5 ms·

Personally, I dislike IKEA for registering as a non-profit, when they're very clearly not. To me, this belongs in the same bucket as any number of tax avoidanc

by candu 6y ago

Personally, I dislike IKEA for registering as a non-profit, when they're very clearly not. To me, this belongs in the same bucket as any number of tax avoidance schemes that ensure wealthy individuals pay far lower tax rates than the average person, and that large corporations pay effectively nothing. If they're able to provide great customer service - well, good on them, but I'd much rather the public purse have the money necessary to support people in general. I'm very, very tired of "innovation" being used as an excuse to completely ignore relevant taxes and laws, especially when said innovation is often possible only because of extensive public investment in research, supply chain stability, etc. (If you're not sure what I'm talking about with that last sentence: read The Entrepreneurial State, or talk to anyone who's ever received a DARPA / NSF / etc. grant, or maybe even just go look at an actual public sector budget sometime.)

istjohn 6y ago
Wow, that is sketchy. Here's more info on IKEA's tax evasion scheme: https://www.fastcompany.com/3035734/ikea-is-a-nonprofit-and-yes-thats-every-bit-as-fishy-as-it-sounds https://www.fastcompany.com/3035734/ikea-is-a-nonprofit-and-...
- sneak 6y ago
  avoidance != evasion
  - rychco 6y ago
    Fwiw, the first definition I found for the word evade is “escape or avoid, especially by cleverness or trickery.”
    - Sodman 6y ago
      In the US, they are very specific, distinct things. Tax Evasion[0] is not paying taxes you legally owe. Tax Avoidance[1] is finding ways to owe less tax. Evasion is considered illegal, but Avoidance can practically be considered encouraged, as it's perfectly legal and rewards practitioners with lower tax bills. [0]https://www.investopedia.com/terms/t/taxevasion.asp https://www.investopedia.com/terms/t/taxevasion.asp [1]https://www.investopedia.com/terms/t/tax_avoidance.asp https://www.investopedia.com/terms/t/tax_avoidance.asp
      - sandworm101 6y ago
        >> an practically be considered encouraged It is openly encouraged. All those little policies, those loopholes, are there to encourage certain behaviors and discourage others. Want to funnel profits into live insurance on your employees in order to avoid tax? (Walmart does this) Go right ahead. That bit of tax code is there specifically to encourage the use of life insurance. If it is in the code, it is there because the government wants you to use it.
      - LeifCarrotson 6y ago
        Most people reading this are probably aware of the distinction in technical, legal terms. But it doesn't matter, because we're not prosecutors or the IRS. But I still call it tax evasion colloquially, because I'm just an average Joe who can't prosecute anyone so my legal opinion doesn't matter. My judgement is not whether it's illegal, but whether it's immoral and scummy. My neighbor, a self-employed painter, claiming his work truck (that he also uses to pull the family camper) as a depreciating business asset is tax avoidance, and I can get behind that. Ikea registering as a nonprofit with 99% overhead is tax evasion, and it's scummy. Society, as represented by the government, wants charities to exist to assist with causes that society values, like, I suppose, architecture. They encourage this through the tax code. Society also want for-profit businesses to pay their fair share of taxes. This is blatantly a deceitful manipulation of the tax code, whether it's legal or not I don't care, they've abused the law to do things it wasn't intended to do
        dj_mc_merlin 6y ago
        The difference between avoidance and evasion is very important. One of them is legal and economically encouraged, the other one is an accusation of a crime. Also, most people learn this in high school. Calling it evasion when it is avoidance only confuses people as to what you mean, and makes people think you don't know what the terms mean. > My neighbor, a self-employed painter, claiming his work truck (that he also uses to pull the family camper) as a depreciating business asset is tax avoidance, and I can get behind that. Ikea registering as a nonprofit with 99% overhead is tax evasion, and it's scummy. But objectively speaking, you are aware it's the exact opposite? It's like trying to defend a function in C that causes UB by claiming it works on your machine. Yes, ok, but it is still UB. Your opinion does not change that, or what other people assume you mean when you say things.
    - mytailorisrich 6y ago
      "Tax evasion" refers to illegal actions to indeed evade tax lawfully due. "Tax avoidance" is the perfectly legal practice of (more or less aggressively) minimising the amount of tax lawfully due. Everyone engages in tax avoidance at least to a degree.
      - Fezzik 6y ago
        People don’t like thinking this way... it’s difficult for a lot of people to grasp, for example, that if they have children and claim those children as a deduction they are thereby avoiding federal income taxes. Individuals avail themselves of the parts of the tax code that benefit them just like Big Corps do. You are not required to claim offspring as a deduction, so I guess by the logic of many people in this thread anyone who does is scummy because they are avoiding taxes? Seems kooky.
        pegasus 6y ago
        I most people wouldn't your example tax avoidance. That deduction is meant for that particular situation and claiming it is to be expected. Exploiting some complicated loop-hole is something else entirely. That's what most people would label as tax avoidance.
        Fezzik 6y ago
        That is effectively my point. It may be worth reassessing your perspectives if you are comfortable saying “when I use the tax code to my benefit, it is okay” but “when he uses the tax code to his benefit, it is not okay.” Fundamentally it is the same thing. The only difference is the scale. I’m open to arguments as to why this conclusion is correct, but it really seems like the classic case of hating on Big Corps because they are big, not because they are doing something bad (which they often do, but not in this case. To my mind).
        kbenson 6y ago
        You are making a distinction that doesn't exist. What you might consider a complicated loophole might be what every company with a CPA considers standard practice. Just because it's not obvious to a layman doesn't mean it's not the obvious standard operating procedure for corporate taxes. They are both "avoidance" in the same way, which is taking advantage of specific provisions that benefit that tax paying entity. It's the same with the mortgage interest deduction. You avoid some level of taxes as a homeowner by deducting your mortgage interest. Until you have a house and need to do so, it may seem like some weird loop-hole in the taxes, and when you have a house and use it, it's just something you do every year. Don't expect a multi-national company worth hundreds of millions or billions to view the tax system as being as opaque and complicated as it seems to an individual. Their situation is vastly more complicated than an individuals, and their capability to navigate the tax system is vastly higher as well with multiple CPAs on staff or a large firm hired, so they can take advantage of those provisions put into the system specifically for them.
  - deleted 6y ago
    [deleted]
Scarblac 6y ago
What I don't understand is how Inter Ikea Systems (the company that holds the rights to the Ikea concept, that is paid by the nonprofit) avoids having to pay taxes.
- patentatt 6y ago
  There’s plenty of blog articles and YouTube videos out there that break it down, it’s quite elaborate if memory serves.
  - peteforde 6y ago
    Disable your Javascript and then check out this 2006 Economist article and your mind will be blown (maybe): https://web.archive.org/web/20201112042116/https://www.economist.com/business/2006/05/11/flat-pack-accounting https://web.archive.org/web/20201112042116/https://www.econo...
    - deleted 6y ago
      [deleted]
andromeduck 6y ago
We would all be better off if corporate taxes were reduced to low single digits in favor of regular individual income tax and VAT bit the optics aren't good so it's never gonna happen except if you're big enough to have creative accountants and political/economic clout like Ikea and others.
- dahfizz 6y ago
  Its amusing and depressing that we are in a situation where all experts, from across the political spectrum, can agree on what a more optimal tax system would be. Yet the structure of our democracy basically makes a more optimal solution impossible. https://www.npr.org/transcripts/499490275 https://www.npr.org/transcripts/499490275
- mikem170 6y ago
  I've held that point of view, but heard something recently that gave me pause: The high tax rates of the 1960's were the reason that companies paid their employees more and/or invested in research, producing things like Bell Labs. The reasoning was that when corporate tax rates are low companies will use the extra money to play financial games, and when corporate tax rates are high companies know they are better of off giving the money to retain/recruit good employees or spending it on research to grow the business instead.
  - andromeduck 6y ago
    I'm not sure I entirely buy that. Sector monopolies were much more common around that time too which makes broader research investments easier to recuperate and there was also strong market incentives to do so because the bottom kept getting eaten up by foreign and particularly asian manufactuerers.
throwawaygh 6y ago
> Personally, I dislike IKEA for registering as a non-profit, when they're very clearly not. They're clearly not a charity. But there are TONS of tax-sheltered businesses that aren't charities. To me, it's morally equivalent to eg churches that use tax-free money to buy and operate super nice concert venues. Or any other non-profit that uses pre-tax money to pay salaries. IMO, Ikea > Churches. > or talk to anyone who's ever received a DARPA / NSF / etc. grant Y Combinator recently published an article about how to bootstrap a biotech startup on a small seed round, and they included an example company. Step Zero was "get NSF/NIH grants and hire a student/post-doc at a university". Incidentally also the Step Zero for lots of tech companies in the 80s, 90s, and even today.
- hello_moto 6y ago
  IKEA > (Mega) churches. There are smaller churches that would benefit from the Govt policies.
  - bloomingeek 6y ago
    Thank you, and absolutely correct. Also, thanks for differing Mega churches from small churches.
  - throwawaygh 6y ago
    It's less about the size of the church and more about the % of the church's untaxed revenue that is spent on salaries and mostly-single-use worship space. Plenty of small churches spend almost all of their revenue on pastoral salary and workship space. It's fine, to each their own, but treating that sort of tithing the same way we treat donations to actual charities seems weird. Both Ikea and non-charitable $ spent by churches should be taxes. TBH though, it's not 1800. we should stop (not) taxing based on institution type and start (not) taxing based on where the dollars are going. This would solve lots of problems in the non-profit world (including IKEA and churches).
    - michaelmior 6y ago
      > we should stop (not) taxing based on institution type and start (not) taxing based on where the dollars are going While I don't necessarily disagree, this seems like it would create a large administrative burden and a strong incentive for businesses to simply lie (or creatively disguise) where there money going. This seems easier than fraudulently registering a for-profit business as a non-profit. Although I suppose it's hard to say whether the current or your proposed approach would result in tax breaks really happening where we want them.
Glavnokoman 6y ago
In general I tend to dislike IKEA. But I'd totally approve avoiding taxes to preserve the forest (in case that's actually what they did).
Rumudiez 6y ago
If you respect freedom and tolerance of religion, I will hold you to respect my worship space in the IKEA showroom. Plywood is my god and IKEA is his messenger. For this reason, I think it's perfectly fair that IKEA gets the same treatment as any Church. If I ever open my own business, I will make sure to register is a non-profit religious organization as well. If you don't like the loophole, take it out of legislation -- everything here is above board, legally speaking.

by candu 6y ago

istjohn 6y ago

Wow, that is sketchy. Here's more info on IKEA's tax evasion scheme: https://www.fastcompany.com/3035734/ikea-is-a-nonprofit-and-yes-thats-every-bit-as-fishy-as-it-sounds https://www.fastcompany.com/3035734/ikea-is-a-nonprofit-and-...

sneak 6y ago
avoidance != evasion
- rychco 6y ago
  Fwiw, the first definition I found for the word evade is “escape or avoid, especially by cleverness or trickery.”
  - Sodman 6y ago
    In the US, they are very specific, distinct things. Tax Evasion[0] is not paying taxes you legally owe. Tax Avoidance[1] is finding ways to owe less tax. Evasion is considered illegal, but Avoidance can practically be considered encouraged, as it's perfectly legal and rewards practitioners with lower tax bills. [0]https://www.investopedia.com/terms/t/taxevasion.asp https://www.investopedia.com/terms/t/taxevasion.asp [1]https://www.investopedia.com/terms/t/tax_avoidance.asp https://www.investopedia.com/terms/t/tax_avoidance.asp
    - sandworm101 6y ago
      >> an practically be considered encouraged It is openly encouraged. All those little policies, those loopholes, are there to encourage certain behaviors and discourage others. Want to funnel profits into live insurance on your employees in order to avoid tax? (Walmart does this) Go right ahead. That bit of tax code is there specifically to encourage the use of life insurance. If it is in the code, it is there because the government wants you to use it.
    - LeifCarrotson 6y ago
      Most people reading this are probably aware of the distinction in technical, legal terms. But it doesn't matter, because we're not prosecutors or the IRS. But I still call it tax evasion colloquially, because I'm just an average Joe who can't prosecute anyone so my legal opinion doesn't matter. My judgement is not whether it's illegal, but whether it's immoral and scummy. My neighbor, a self-employed painter, claiming his work truck (that he also uses to pull the family camper) as a depreciating business asset is tax avoidance, and I can get behind that. Ikea registering as a nonprofit with 99% overhead is tax evasion, and it's scummy. Society, as represented by the government, wants charities to exist to assist with causes that society values, like, I suppose, architecture. They encourage this through the tax code. Society also want for-profit businesses to pay their fair share of taxes. This is blatantly a deceitful manipulation of the tax code, whether it's legal or not I don't care, they've abused the law to do things it wasn't intended to do
      - dj_mc_merlin 6y ago
        The difference between avoidance and evasion is very important. One of them is legal and economically encouraged, the other one is an accusation of a crime. Also, most people learn this in high school. Calling it evasion when it is avoidance only confuses people as to what you mean, and makes people think you don't know what the terms mean. > My neighbor, a self-employed painter, claiming his work truck (that he also uses to pull the family camper) as a depreciating business asset is tax avoidance, and I can get behind that. Ikea registering as a nonprofit with 99% overhead is tax evasion, and it's scummy. But objectively speaking, you are aware it's the exact opposite? It's like trying to defend a function in C that causes UB by claiming it works on your machine. Yes, ok, but it is still UB. Your opinion does not change that, or what other people assume you mean when you say things.
  - mytailorisrich 6y ago
    "Tax evasion" refers to illegal actions to indeed evade tax lawfully due. "Tax avoidance" is the perfectly legal practice of (more or less aggressively) minimising the amount of tax lawfully due. Everyone engages in tax avoidance at least to a degree.
    - Fezzik 6y ago
      People don’t like thinking this way... it’s difficult for a lot of people to grasp, for example, that if they have children and claim those children as a deduction they are thereby avoiding federal income taxes. Individuals avail themselves of the parts of the tax code that benefit them just like Big Corps do. You are not required to claim offspring as a deduction, so I guess by the logic of many people in this thread anyone who does is scummy because they are avoiding taxes? Seems kooky.
      - pegasus 6y ago
        I most people wouldn't your example tax avoidance. That deduction is meant for that particular situation and claiming it is to be expected. Exploiting some complicated loop-hole is something else entirely. That's what most people would label as tax avoidance.
        Fezzik 6y ago
        That is effectively my point. It may be worth reassessing your perspectives if you are comfortable saying “when I use the tax code to my benefit, it is okay” but “when he uses the tax code to his benefit, it is not okay.” Fundamentally it is the same thing. The only difference is the scale. I’m open to arguments as to why this conclusion is correct, but it really seems like the classic case of hating on Big Corps because they are big, not because they are doing something bad (which they often do, but not in this case. To my mind).
        kbenson 6y ago
        You are making a distinction that doesn't exist. What you might consider a complicated loophole might be what every company with a CPA considers standard practice. Just because it's not obvious to a layman doesn't mean it's not the obvious standard operating procedure for corporate taxes. They are both "avoidance" in the same way, which is taking advantage of specific provisions that benefit that tax paying entity. It's the same with the mortgage interest deduction. You avoid some level of taxes as a homeowner by deducting your mortgage interest. Until you have a house and need to do so, it may seem like some weird loop-hole in the taxes, and when you have a house and use it, it's just something you do every year. Don't expect a multi-national company worth hundreds of millions or billions to view the tax system as being as opaque and complicated as it seems to an individual. Their situation is vastly more complicated than an individuals, and their capability to navigate the tax system is vastly higher as well with multiple CPAs on staff or a large firm hired, so they can take advantage of those provisions put into the system specifically for them.
- deleted 6y ago
  [deleted]

Scarblac 6y ago

What I don't understand is how Inter Ikea Systems (the company that holds the rights to the Ikea concept, that is paid by the nonprofit) avoids having to pay taxes.

patentatt 6y ago
There’s plenty of blog articles and YouTube videos out there that break it down, it’s quite elaborate if memory serves.
- peteforde 6y ago
  Disable your Javascript and then check out this 2006 Economist article and your mind will be blown (maybe): https://web.archive.org/web/20201112042116/https://www.economist.com/business/2006/05/11/flat-pack-accounting https://web.archive.org/web/20201112042116/https://www.econo...
  - deleted 6y ago
    [deleted]

andromeduck 6y ago

We would all be better off if corporate taxes were reduced to low single digits in favor of regular individual income tax and VAT bit the optics aren't good so it's never gonna happen except if you're big enough to have creative accountants and political/economic clout like Ikea and others.

dahfizz 6y ago
Its amusing and depressing that we are in a situation where all experts, from across the political spectrum, can agree on what a more optimal tax system would be. Yet the structure of our democracy basically makes a more optimal solution impossible. https://www.npr.org/transcripts/499490275 https://www.npr.org/transcripts/499490275
mikem170 6y ago
I've held that point of view, but heard something recently that gave me pause: The high tax rates of the 1960's were the reason that companies paid their employees more and/or invested in research, producing things like Bell Labs. The reasoning was that when corporate tax rates are low companies will use the extra money to play financial games, and when corporate tax rates are high companies know they are better of off giving the money to retain/recruit good employees or spending it on research to grow the business instead.
- andromeduck 6y ago
  I'm not sure I entirely buy that. Sector monopolies were much more common around that time too which makes broader research investments easier to recuperate and there was also strong market incentives to do so because the bottom kept getting eaten up by foreign and particularly asian manufactuerers.

throwawaygh 6y ago

> Personally, I dislike IKEA for registering as a non-profit, when they're very clearly not. They're clearly not a charity. But there are TONS of tax-sheltered businesses that aren't charities. To me, it's morally equivalent to eg churches that use tax-free money to buy and operate super nice concert venues. Or any other non-profit that uses pre-tax money to pay salaries. IMO, Ikea > Churches. > or talk to anyone who's ever received a DARPA / NSF / etc. grant Y Combinator recently published an article about how to bootstrap a biotech startup on a small seed round, and they included an example company. Step Zero was "get NSF/NIH grants and hire a student/post-doc at a university". Incidentally also the Step Zero for lots of tech companies in the 80s, 90s, and even today.

hello_moto 6y ago
IKEA > (Mega) churches. There are smaller churches that would benefit from the Govt policies.
- bloomingeek 6y ago
  Thank you, and absolutely correct. Also, thanks for differing Mega churches from small churches.
- throwawaygh 6y ago
  It's less about the size of the church and more about the % of the church's untaxed revenue that is spent on salaries and mostly-single-use worship space. Plenty of small churches spend almost all of their revenue on pastoral salary and workship space. It's fine, to each their own, but treating that sort of tithing the same way we treat donations to actual charities seems weird. Both Ikea and non-charitable $ spent by churches should be taxes. TBH though, it's not 1800. we should stop (not) taxing based on institution type and start (not) taxing based on where the dollars are going. This would solve lots of problems in the non-profit world (including IKEA and churches).
  - michaelmior 6y ago
    > we should stop (not) taxing based on institution type and start (not) taxing based on where the dollars are going While I don't necessarily disagree, this seems like it would create a large administrative burden and a strong incentive for businesses to simply lie (or creatively disguise) where there money going. This seems easier than fraudulently registering a for-profit business as a non-profit. Although I suppose it's hard to say whether the current or your proposed approach would result in tax breaks really happening where we want them.

Glavnokoman 6y ago

In general I tend to dislike IKEA. But I'd totally approve avoiding taxes to preserve the forest (in case that's actually what they did).

Rumudiez 6y ago

If you respect freedom and tolerance of religion, I will hold you to respect my worship space in the IKEA showroom. Plywood is my god and IKEA is his messenger. For this reason, I think it's perfectly fair that IKEA gets the same treatment as any Church. If I ever open my own business, I will make sure to register is a non-profit religious organization as well. If you don't like the loophole, take it out of legislation -- everything here is above board, legally speaking.