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To be fair, trickle down economics is just fantasy. Tax avoidance is something everyone with a 401k does and is encouraged by the tax code. If there's somethin

To be fair, trickle down economics is just fantasy. Tax avoidance is something everyone with a 401k does and is encouraged by the tax code. If there's something unique about what they're doing, especially as a result of them lobbying for certain parts of the tax code, then I can see it being judged harshly. If anyone can do what they're doing, then I don't see it as particularly negative.

Jochim 6y ago
A 401k has the specific purpose of helping individuals fund their retirement years, something society has agreed is worth providing some benefit for. There is an element of intention to the exemption and it serves a specific purpose. > If anyone can do what they're doing, then I don't see it as particularly negative. Typically not just anyone can do this, smaller firms do not have the resources set-up these schemes. Smaller firms are also much more likely to be slapped down by the government. The result of this is that larger corporations are further advantaged. I think attempting to equate personal and corporate taxation is a mistake. Corporations are increasingly transnational in a way that people cannot be, and they are leveraging not just local tax codes, but often established treaties and differences between national tax codes that were introduced with different intent.
- lotsofpulp 6y ago
  >A 401k has the specific purpose of helping individuals fund their retirement years, something society has agreed is worth providing some benefit for. There is an element of intention to the exemption and it serves a specific purpose. A 401k has the specific purpose of helping large businesses maintain a competitive advantage over small businesses. If the government wanted to help individuals fund their retirement years, then there is no reason to involve employers in the tax code. They could simply issue the same rules and contribution limits for IRAs. But they don't. They punish you if you're employed by an employer that doesn't offer a 401k, by setting your contribution limit to a paltry $6k while 401k participants get tens of thousands, and your contribution limit is zero if your spouse is eligible for a 401k and your income is over a certain amount.
  - ashtonkem 6y ago
    While there are certainly issues in the tax code, you’re absolutely just making up the history and intent of the 401k. The 401k was not setup to help big business, quite the opposite. They were setup as an explicit alternative to the pension systems that historically were how employees retired, and pensions absolutely favor large companies that can afford them. 401k programs allow much more employee choice and mobility, which they’ve arguably achieved.
    - lotsofpulp 6y ago
      Whatever the history is, it's been 40+ years since it started, and legislators have subsequently gone through a lot of effort to create a two tier system (IRAs vs 401k) which heavily favors employees of large businesses than can afford to pay high wages. When something so blatantly tilted towards the rich, white collar world exists, and can so easily be fixed (by simply matching the terms of the IRA to the 401k), and has not been fixed for over 4 decades, I then take it to be intentional.
- omgwtfbyobbq 6y ago
  In the same way that a 401k is set up for a specific purpose, IKEA's foundation was also set up for a very specific purpose. If anything, the purpose was criticized as being overly narrow, and they recently updated it to be more broad. Whether a firm can do something similar depends on the specifics. I'm not sure how large IKEA was when they set up their corporate structure in the early 80s, but I doubt they were as large as they are today. https://web.archive.org/web/20201112042116if_/https://www.economist.com/business/2006/05/11/flat-pack-accounting https://web.archive.org/web/20201112042116if_/https://www.ec... I'm not trying to equate personal and corporate taxation though. If IKEA wants to funnel a large portion of their profits into a foundation to control themselves rather than paying taxes to the government instead, I don't see how that is tax avoidance. Many other foundations around the world are set up so the controlling interests of companies can choose how to disperse money instead paying taxes and letting the government choose how to disperse it. Not that there's anything wrong with that either, but having a corporation designed to minimize taxes by funneling profits into a foundation doesn't scream tax avoidance to me. With that said, there could be other aspects of their corporate structure that I'm not aware of, but like I said, if other companies can also implement the same structure, even if it's across national boundaries, I don't see it as being particularly unethical. Although if someone believed for instance that companies should always repatriate all profits, then I could see how they would think this is unethical, so as usual YMMV. Edit - To put it another way, there don't seem to be laws restricting investment firms from buying controlling interests in companies to manipulate asset prices/consumer behavior, which to me is far more detrimental than someone who may be pathologically frugal deciding they want to minimize taxes by setting up a complicated corporate structure with a foundation. https://en.wikipedia.org/wiki/Ingvar_Kamprad#Personal_life https://en.wikipedia.org/wiki/Ingvar_Kamprad#Personal_life
  - Jochim 6y ago
    > In the same way that a 401k is set up for a specific purpose, IKEA's foundation was also set up for a very specific purpose. If anything, the purpose was criticized as being overly narrow, and they recently updated it to be more broad. Non-profit taxation laws were not set up with the intent of allowing for profit businesses to avoid taxation. That doesn't mean that it wasn't the outcome. > Edit - To put it another way, there don't seem to be laws restricting investment firms from buying controlling interests in companies to manipulate asset prices/consumer behavior, which to me is far more detrimental than someone who may be pathologically frugal deciding they want to minimize taxes by setting up a complicated corporate structure with a foundation. The existence of a worse scenario doesn't prevent us dealing with the current one.

Jochim 6y ago

A 401k has the specific purpose of helping individuals fund their retirement years, something society has agreed is worth providing some benefit for. There is an element of intention to the exemption and it serves a specific purpose. > If anyone can do what they're doing, then I don't see it as particularly negative. Typically not just anyone can do this, smaller firms do not have the resources set-up these schemes. Smaller firms are also much more likely to be slapped down by the government. The result of this is that larger corporations are further advantaged. I think attempting to equate personal and corporate taxation is a mistake. Corporations are increasingly transnational in a way that people cannot be, and they are leveraging not just local tax codes, but often established treaties and differences between national tax codes that were introduced with different intent.

lotsofpulp 6y ago
>A 401k has the specific purpose of helping individuals fund their retirement years, something society has agreed is worth providing some benefit for. There is an element of intention to the exemption and it serves a specific purpose. A 401k has the specific purpose of helping large businesses maintain a competitive advantage over small businesses. If the government wanted to help individuals fund their retirement years, then there is no reason to involve employers in the tax code. They could simply issue the same rules and contribution limits for IRAs. But they don't. They punish you if you're employed by an employer that doesn't offer a 401k, by setting your contribution limit to a paltry $6k while 401k participants get tens of thousands, and your contribution limit is zero if your spouse is eligible for a 401k and your income is over a certain amount.
- ashtonkem 6y ago
  While there are certainly issues in the tax code, you’re absolutely just making up the history and intent of the 401k. The 401k was not setup to help big business, quite the opposite. They were setup as an explicit alternative to the pension systems that historically were how employees retired, and pensions absolutely favor large companies that can afford them. 401k programs allow much more employee choice and mobility, which they’ve arguably achieved.
  - lotsofpulp 6y ago
    Whatever the history is, it's been 40+ years since it started, and legislators have subsequently gone through a lot of effort to create a two tier system (IRAs vs 401k) which heavily favors employees of large businesses than can afford to pay high wages. When something so blatantly tilted towards the rich, white collar world exists, and can so easily be fixed (by simply matching the terms of the IRA to the 401k), and has not been fixed for over 4 decades, I then take it to be intentional.
omgwtfbyobbq 6y ago
In the same way that a 401k is set up for a specific purpose, IKEA's foundation was also set up for a very specific purpose. If anything, the purpose was criticized as being overly narrow, and they recently updated it to be more broad. Whether a firm can do something similar depends on the specifics. I'm not sure how large IKEA was when they set up their corporate structure in the early 80s, but I doubt they were as large as they are today. https://web.archive.org/web/20201112042116if_/https://www.economist.com/business/2006/05/11/flat-pack-accounting https://web.archive.org/web/20201112042116if_/https://www.ec... I'm not trying to equate personal and corporate taxation though. If IKEA wants to funnel a large portion of their profits into a foundation to control themselves rather than paying taxes to the government instead, I don't see how that is tax avoidance. Many other foundations around the world are set up so the controlling interests of companies can choose how to disperse money instead paying taxes and letting the government choose how to disperse it. Not that there's anything wrong with that either, but having a corporation designed to minimize taxes by funneling profits into a foundation doesn't scream tax avoidance to me. With that said, there could be other aspects of their corporate structure that I'm not aware of, but like I said, if other companies can also implement the same structure, even if it's across national boundaries, I don't see it as being particularly unethical. Although if someone believed for instance that companies should always repatriate all profits, then I could see how they would think this is unethical, so as usual YMMV. Edit - To put it another way, there don't seem to be laws restricting investment firms from buying controlling interests in companies to manipulate asset prices/consumer behavior, which to me is far more detrimental than someone who may be pathologically frugal deciding they want to minimize taxes by setting up a complicated corporate structure with a foundation. https://en.wikipedia.org/wiki/Ingvar_Kamprad#Personal_life https://en.wikipedia.org/wiki/Ingvar_Kamprad#Personal_life
- Jochim 6y ago
  > In the same way that a 401k is set up for a specific purpose, IKEA's foundation was also set up for a very specific purpose. If anything, the purpose was criticized as being overly narrow, and they recently updated it to be more broad. Non-profit taxation laws were not set up with the intent of allowing for profit businesses to avoid taxation. That doesn't mean that it wasn't the outcome. > Edit - To put it another way, there don't seem to be laws restricting investment firms from buying controlling interests in companies to manipulate asset prices/consumer behavior, which to me is far more detrimental than someone who may be pathologically frugal deciding they want to minimize taxes by setting up a complicated corporate structure with a foundation. The existence of a worse scenario doesn't prevent us dealing with the current one.