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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 stealin

by 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.
- throwaway2245 6y ago
  >It would be foolish not to. Hard disagree. At typical self-employed scale, fiddling around with avoiding taxes is a waste of time (and money) which is a net loser against putting that energy into finding income. Are self-employed people really busy setting up as a business in Estonia or lobbying their national representatives? If you're taxed on your profits, it's always better to double your profits than to avoid tax on your current profits. This tax avoidance strategy only becomes important where there are no other efficiencies remaining to find: or, when you don't have other competitors to worry about. It's a monopolist strategy. A tax reform that benefits you is also going to benefit your competitors - so it's not being done for competitive reasons.
  - graeme 6y ago
    You’re arguing against a straw man. OP wasn’t saying the self employed incorporate in Estonia. They said they are efficient with taxes. They even gave a specific example: business expenses. For example, I run a business in Canada, and know that food and drinks are only 50% deductible. Therefore, at a 50% marginal tax rate those items effectively cost business 50% more than, say, buying office supplies. And that informs decision making. It’s also vital to know how different capital cost classes and depreciation schedules affect things, or to properly set up a home office deduction , and to deduct everything deductible. Most of these things are set it and forget it. It’s absolutely worth doing correctly even at a self employed scale.
    - throwaway2245 6y ago
      Legitimately expensing office supplies is scarcely considered "corporate tax avoidance" and not reasonable to call "stealing". Since the OP was making this direct comparison, and you seem to like fallacies, you can take it that I am calling their argument a slippery slope fallacy.
      - jlokier 6y ago
        I am the OP and I was not making this direct comparison. I was pointing out that it's common for the small business to perform tax efficiency, which is extremely widespread and taught in small business courses. Most people running a small business or self-employed relate to it, and it's indeed a "set and forget" thing, mainly because you just do what the accountant tells you. In that world, tax efficiency is largely seen as the right thing to do and sensible ("good"). And when you scale that up, the end result looks like international corporate tax avoidance ("bad"). That's not at all the same as saying the small business version is tax avoidance of the "bad" kind. It's saying that one thing follows from another, not that they are the same thing. And so we can't solve international corporate tax avoidance by a simple expedient of trying to "ban" or "shame" it, because there isn't any clear boundary at which sensible, approved, "good" tax efficiency turns into shameworthy "bad" avoidance. And so, to solve it, we need to use a different method, and I advocated such a method.
piyush_soni 6y ago
I used to think like that as well, but honestly, people will exploit loopholes in the law as long as they're there. The whole morality or ethics part of it is really subjective. The only correct fix is to fix those loopholes.

by habosa 6y ago

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.

throwaway2245 6y ago
>It would be foolish not to. Hard disagree. At typical self-employed scale, fiddling around with avoiding taxes is a waste of time (and money) which is a net loser against putting that energy into finding income. Are self-employed people really busy setting up as a business in Estonia or lobbying their national representatives? If you're taxed on your profits, it's always better to double your profits than to avoid tax on your current profits. This tax avoidance strategy only becomes important where there are no other efficiencies remaining to find: or, when you don't have other competitors to worry about. It's a monopolist strategy. A tax reform that benefits you is also going to benefit your competitors - so it's not being done for competitive reasons.
- graeme 6y ago
  You’re arguing against a straw man. OP wasn’t saying the self employed incorporate in Estonia. They said they are efficient with taxes. They even gave a specific example: business expenses. For example, I run a business in Canada, and know that food and drinks are only 50% deductible. Therefore, at a 50% marginal tax rate those items effectively cost business 50% more than, say, buying office supplies. And that informs decision making. It’s also vital to know how different capital cost classes and depreciation schedules affect things, or to properly set up a home office deduction , and to deduct everything deductible. Most of these things are set it and forget it. It’s absolutely worth doing correctly even at a self employed scale.
  - throwaway2245 6y ago
    Legitimately expensing office supplies is scarcely considered "corporate tax avoidance" and not reasonable to call "stealing". Since the OP was making this direct comparison, and you seem to like fallacies, you can take it that I am calling their argument a slippery slope fallacy.
    - jlokier 6y ago
      I am the OP and I was not making this direct comparison. I was pointing out that it's common for the small business to perform tax efficiency, which is extremely widespread and taught in small business courses. Most people running a small business or self-employed relate to it, and it's indeed a "set and forget" thing, mainly because you just do what the accountant tells you. In that world, tax efficiency is largely seen as the right thing to do and sensible ("good"). And when you scale that up, the end result looks like international corporate tax avoidance ("bad"). That's not at all the same as saying the small business version is tax avoidance of the "bad" kind. It's saying that one thing follows from another, not that they are the same thing. And so we can't solve international corporate tax avoidance by a simple expedient of trying to "ban" or "shame" it, because there isn't any clear boundary at which sensible, approved, "good" tax efficiency turns into shameworthy "bad" avoidance. And so, to solve it, we need to use a different method, and I advocated such a method.

piyush_soni 6y ago

I used to think like that as well, but honestly, people will exploit loopholes in the law as long as they're there. The whole morality or ethics part of it is really subjective. The only correct fix is to fix those loopholes.