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What he doesn't mention is that an increase in corporate taxes will mostly impact SMBs and not giant "Big Tech" companies that have all kinds of ways of avoidin

• surfsvammel 6y ago
  Couldn’t one make the argument “there is no use because Big Tech have so many lawyers” no matter what the new policy is? If taxing the big companies is the aim, how does one gauge the policy suggestion? (I am not Americans just watching this curiously from outside) Edit: spelling
  • otikik 6y ago
    Well one policy could be "tax companies with more than x lawyers".
    • sofixa 6y ago
      They'd just outsource them to a legal firm
    • ekam 6y ago
      This doesn’t work at all, many companies don’t have lawyers of their own but keep big law firms on retainer. And companies could just offload more onto JD-advantage employees/ law student interns anyways since they’re not “lawyers”
      • terminalcommand 6y ago
        They have both in-house counsels and work with external law firms. A reason for doing this is to avoid liability. Some big companies retain multiple law firms and ask the same advice a couple of times. If an overworked attorney who barely gets any sleep ever misses a point or drafts his/her advice vaguely in a way that would enable their evil plans, they rely on that single opinion. If there are any problems they don't assume any liability, because hey they got a legal opinion from a respectable law firm. Nobody needs to know/can prove they obtained multiple opinions on the same matter because of legal privilege. In return, big law gets paid a lot of $$$, because of the risk of providing such opinions under considerable pressure and trickstery.
        • sokoloff 6y ago
          Having a legal opinion supporting an aggressive tax position that is eventually overturned doesn’t get you out of liability for that position. The appearance of food faith efforts to comply with the complex tax code may reduce penalties assessed.
          • terminalcommand 6y ago
            Sure, my comment wasn't tax code specific. There is always risk involved, but it's much less. If you need to do it anyway, better pressure a lawyer into giving you a legal opinion. The company will pay pay the fine but who can blame you for acting on it. In a big corp, I think most employees are concerned with saving the day. If the management pressures them to cut corners most will. What better way is there to pass the blame?
    • sebmellen 6y ago
      Voilà! Amazon Legal Services LLC (no connection to Amazon.com Inc. ;), now provides all legal services to Amazon.com Inc.
      • deleted 6y ago
        [deleted]
    • noxer 6y ago
      Such rules only act as an incentive to find new loopholes and waist money using them. A large company can spend 99% of what they save in taxes to find out how to save it and its a net gain. The solution would be to have absolute minimalist tax rules which are so simple that there wont be loopholes. Then also make judges apply common sense and smash every attempted loophole until everyone stops wasting money to find one. Never going to happen obviously but we can dream.
      • Frost1x 6y ago
        The issue with this is that tax code is often used as a proxy to fix all sorts of social problems that lead to inequality. We give tax breaks to subsets of populations who really need them. We also push policy through tax incentives, for example solar related deductions. I think we'd be better off fixing the deduction of such problems, but just pointing out that part of the reason taxes are so complicated are to enable this. Another reason is to create corporate tax loopholes...
        • noxer 6y ago
          Subsidizing anything should never be done trough tax breaks anyway. It just hides tax spending. Also this was about corporate taxes not private taxes. If a corporation "really needs a tax cut" its probably just unsustainable and if not it should find investors to bring the money voluntary not force spend the peoples money. Yes the loopholes are intentional but it only helps very few individuals and a whole industry of layer, while corporations aren't actually in the business of finding tax loopholes they are indirectly forced to participate anyway because their competitor does. People blame the companies for evading taxes but they are not the problem they have to play along because everything else would be hard to explain to the shareholders. Imagine if you are a business owner and your company slowly grows to amazon size. At what point would a sane person like to pay people to evade taxes? You would never want to do that instead of building a team of tax specialist or outsource that you could expand in real business. Your local small business owner and Jeff Bezos both have no interest in that.
  • bopbeepboop 6y ago
    The traditional solution is to lower taxes and simplify the tax code. Large corporations have an effective tax rate below the nominal one due to antics with exceptions — while smaller businesses get hit harder. What’s called “progressive” often ends up regressive due to the imbalance in ability to do finance trickery. Rich people will always find or create exploits in the law, so those “high taxes on mega corps and billionaires!” hit the middle class and medium sized businesses: they’re who bear the brunt of taxes, in the US. You get out of doing that unnecessary damage by removing the game: no whatever exceptions, just a flat rate everyone pays. What’s called “regressive” is actually progressive in that it lightens the tax burden on the middle class and medium businesses, while making the richest pay a fair share. (Also, simpler codes are harder to cheat.) Discussing the tax burden of the poorest is a misdirection used by politicians: the poorest in the US receive more benefits than they pay, so it’s a question of how that burden is split between the middle class and the upper class.
    • mcv 6y ago
      It's not that simple. As far as I know, corporate taxes are already flat. (If they weren't, corporations could easily split into several smaller ones to keep their profits below some threshold.) The big issue is with "just a flat rate that everyone pays". What do you pay that rate over? Big corporations manage to pay that rate over nothing. Generally those corporate taxes are paid over profits, so corporations avoid taking profits in countries that tax them. They sit on their money, pay it out as bonuses to executives, and take their profits in tax havens. The issue isn't the tax rate, it's the loop holes. It's that the amount that's taxed is easily manipulated. Instead of easily manipulatable profits, the tax should be levied on something less easily manipulatable. Like revenue. Of course that already happens: VAT taxes, only because you pay them on all products, they are effectively paid by consumers, not corporations. But how about allowing corporations to deduct their local external costs from their revenue? Not easily manipulatable foreign external costs, but simply the costs made in the same market as where the revenues come from? Then you're effectively still taxing profit, but tied to the local market, cutting tax havens and internal trickery out of the picture. A company on the other side of the world selling in your country but not making any costs there; no labour, manufacturing, rent, etc; would pay tax over their entire revenue, whereas a local shop that has does have all those costs, and therefore cannot help but invest in the local economy, gets to deduct those costs and pay less taxes. I think that could do a lot to even out the imbalance and make the playing field a lot fairer.
  • Proziam 6y ago
    This is one of the primary reasons I promote using the simplest possible tax and incentive structures. The simpler it is, the easier it is to avoid creating loopholes. Besides, paying tax should be a much easier process for the small fish.
    • ragnese 6y ago
      The loopholes aren't accidents.
  • gigatexal 6y ago
    Yes. Throw enough smart tax lawyers at a problem and limit your tax regardless of what law is passed.
  • PoignardAzur 6y ago
    One proposed reform was to give corporations an obligation to explain the difference between their profits declared to the IRS (as low as they can get away with) and their profits declared to their shareholders (accurate, because they want people to buy their shares). Both declarations are available to the IRS; if you force corporations to declare how they "bridge the gap", while it would let them practice tax evasion, it would make it easier to assess what form that evasion takes; and it would make fraud much harder. I don't remember if it went through.
    • ljjvn 6y ago
      Rate reconciliations are required disclosure. See page 64 of the 2019 financial statements [1]. [1] https://s2.q4cdn.com/299287126/files/doc_financials/2020/ar/2019-Annual-Report.pdf https://s2.q4cdn.com/299287126/files/doc_financials/2020/ar/...
• jhanschoo 6y ago
  Let me add more nuance to this. What you mention is less true if corporate tax is progressive on profits. On the other hand, Amazon wouldn't care about corporate taxes on profits because it reinvests all its revenue.
• xg15 6y ago
  > ... not giant "Big Tech" companies that have all kinds of ways of avoiding them and employ hundreds of people in their accounting department... You could make that argument against absolutely any policy. So what is your solution then? Don't do anything?
  • vasco 6y ago
    Tax individual wealth and remove income taxes for corporations. Not capital gains, but wealth as in Switzerland or The Netherlands. Income taxes for corporations all disappear when the corporation reaches a given size after which the state only captures capital gains taxes from shareholders and employment and other taxes. The only companies that end up paying income tax are the small ones. So just tax wealth of individuals and remove all the shenanigans in between.
    • xg15 6y ago
      > Income taxes for corporations all disappear when the corporation reaches a given size Could you explain why this is the case? > So just tax wealth of individuals Individuals can play the same games. Jeff Bezos could move most of his wealth into funds, foundations or companies and be poor on paper while still keeping the de-facto control of all assets. Or they could shift their wealth overseas, into tax havens or into less transparent areas like crypto.
      • hellbannedguy 6y ago
        If we could close most loopholes taxing the wealth of the individuals might work. I’m talking all loopholes, even giving money to a 501c3. Billy’s nonprofit gives back less than 1% to the country that coddled him. Plus—I feel a lot of nonprofits are just tax dodges. Want to manufacture overseas? Fine, but move to that country, and don’t come back. I got carried away again. I would like to basically see tax loopholes closed, or only allowed the first few years of a business life.
      • hedshodd 6y ago
        >> Income taxes for corporations all disappear when the corporation reaches a given size > Could you explain why this is the case? Just to comment on this real quick, this has multiple reasons. Basically, the larger your company is, the more funds you have to spend on lawyers and experts, as well as offshoring. Also, depending on the country you're in and the specific tax laws, it might be easier to fulfill incentives for nullifying the corporate tax (IIRC reinvesting and creating jobs is how Amazon nullifies a good chunk of their taxes, right?). That is not to say, we should completely axe corporate tax imo, because some of those incentives are really good. You want corporations in your country to reinvest and create jobs, because that's overall a really good thing for the job market. The thing about Bezos' wealth is that a huge chunk (maybe even the majority) of it is already in the form of assets. That's not as easily moved overseas (though to my limited understanding it isn't impossible) without hurting his own company, and at that point it might be profitable to just pay a wealth or asset tax or something like that. Obviously that would need to be designed REALLY well, but there's a good chance that that's how we can tax exactly what we want to tax, without hurting small businesses and without hurting the lower class.
• ActorNightly 6y ago
  Avoiding taxes for corporations most often involves pouring money into projects, which in turn creates jobs, which in turn puts money into peoples hands. Of course this is not an issue for big companies that have the capital to do this. This is arguably a more efficient transfer capital rather than raising taxes and then dealing with bipartisan political entities in the most efficient use. Id also point out that the new tax policy also raises wealth tax by a significant amount. Also, its probably better to deal with wealth tax on a state by state basis, since this in turn forces the development of generally low tax areas since its favorable for people to move there (like all the companies setting up shop in Austin right now, which in turn raised the wealth of anyone there who owns a house by close to 100k at this point)
• dr_dshiv 6y ago
  Always the conflict is: how can such a huge company make so much money and pay so little in taxes? Always the answer is: they didn't make profit because they reinvested or otherwise spent the money. (Correct me of I'm wrong) How about a policy of mandatory 10% profit for companies over 1B in revenue? That would produce some nice antimonopoly effects too.
  • solveit 6y ago
    > Always the answer is: they didn't make profit because they reinvested or otherwise spent the money. This is the desired outcome and we should not touch this.
    • zephyr____ 6y ago
      Why? I'd rather the Gov the spend money on programs than corporations on RND.
      • solveit 6y ago
        Uh, in that case we'll have to disagree. I think corporations in general do a better job of spending money than the government, but I don't have hard evidence for that view.
        • brutal_chaos_ 6y ago
          > I think corporations in general do a better job of spending money than the government Agreed. To add perspective, I don't believe corporations will give a crap about the people (extreme example, Amazon) like we believe our respective governments should. I'd rather have bad spending on keeping people alive than no spending at all.
        • toomanybeersies 6y ago
          In my experience, corporations are great at finding ways to get "innovation grants" and "R&D tax incentives" for things that involve no real research or innovation. Instead of actually promoting innovation, they tend to become a subsidy for the tech industry.
• piokoch 6y ago
  Yes, yes and yes. People are sometimes surprise why people who has a lot of money seem to be left-leaning and support things like higher taxation. First, it is never a concern for them. If they need, they offshore their money or pay lawyers who know tricks or start some foundation to pass money through it. Something that people from middle class are not able to afford. The other reason is that making difficult for members of middle class to accumulate wealth secures their own business, they are effectively killing the growth of potential competitors. In the longer perspective this is very dangerous, it creates oligarchy, which, in turn, has all the incentives to restrict free market, free speech and democracy. Middle class is important for the society since those are people who have time to engage themselves into public affairs, they don't have to spend all their time trying to earn money. In addition middle class is much more numerous than 1% of the wealthiest. As a result they give work to a lot of people who are down the social ladder. Both Mark Zuckerberg and some Mr. Jones, who owns a grocery shop employ a single babysitter, need a single plumber to fix their pipes, are able to eat the same amount of food, etc. So thousands of Jones are given job to much more people than single Mark Zuckerberg (obviously I am talking about Zuckerberg as a person, not his company). That's why from the social perspective it is important to have as many Mr. Jones as possible. They give work to a lot of people, they drag them up. That's why taxing heavily middle class is a terrible idea and all the "tax the rich" regulations in the end mean "tax those who cannot escape taxation".
  • lotsofpulp 6y ago
    > That's why taxing heavily middle class is a terrible idea This seems to relate to marginal income tax rates, not corporate taxes. >and all the "tax the rich" regulations in the end mean "tax those who cannot escape taxation". They don’t have to. Simply eliminate deductions and credits and exemptions.
    • klausjensen 6y ago
      > Simply eliminate deductions and credits and exemptions. Simply? In a global world economy? There is nothing simple about it.
    • sokoloff 6y ago
• odiroot 6y ago
  > What he doesn't mention is that an increase in corporate taxes will mostly impact SMBs So, in practice, that's just lobbying to kill his competition off?
• petercooper 6y ago
  At the weekend I calculated that Amazon's UK division pays 77x more corporation tax than my company. Which sounds fine, until I realize my company is probably worth 1000000x less than Amazon's UK division ;-)
• gamblor956 6y ago
  The 1099k thing for payment processors has been required for years. It means that companies like MasterCard and PayPal and square need to report transactions, not small businesses. The payment processors fought hard against it and lost.
• stjohnswarts 6y ago
  I'm sorry but putting a floor on corporate taxes is a good idea as long as all parties abide by the same rules. You don't seem to understand that the USA has some of the highest in the world so it would actually help SMBs here. There should be an out for when countries don't keep up their part of the bargain. They should pay a heavy price such as punitive tariffs for X number of years.