positive rights end?

an_opabinia 6y ago

Summers is right, of course releasing M3 would be a no-brainer. Can we ever reconcile accounting and economics? With its excess cash reserves, if Apple paid tax, absolutely nothing about its business would change. The more profound perspective is, who is really the tax collector then? Who is playing that economic role? Obviously these giant tax-evading companies. They are accumulating huge stockpiles of cash they cannot spend, a long-running surplus, they can't even effectively give it back to shareholders, and it's not because of tax policy. It's because they are the tax. That's not controversial, some people call it simply rent seeking, but Summers should be going a few steps further: can we characterize the exact amount of non-tax compulsory payments (NTCPs) we are giving to Apple? Is there a policy process to convert the beneficiary of NTCPs from private ownership to the public, i.e. make it just a plain old tax?

RhodoYolo 6y ago
Why does US tax money coming back into the country and at what rate? Wouldn't you want to encourage money to be made elsewhere and brought back to the states for investment? or am i fundamentally misunderstanding economics?
- vkou 6y ago
  US citizens are taxed on global income regardless of whether they live in the US, or whether any of their money will ever enter the US. It's only right for US corporations to be taxed the same way. Most of these insane financial contortions are done because they aren't taxed on foreign, non-repatriated earnings - creating an incentive to convert domestic earnings into 'foreign' ones, that get repatriated the next time there's a tax holiday. I personally would love to earmark my personal income as foreign-sourced, and to not pay any taxes on it until I get a tax discount... But if I were to do that, I would go to jail for tax evasion.
  - loosetypes 6y ago
    “The only major nation that taxes its citizens (and green card holders) regardless of where they live is the United States.” “Some lists of countries that tax citizens and legal residents on their worldwide income include Libya, North Korea, Eritrea and the Philippines.” Both from the first search result, https://premieroffshore.com/which-countries-tax-worldwide-income/ https://premieroffshore.com/which-countries-tax-worldwide-in.... At least we’re in good company?

ALittleLight 6y ago

I read about tax avoidance schemes like corporate inversions or sending all your patents to a company in some tax free haven and licensing your patents from your company for all your profits, and so on, and it makes me really mad. Companies making many billions of dollars paying no taxes. My intuition is that if I personally came up with a cute "gotcha" like this where I wound up paying zero in taxes because of some loophole, I would go to prison. Why isn't the same standard applied to rich companies? "You're technically owned by an Irish company you invented to avoid taxes? Cool. The c-suite plus your accountants are going to prison for the next five years and we're seizing the X billion you actually owe plus a punitive fine." These tax shenanigans would stop if laws were enforced.

gnicholas 6y ago
This is a case of economies of scale. A fairly wealthy person could save maybe $50,000 per year with the advice of the smartest tax lawyers and accountants in the world. But it would cost them $500,000 per year to pay for the structure to be created/updated. When I worked as a tax lawyer, we created structures and defended cases that saved our clients hundreds of millions of dollars. At this scale, paying for our services was a no-brainer. On top of that, big companies lobby lawmakers to make the tax system favorable to them. This makes sense for the same reason: paying a couple million dollars to create/maintain a provision that saves $100M/yr is a no-brainer. I'm not saying any of this is right or good (and I am no longer a tax lawyer; I now build tools that help people with disabilities). I'm just saying this is why it makes sense that companies can walk a fine line on taxes, save tons of money, and you and I cannot.
- wiz21c 6y ago
  Maybe it's a little too much to ask, but are why are you "not saying any of this is right or good". Part of my brain wishes that law would actually mean justice but somehow, if I trust only what I know, I cleary cannot judge, as you do, if finance engineering is good or bad. I'd like to know what prevents you to choose if it's good or right (as person who have worked inside the business) thx

cblconfederate 6y ago

> The public has a right to know how companies that pay no taxes pull it off Not just that, they need cheap access to the same infrastructure.

chii 6y ago
unfortunately, it doesn't exist. Otherwise, if it does, then there's a way to arbitrage the extra money savings into a service that you can pay for (in lieu of tax). The fact that such a service doesn't exist for the pleb individual means that this can't be done.
- cblconfederate 6y ago
  at least in europe , there is a market for "tax optimization" for middle-to-upper middle class people that is not prohibitively expensive, involving the many tax havens of the EU for certain kinds of businesses, for those willing to go through the hassle.
stjohnswarts 6y ago
That doesn't exist and won't as long as corporations can spend unlimited amounts on politicians and said politicians have no term limits.

deleted 6y ago

[deleted]

ghskskdbbdmdldk 6y ago

I just want healthcare. We pay more than enough taxes to get healthcare. Why do I not get healthcare for the taxes I pay? The government is busy trying to use my wealth to mine asteroids or shoot brown people or some stupid shit. I appear to get approximately zero benefit from the taxes I pay. Unlike, apparently, many americans, I am far more worried about blood pressure than I am about aggressive brown people and our failure to colonize mars.

juskrey 6y ago

Why no one ever mentions how much companies effectively contribute to various salary and employees income taxes? Corporate tax is practically nothing.

pcurve 6y ago
Companies that pay billions in taxes also contribute. Why let a handful get away with it?
- juskrey 6y ago
  Wrong incentives. When basing on salary/personal income taxes, government is interested to raise everyone's income less inflation if it wants more taxes (let's skip 20th century aberrations like > 90% income taxes for now). Corporate tax is an opaque mechanism with unknown corrupt incentives, effectively turns into blackmailing of business and IMO should be dropped whatsoever. Many countries are adopting zero corporate tax (having dividend and salary taxes instead).
arielm 6y ago
Solid point, though those on here that don’t run businesses probably don’t get the scope of what companies pay that those big ones aren’t able to avoid.
chii 6y ago
> employees income taxes? that's the employee's contribution, not the company's.
- refurb 6y ago
  Right, but if the company didn't create the job, the income tax collected would be zero. I'm not saying the income tax collected is purely coming from the company, but take Amazon for example - their economic activity creates jobs which pay salaries that are taxed.
  - chii 6y ago

fierarul 6y ago

This will not end until people will all "incorporate" and apply the same tax tricks as major corporations. In other words we need the revolution of the "personal corporation". The startup that offers this will be the next Apple. Or, will be shut down when the law is changed. Either way, it's a win for society. Stripe Atlas is a step in the right direction, but it does only the low hanging fruit. Accounting, handling audits and winding down is where the pros are required.

gnicholas 6y ago
Unfortunately, sophisticated tax advice simply does not scale down to the level that would make it applicable to most companies/people. This type of advice is heavily fact-specific, and if you create a complicated legal structure, you can't take your eye off the ball for a minute. Otherwise you can end up blowing the whole thing up, or worse. I would note that the world you describe (where people have tax tricks just like corporations) used to exist. Before the tax reform bill of 1986, doctors/lawyers/dentists/etc. were able to take advantage of tax shelters that greatly reduced their wage income, without actually incurring any real losses. These passive loss tax shelters were heavily marketed by accounting firms because of their general applicability. But in 1986 they were eliminated by a tax reform bill that outlawed perceived abuses and lowered tax rates.
- fierarul 6y ago
  I have to say I like your replies on this topic here and elsewhere. Almost sounds like these tax avoiding entities are software and there's a big maintenance cost as laws change all the time. I've always thought that a big part of law should be "programable" and I think we are slowly getting there. Next up, imagine a machine learning trained entity just roaming the international law landscape, just trying to survive.

supernova87a 6y ago

I'm not sure I understand (or agree with) his assumption that the full tax returns of corporations are private matters and always must be. That's a choice that Congress can make. If corporations are the way for entities to achieve individual profits without individual liabilities, then surely privacy is not the same concern as for individuals' tax returns. Why are corporations (whose structure is granted by law to reap certain benefits with incorporated protections) then further shielded from their tax returns being public to show how they did it? We can (if our leaders were incentivized to do it) choose to have it be true.

shadowmore 6y ago
But our leaders aren't incentivized to do it, because our leaders are incentivized only by the very corporations in question. As in, the corporations, through lobbying, quite literally write the legislation, not the people we actually elect to office. So uprooting corporate tax info transparency rules is something that will never come to pass until other existing systems are demolished, but how do you get the legislators to legislate against their own self-interest?
- cies 6y ago
  > uprooting corporate tax info transparency rules Also the Big Four are not going to like that, they make a lot of money off this.
- supernova87a 6y ago
  I just read a story about how in the 1950s some citizens in Appalachia couldn't get their representatives to give a damn about fixing the run-down single bridge to their small isolated town far away from the big cities of importance. So what they did was to ask the Soviet Union's representative office in the United States to sponsor their bridge repair, and they let all the newspapers know about it. Sooner than you could blink, the state politicians reversed course and ponied up the $ for the bridge. Maybe sometimes what you need is your enemies to be shown to be exploiting your weaknesses so that someone cares enough to fix it.

knowingpark 6y ago

As if Larry Summers doesn't know how they do it. Is he trolling? Why doesn't he just write the article "This is how corporations pay no tax"? Maybe it has something to do with un-elected officials, who generally represent the not-public, being Treasury Secretary.

rootsudo 6y ago

It's not really a secret, the laws are public, the methods exactly aren't hidden as they must abide that and people in the profession understand liability mitigation. The challenge here is education the public what assets, tax liability and general liability are for a corporation and what a corporation actually is (basically, almost, kinda a person.) So it isn't shenanigans, it's the general public inability to learn a specific niche field and people whoa are knowledgeable, exploiting a legal loophole, on purpose whether or not the spirit/letter of the law was for that.

known 6y ago

Not possible since TRUTH is suppressed in the name of trust/loyalty/compliance/privacy/conspiracy/discipline/patriotism/sedition/job/national security/intellectual property https://yts.mx/movies/citizenfour-2014 https://yts.mx/movies/citizenfour-2014

blargmaster42_8 6y ago

Taxation is theft, avoiding it is heroic.

29athrowaway 6y ago

The wealthy tax the rest of us. Think about it. Tax avoidance, subsidies, bailouts, stimuli, etc. Want to tax the rich? No. They tax you.

robertlagrant 6y ago
That's not taxing us, that's just them (or businesses they, or non-rich people, run) getting some tax relief. They will still be either paying more tax or employing more people or investing in more companies that employ people than I do, that's for sure.
- mtgx 6y ago
  Many large companies that got tax breaks ended up firing thousands weeks later and buying more of their own stock.
- 29athrowaway 6y ago
  They make us pay for their convenience. For example, Walmart pays minimum wage and asks employees to use Medicaid while their leadership gets enormously rich.
  - robertlagrant 6y ago
    If you spread that wealth (the non-stocks and shares kind, actual money) per-employee, you will not get very much money. That's why this sort of statement is silly.

lifeisstillgood 6y ago

This is a US specific comment but I was reading the David Shor article yesterday and he pointed out that the (vast) majority of funding (for democrats?) comes from individual (wealthy) donors - ie not the corporations who tend not to own the politicians so much anymore.

simonh 6y ago

As usual The Economist has a lot that’s very sensible to say about tax reform. In particular putting more emphasis on taxing investors (you can shift your profits between jurisdictions but not your investors), property and inheritances. The main target should be rents. https://www.economist.com/leaders/2018/08/09/overhaul-tax-for-the-21st-century https://www.economist.com/leaders/2018/08/09/overhaul-tax-fo...

andromeduck 6y ago

Or we could just focus on taxing the unearned value arising out of land control instead of property. Land tax + VAT would be ideal and difficult to avoid.

cies 6y ago
Or just tax pollution and resource (land et al) usage. That will rearrange the economy to overcome one of the biggest challenges of our time. Tax on labour and housing are dis-incentivizing "good behavior".
- andromeduck 6y ago
  I don't think pollution taxes ought to be treated as general revenue. It should be distributed back as UBi for transparency purposes.
- stjohnswarts 6y ago
  I think this is the only way to get corporation onboard for pricing in climate change. I don't see it happening though as they have a boot on the necks of almost every member of Congress because the corps essentially fund their careers as politicians.

afrojack123 6y ago

I see so many posts that have the wrong idea. So many of our politicians and lobbyists are former lawyers. Even the accountants are in on it. The laws are written to be purposely complicated so mega corporations keep smaller entrepreneurs down and lawyers/accountants big fees for knowing the rules inside out(they wrote them). Why do you think large companies give stock options as compensation instead of straight cash. It is to avoid taxes. The average American has one source of income a W2. A simple tax filing. Next time you do your tax filing, look at the questions TurboTax or FreeTaxUSA asks you and then look at the offical government tax doc(this is what gets filled out with your answers).

sokoloff 6y ago
Most large companies have transitioned to giving shares (RSUs) rather than stock options (NQSOs in the case of large companies) for non-executives. Compliance risks/costs are lower and payouts to employees are more predictable (and therefore valued more highly by employees).

harry8 6y ago

Vague idea: The government can compulsorily acquire the domestic domiciled assets of any company for 50? 100? times that company's declared taxable income with some appropriate average over the previous 5 years. You earn nothing taxable here? Great for your tax bill but now you can worry about the capital loss and loss of control of trademarks & patents domestically. Better to declare the profit and pay the tax like an honest person...

mhaymo 6y ago
There are legitimate reasons for a valuable company to make little to no profits. Namely re-investment in growth. Your proposal would make it impossible for businesses to spend todays profits on growth for tomorrow, and would thereby dramatically slow economic growth.
- iguy 6y ago
  Yes. The whole idea of describing the tax on profits as an involving "declared taxable income" is misleading. Few workers work without a salary, but plenty of companies run without profit... because they are re-investing and growing, or because they are slowly shrinking and dying. Lots of tax can still be collected (on money going out as salaries, and through VAT on money coming in) and their existence can still be useful (making stuff we need, and employing people) even if the books exactly balance at the end of the year.
- harry8 6y ago
  This is actually incorrect. Investment is not tax deductable. Invest all your salary in an S&P500 index fund as a tax deduction? Business expenses are tax deductable. Investment is not. Yes I'm completely aware that this is one of Amazon's stated defences for tax dodging. Tax dodging is their core competency. I hate that.
  - mhaymo 6y ago
    No you're incorrect, and drawing a false distinction between spending company money on growth instead of profits, and other business expenses. There is no distinction for tax purposes, nor should there be.

whiddershins 6y ago

I don’t fully understand why corporations are taxed in the first place. All the money the corporation takes in ultimately gets spent on operating expenses, or is profit that is then distributed to shareholders who then owe taxes on that income. If it’s annoying and counter intuitive that corporations are in some legal senses considered people, it is even more confusing that they pay taxes. This sets up a crazy situation where employees of the corporations start lobbying and messing with policy and regulations so it favors the organization. Seems like bad piled on top of bad. Increasing the tax rate on investment income is basically the same thing as taxing corporations, but would remove all these perverse incentives.

Schiendelman 6y ago
This makes a lot of sense. There’s no way for the money to get out of the corporation without being taxed, we have all these R&D deductions to make many companies able to pay nothing, why not be direct about it? On the other hand, is the status quo ok? Are we getting something out of companies having to do these specific activities to deduct?
- tim333 6y ago
  >There’s no way for the money to get out of the corporation without being taxed Not totally true. Interest free loan to the owner or his mother in law. Company buys a house / car / jet owner can use. Company buys consultancy services from the owners other company based in the Bahamas etc
  - Schiendelman 6y ago
    Those expenditures aren’t tax deductible; they aren’t r&d.
etripe 6y ago
They are taxed because they are beneficiaries of society's investment in infrastructure and people. They benefit directly from a healthy, educated population, enforcement of construction codes, the operation of the legal system, roads and waterways, etc. Companies aren't entirely benign, either, so part of those taxes goes to environmental impact assessment and handling they don't pay for, such as pollution, health hazards, etc. If you were to make the case the healthy, educated employees could be compensated through their wages, then that still leaves infrastructure, externalities and the legal system. While you could privatise infrastructure, I think it would be a bad idea. It could lead to shady schemes where a corporation "taxes" its employees on the toll road leading up to the building. Considering historical examples like company stores, I'm not sure we could rule that scenario out. Also, where does infrastructure stop and what does it include? The last miles of telecoms, power, water and other utilities or more? As to the legal system, it seems self-evident we don't want that privatised. Do you disagree? On the topic of externalities: I suppose it's feasible to create new taxes specifically for what are now considered externalities, so corporations pay for them: pollution, carbon footprint, burnouts/boreouts, etc. Would you be in favour of those?

known 6y ago

Let us make Companies comply with https://en.wikipedia.org/wiki/Freedom_of_Information_Act_(United_States) https://en.wikipedia.org/wiki/Freedom_of_Information_Act_(Un...

bwilli123 6y ago

I would argue that given all the privileges that Society gives to Limited Liability Companies, that there should be one basic demand in return (regardless of profitability, or lack of it) That is, that all company communications be released to the public after a 10 year delay. Governments worldwide manage to do this after 10, 25 or 50 years. I don't see why corporations would rate the same privilege. Transparency is the best defence against corruption.

LatteLazy 6y ago

The behaviour is legal because it was made legal. We choose to do this. Pretending its some magic trick with complex steps is simply a nice excuse to avoid the difficult truth: it's legal and easy for publically traded companies to pay no corp tax and we like it that way.

thysultan 6y ago

Create a "church of the people" non-profit org, where anyone that "believes" can join and give it charity, and the church in its infinite benevolence gives credit cards to the needy(the donors) that they can use as they like or as the gods allows(how much you donated + interest). To avoid taxes you mealy have to find a way to appear poor. In the above scenario both the "church" org and the donors are poor if the church uses all its donations on its donors and vice-versa.

BlueTemplar 6y ago
Sadly, "Our Lady of Perpetual Exemption" was shut down... https://www.youtube.com/watch?v=JcPeBAYYuhc https://www.youtube.com/watch?v=JcPeBAYYuhc https://en.wikipedia.org/wiki/Our_Lady_of_Perpetual_Exemption https://en.wikipedia.org/wiki/Our_Lady_of_Perpetual_Exemptio... (Too many people contributed their seeds…)

habosa 6y ago

The lawyers who work at all of these firms who make large-scale international corporate tax avoidance possible should be ashamed of themselves. They are stealing from their fellow citizens. When big fraud scandals occur (Enron, Wirecard) the accountants and auditors are rightfully shamed by their industry. When we find out who paid $0 in corporate income tax the lawyers who made it happen and defended it seem to escape scrutiny. The legal industry will protect its own every time, no matter who they enable or defend. “In every big transaction [...] there is a magic moment during which a man has surrendered a treasure, and during which the man who is due to receive it has not yet done so. An alert lawyer will make that moment his own, possessing the treasure for a magic microsecond, taking a little of it, passing it on. If the man who is to receive the treasure is unused to wealth, has an inferiority complex and shapeless feelings of guilt, as most people do, the lawyer can often take as much as half the bundle, and still receive the recipient’s blubbering thanks.” ― Kurt Vonnegut, God Bless You, Mr. Rosewater

sneak 6y ago
If the law can make something not stealing when it fits the common definition (that is, taking money from people nonconsensually and calling it “taxation”), then someone minimizing taxes while complying with the tax law as it is written is not stealing, as the law is thus the authority on what is or is not “stealing”. However, if you think that complying with the tax law is stealing (and thus believe that the law is not the basis for what is or is not “stealing”), then it’s also legitimate to call what the tax enforcers do “stealing”, even though it is permitted by law, because it fits the common definition of “taking without consent via threat of force”. You can’t have it both ways and be consistent. Either the law defines what is “stealing” or it does not.
jlokier 6y ago
> They are stealing from their fellow citizens. Yeah, but stealing how much? Almost everyone I know or read about who runs a small business or is self-employed talks with their accountant about how run things in a "tax efficient" way, to pay the minimum tax within the rules while keeping reasonable about it. It would be foolish not to. You have to keep competitive. And the rules are, for the most part, based on fair and sensible principles. Things like if you paid for something to use in your trade, it's fair to subtract that from what someone paid you, so the different is your profit on which tax is based. Scale that up to large international corporations, and it turns out "minimum tax within the rules" is often $0 in a particular country, often because your profit there is also $0. Just because you can structure a complex business of many parts in such a way that those initially fair and sensible tax principles work out that way. The tax rules don't specify a larger, correct amount of tax. So the lawyers, should they be ashamed for advising their clients how to run a large company tax efficiently? Assuming yes, because that's the premise being replied to here, what should they be advising their clients to do instead? A voluntary tax overpayment? Structure the business another way? Guess? Copy other companies? Is "shame" really the right way to control what advice lawyers and accountants give to large companies? It seems to me that "shaming" by itself quickly leads to a lot of uncertainty and unfairness, because nobody can tell what the correct advice or correct tax payments "ought" to be on shame alone. You'll end up with different companies who do exactly the same thing paying wildly different amounts based, essentially, on what they voluntary decide to do for PR or emotional reasons. That has the potential to be quite unfair. It would be highly unprofessional for a lawyer or accountant to give advice based on their personal emotional state, and nebulous targets which nobody has agreed on and different people reach very different views on. So the right thing to do for an ethical professional lawyer or accountant is to resist that pressure, and try to give the most unbiased, knowledgable and reliable advice instead, based on the rules as they are set out, which everyone is supposed to adhere to. That's why I'm inclined more towards ideas like the "General Anti-Avoidance Rule" https://en.wikipedia.org/wiki/Tax_avoidance#General_anti-avoidance_rule https://en.wikipedia.org/wiki/Tax_avoidance#General_anti-avo... which gives companies and their advisors a framework for deciding the correct amounts to pay, with a stick if they don't. Public shaming and campaigning is useful, but the end goal of that is ideally to apply political pressure to improve the rules in a "level playing field" way, so that proper application of them results in proper taxation. Many attempts at closing tax loopholes tend to make the tax code more complex, which requires yet more rules to close yet more new loopholes. Those rules are very "gameable". But general anti-avoidance rules don't have to have this problem, if they are constructed with suitable generality and defer hair-splitting details to fair justice principles rather than ever-finer rules. Getting this right is still difficult, and still a work in progress. It's very contextual too, as the difference between structuring a business to avoid tax and structuring a business because that's how you conduct business is as much about culture and common practice as anything, and these change over time even while the general rule stays the same. But it seems like a better general approach to me.

pge 6y ago

Maybe in the era of multinational corporations, the idea of corporate taxation is outdated. What if corporate taxes were eliminated entirely and replaced with higher taxes on personal wages? It’s far more difficult for a person to game the tax system than a corporation. People can’t move their income to another country, or any of the other games corporations play (or at least, it is much more difficult for them to do so).

RandomGenerated 6y ago
Then everyone will become a corp

jokoon 6y ago

"Good people do not need laws to tell them to act responsibly, while bad people will find a way around the laws." - Plato "Life is nothing but a competition to be the criminal rather than the victim." - Bertrand Russell Honestly those are the only nuggets of wisdom I can think about when I look at all the tax havens. The movie The Laundromat was also quite instructive. The end of the cold war moved the ideological cursor "organized economy versus libertarian economy". Governments are struggling hard to save their model so they can function properly. I really have a hard time seeing how this won't create problems, this is globalization at work. Not sure if states/borders will disappear.

deleted 6y ago

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bdcravens 6y ago

"But corporations should be required to publicly account for the gap between the income they report to the IRS and the income that they report to their shareholders." I suspect this is a far greater issue than companies who pay $0; his proposal would apply to ALL with shareholders, and I (as a layperson) believe most companies have some gap there.

cwhiz 6y ago

Just get rid of corporate taxes, and get rid of capital gains taxes. Treat all income the same. Kills the double taxation issue, and removes the incentives for corporations to avoid taxes.

saalweachter 6y ago
Double taxation is a talking point, not a philosophical problem. It's like rebranding the inheritance tax as the death tax to make it sound unfair or absurd ("they tax dying in this country!!!"). Double taxation happens constantly in all sorts of contexts, for instance, most of us pay income tax, and then pay sales tax using those already-taxed dollars, and then the seller pays income tax on the money received less sales tax. The reason we tax in so many ways is mostly some combination of "hysterical raisins" and politics (it can be politically easier at different times to raise revenues in different ways, and restructuring the tax code will create winners and losers so maintaining the patchwork status quo is easier), but it's not necessarily a bad thing to tax with a variety of methods. There is a certain amount of administrative overhead in having a corporate and personal income tax, a payroll tax, a sales tax, a property tax, etc etc etc, but doing so also makes it harder for someone to dodge taxes entirely -- restructuring to avoid personal income taxes can put you in line for corporate income taxes and vice versa, for instance. Holding lots of land subjects you to property taxes instead of corporate taxes on the companies you own stock in. Meanwhile all of these separate taxes create paper trails that can be used in the mutual enforcement of all taxes. If you run a business and your sales tax receipts, corporate taxes, and personal income taxes don't roughly line up, it signals that an audit may be called for. The tax system becomes a checksum for itself. Now, this may all just be status quo rationalization, but my point is, "double taxation" is just a shibboleth and not itself a reason to radically reform the tax code.
- JoeAltmaier 6y ago
  Agreed. Its infinite taxation, as the money goes around and around in a circle. It's all green, and all been taxed many times. As the philosopher said, taxation is the art of plucking a goose so as to get the most feathers with the least squawking.

deleted 6y ago

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easytiger 6y ago

The public also needs to learn about taxation escalation as a heist pulled off in the fog of the world wars that is ever increasing in burden. This as a counter to the increasingly corrupt assertion that tax is a moral obligation.

adeptus 6y ago

I am still confused as to why companies have to pay tax at all? If every single employee including owners already pay income tax, and IVA/GST/purchase taxes, property taxes, xyz additional personal taxes levied by respective governments, why then on top of all that make companies pay tax, doesn't that just detract from people wanting to start companies and/or seek countries with the least taxes/best loopholes? Disclaimer: I own no companies. I don't even own stocks at the moment.

Icedcool 6y ago
Because they act as a stand alone entity, and they may make and keep profit that doesn’t get dispersed to the employees.
- emteycz 6y ago
  They don't make use of it in a way a person does. They use it to make more income, not for food, housing, fun, etc.
  - TheRealSteel 6y ago
    That sounds like more of a reason to tax them, not less.
    - anonunivgrad 6y ago
      You’re just quibbling about how much the total taxation should be. The point is that it doesn’t matter if you tax the company profits at 20% and capital gains at 20% (assume the normal income tax is 40%) or if you tax the company 0% and tax capital gains at 40%. The government already tries to reduce double taxation. There is not supposed to be a penalty for incorporating vs. doing business as a sole proprietor or general partnership. That’s why the capital gains tax is lower than the income tax. This is all about ease of administration and making creative accounting more difficult or impossible. If you’re looking at it through some moral lens, you don’t get it.

exabrial 6y ago

The problem isn't "who's not paying taxes", the problem is "taxes". In the USA we pay extraordinary taxes for extraordinarily small returns. If the US government was on charity navigator, it would have a no-star rating. This money is best left to the distributed wisdom of thousands of companies in millions of individuals who will look after every dollar and see to it's use rather than waste. When I see headlines like this I'm not upset by them I'm sort of thankful they are not fueling reckless spending.

exabrial 6y ago
Oh the internet is not without irony. On second page of HN today: https://tunnelingonline.com/why-tunnels-in-the-us-cost-much-more-than-anywhere-else-in-the-world https://tunnelingonline.com/why-tunnels-in-the-us-cost-much-...

sigzero 6y ago

I hate to break it to the author but no, you do not have that "right".

CWuestefeld 6y ago

Although avoiding taxes may be a sort of business "code smell" that makes us suspicious, there's no inherent reason to regard such behavior as evil. The tax code, in all its thousands of pages, is designed (or at least it's supposed to be) to give incentive to certain behaviors that we'd like our businesses (and citizens) to follow. And the more they do this, the less taxes they'll be paying. Thus, to a first approximation, paying very low taxes ought to be indicative of a payer who's doing all the things that our politicians and bureaucrats think they should be doing. A few years ago I replaced all the windows in my house, along with a door and a garage door, with new, energy-efficient ones. This entitled me to a tax credit for that year, allowing me to pay a few thousand dollars less in taxes. I don't think that people should accuse me of being a bad citizen because my tax bill that year was unusually low. If anything, I'd think that the same environmental groups who lobbied for such measures in the tax code would all be shaking my hand for taking advantage of that in order to achieve the goal of lowered energy usage. So yeah, maybe be suspicious of such businesses, but let's not just assume they're evil. That said, the idea that the public has a right to know what corporations are doing this is fully compatible with my claim, so we'd also know who's being a good corporate citizen.

walto2 6y ago
Sadly though, capitalism has a way of turning everything into a perverse incentive.
- stjohnswarts 6y ago
  So does basically every other human effort where one can extract a benefit for an individual. Since communism on a large scale has always resulted in failure of its implementation can you suggest a 3rd path?
nolroz 6y ago
I think this point outlines how important it is for the public to know how the taxes were reduced. If the methods create positive outcomes to society then it would seem a lot less shady.

parenthesis 6y ago

Governments should pay the necessary salaries to hire some top tax-avoidance experts to help them close loopholes.

EPiXNiCROS 6y ago

good for them. you have absolutely no right to the labor of another and fuck you for thinking you do.

beagle3 6y ago

They should have AMT for companies like they do for people. After all, corporations are people too! The mechanics would be different, of course, as e.g. the whole point of AMT is to disallow some deductions, and many businesses would be bankrupt without (totally reasonable) deductions. The problem in collecting these taxes is not the ability to do so, it is rather the will to do so.

moneytalks 6y ago

Can't wait to see how http://n-gate.com http://n-gate.com summarizes this one.

Attained 6y ago

Isn't that profit for shareholders taxed as cap gains? Edit: I mean, if I own a share I pay taxes when I sell it and make money

clausewitz 6y ago

but...job creators...and trickle down...and bootstraps

stevenalowe 6y ago

https://en.wikipedia.org/wiki/Gregory_v._Helvering https://en.wikipedia.org/wiki/Gregory_v._Helvering - no obligation to maximize taxes - reinvest profits in company growth is the simplest way to avoid taxes, and arguably better for the economy

neycoda 6y ago

Most of the ways companies avoid taxes now used to be illegal.