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> 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.
- ovi256 6y ago
  "Why? I'd rather corporations spend money on RND than the Gov on programs." R&D would get us fastest nice things like space colonization, longevity, megastructures, the next step on the Kardashev scale.
  - wokkel 6y ago
    As far as I know, it was Nasa that put a man on the moon, not some coorporation. Also: the internet was invented by the government. What nice things have corporations given you?
    - NovemberWhiskey 6y ago
      NASA was the program manager for the Apollo program. You don’t think NASA actually built the rockets or the various modules, do you? NASA doled out public money to prime contractors for various pieces of the program (North American, Grumman, Rocketdyne, Douglas, IBM...) and the primes subcontracted various pieces as they always do. This is not to understate the tremendous engineering effort of organizing such a huge program, but it’s not like this achievement was done by a bunch of government workers alone.
    - u02sgb 6y ago
      I'm not agreeing with either you or the OP but in answer to your question: Being able to watch reusable space rockets.
- kmlx 6y ago
  historically, the Government is by far the worst spender of money. they have the greatest power, and the worst track record.
  - ragnese 6y ago
    What's the data here? Didn't "the government" create the internet, tons of medical research, the interstate highway system, etc? Meanwhile Joe Schmoe bought yet another iPad (which wouldn't exist without the government inventing much of computer tech) to go in a landfill in two years. But at least he funded Apple's ability to make a brand new, basically identical model, next year. How do we measure who has a "good" track record on spending money?
    - adamhp 6y ago
      Just ask anyone who has worked for the US Government, Military, or contractors. To avoid pure anecdotes, the Government Accountability Office actually studies this every year: https://www.gao.gov/products/gao-20-440sp https://www.gao.gov/products/gao-20-440sp ... That's not to say I don't believe in government spending. I don't know that there is a much better solution, and any conglomeration of humans is going to have roughly equal capacity for doing the right thing and doing the wrong thing, hopefully weighted more towards the "right" thing with solid leadership...
      - supercheetah 6y ago
        I don't think that supports your premise. That's like a company report showing where it wasn't spending its money optimally. All institutions, public and private, waste money in some way.
lb1lf 6y ago
-Not the OP, but my impression is s/he implied that the big corporations performed tax shenanigans to ensure their taxable profit ended up very near zero - say, buying expensive services from subsidiaries in tax havens &c. Say I run a company out of the US called 'Paraná' (Seeing as the other big river is already taken), turning $1B/year profit. I promptly spend the profit buying consulting services from 'Paraná Consulting and Tax Shenanigans LLC' based out of a Panama mailbox for $1.05B, for instance - then I even run my US business at a loss. (I don't know anything about US or international tax codes, but the above basically sums up the methods described in X stories I've read about tax planning over the years.)
- nicoburns 6y ago
  I feel like this be addressed by simply banning all trade with tax haven countries.
  - fakedang 6y ago
    Define tax haven countries. The UK is a tax haven for a lot of Russians, Switzerland is a tax haven for anyone not American, the UAE is a tax haven that the US does 18B in trade with, and that invests roughly 25B annually in the US directly, Singapore is a tax haven that the US actually has a surplus with. So yeah, it's not simple.
  - lotsofpulp 6y ago
    Would you also ban trade with tax haven states? There are states that have no income tax, low worker protections that offer lower costs, or did not choose to pay government employees 40 years ago with unfunded retirement benefits.
  - sumedh 6y ago
    > all trade with tax haven countries. UK, Netherlands and others countries have their own tax havens like Cayman Island, Curacao Island. Are you really going to ban trade with such big financial powerhouses?
    - 6y ago
wokkel 6y ago
Hmm. Let's see how they do it in practise: funnel all money to another entity for 'licensing' their own brand. Net effect: no profit == no tax. Benefits for society: zero. Sure you don't want to change that?
- solveit 6y ago
  How does the other entity get out of taxes? If the answer is offshore tax havens, I agree that they're a problem, but domestic tax policy isn't the greatest lever for fixing this. But in general, just moving your money around doesn't let you entirely evade taxes.
  - cutemonster 6y ago
    Moving your revenue to a place with low taxes, lets you escape taxes > doesn't let you entirely evade taxes "Entirely"? It's not about evading taxes to 100%, but maybe 90% (not sure about the numbers). Also, the taxes get paid in a different country, doesn't benefit the people in, say, the US.
    - hnick 6y ago
      Simply using licensing fees to shift revenue is a simple trick but countries can legislate against it if they want. Example: https://www.kwm.com/en/au/knowledge/insights/australian-software-distributor-liable-for-withholding-tax-on-offshore-payments-20140212 https://www.kwm.com/en/au/knowledge/insights/australian-soft... In that example they found that the 'licensing fee' was a royalty meaning there is a 30% withholding depending on double tax treaties and rates between the two locations. Which for a zero tax foreign licensor would mean a 30% local tax on however much you send overseas.
      - cutemonster 6y ago
        Thanks, interesting example. I wonder how much the company saved on avoiding taxes in that way, until it didn't work any more. (Didn't see any numbers, having had a look at the linked page) I wonder if there's any table of all different methods companies use, to avoid taxes, and how much they typically save, and what could be ways to stop it Maybe could be helpful for lawmakers > required to pay 30% withholding tax That's quite a lot is it? Compared to company taxes. Seems like a strong incentive to stop cheating
stereolambda 6y ago
I'm growing increasingly weary about the cult of "reinvestment", which is also visible in some new corporate tax complications in my country. As sibling comments point out, this "reinvestment" can be phony IP purchases in tax havens. On the other hand, even if reinvestment is genuine, there's a question whether further concentration of capital and power in that one corporation is good for society. People say: wow, Amazon got people stuff delivered during lockdown. Truth is, even in a region where e-commerce and delivery markets are far more fragmented, it somehow happened. Pay the damn wages and dividends, I'd say. The former will go into consumption, the latter will go probably into other companies, especially if we discourage less productive uses of capital (like real estate). And also getting taxes from these is more straightforward. Maybe they don't even have to be that high percentage-wise, if there is less possibility of avoidance.
- lotsofpulp 6y ago
  > Pay the damn wages and dividends, I'd say. If the goal is to increase wages, then government should lower the supply of labor and increase the demand for labor. Provide minimum x weeks of vacation, parental leave, maximum 8 hours per day until overtime rates kick in, free higher education, etc. As for forcing companies to pay dividends, I’d rather the government not be able to tell me what to do with my company’s funds. If the government wants control of the funds, they should raise the tax rates.
  - stereolambda 6y ago
    My comment was more about popular mindset than specific policy solutions. I was trying to say that maybe reinvestment is not always an unquestionably good/best thing. > As for forcing companies to pay dividends, I’d rather the government not be able to tell me what to do with my company’s funds I don't want to digress too much, but limited liability corporation and more complex structures with shareholders are creations of the government. You used to have to obtain a specific charter from the sovereign for each one of them. So unless you're an individual doing business with unlimited liability, it's debatable whether government (or the lawgiver, to be more specific) shouldn't get to make the rules for you.
oblio 6y ago
Yeah, and now they "reinvest" in stock buybacks to pump up the share prices. And the people at the top get... tons of shares. Thank you, loopholes!

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.
ovi256 6y ago
"Why? I'd rather corporations spend money on RND than the Gov on programs." R&D would get us fastest nice things like space colonization, longevity, megastructures, the next step on the Kardashev scale.
- wokkel 6y ago
  As far as I know, it was Nasa that put a man on the moon, not some coorporation. Also: the internet was invented by the government. What nice things have corporations given you?
  - NovemberWhiskey 6y ago
    NASA was the program manager for the Apollo program. You don’t think NASA actually built the rockets or the various modules, do you? NASA doled out public money to prime contractors for various pieces of the program (North American, Grumman, Rocketdyne, Douglas, IBM...) and the primes subcontracted various pieces as they always do. This is not to understate the tremendous engineering effort of organizing such a huge program, but it’s not like this achievement was done by a bunch of government workers alone.
  - u02sgb 6y ago
    I'm not agreeing with either you or the OP but in answer to your question: Being able to watch reusable space rockets.
kmlx 6y ago
historically, the Government is by far the worst spender of money. they have the greatest power, and the worst track record.
- ragnese 6y ago
  What's the data here? Didn't "the government" create the internet, tons of medical research, the interstate highway system, etc? Meanwhile Joe Schmoe bought yet another iPad (which wouldn't exist without the government inventing much of computer tech) to go in a landfill in two years. But at least he funded Apple's ability to make a brand new, basically identical model, next year. How do we measure who has a "good" track record on spending money?
  - adamhp 6y ago
    Just ask anyone who has worked for the US Government, Military, or contractors. To avoid pure anecdotes, the Government Accountability Office actually studies this every year: https://www.gao.gov/products/gao-20-440sp https://www.gao.gov/products/gao-20-440sp ... That's not to say I don't believe in government spending. I don't know that there is a much better solution, and any conglomeration of humans is going to have roughly equal capacity for doing the right thing and doing the wrong thing, hopefully weighted more towards the "right" thing with solid leadership...
    - supercheetah 6y ago
      I don't think that supports your premise. That's like a company report showing where it wasn't spending its money optimally. All institutions, public and private, waste money in some way.

lb1lf 6y ago

-Not the OP, but my impression is s/he implied that the big corporations performed tax shenanigans to ensure their taxable profit ended up very near zero - say, buying expensive services from subsidiaries in tax havens &c. Say I run a company out of the US called 'Paraná' (Seeing as the other big river is already taken), turning $1B/year profit. I promptly spend the profit buying consulting services from 'Paraná Consulting and Tax Shenanigans LLC' based out of a Panama mailbox for $1.05B, for instance - then I even run my US business at a loss. (I don't know anything about US or international tax codes, but the above basically sums up the methods described in X stories I've read about tax planning over the years.)

nicoburns 6y ago
I feel like this be addressed by simply banning all trade with tax haven countries.
- fakedang 6y ago
  Define tax haven countries. The UK is a tax haven for a lot of Russians, Switzerland is a tax haven for anyone not American, the UAE is a tax haven that the US does 18B in trade with, and that invests roughly 25B annually in the US directly, Singapore is a tax haven that the US actually has a surplus with. So yeah, it's not simple.
- lotsofpulp 6y ago
  Would you also ban trade with tax haven states? There are states that have no income tax, low worker protections that offer lower costs, or did not choose to pay government employees 40 years ago with unfunded retirement benefits.
- sumedh 6y ago
  > all trade with tax haven countries. UK, Netherlands and others countries have their own tax havens like Cayman Island, Curacao Island. Are you really going to ban trade with such big financial powerhouses?
  - 6y ago

wokkel 6y ago

Hmm. Let's see how they do it in practise: funnel all money to another entity for 'licensing' their own brand. Net effect: no profit == no tax. Benefits for society: zero. Sure you don't want to change that?

solveit 6y ago
How does the other entity get out of taxes? If the answer is offshore tax havens, I agree that they're a problem, but domestic tax policy isn't the greatest lever for fixing this. But in general, just moving your money around doesn't let you entirely evade taxes.
- cutemonster 6y ago
  Moving your revenue to a place with low taxes, lets you escape taxes > doesn't let you entirely evade taxes "Entirely"? It's not about evading taxes to 100%, but maybe 90% (not sure about the numbers). Also, the taxes get paid in a different country, doesn't benefit the people in, say, the US.
  - hnick 6y ago
    Simply using licensing fees to shift revenue is a simple trick but countries can legislate against it if they want. Example: https://www.kwm.com/en/au/knowledge/insights/australian-software-distributor-liable-for-withholding-tax-on-offshore-payments-20140212 https://www.kwm.com/en/au/knowledge/insights/australian-soft... In that example they found that the 'licensing fee' was a royalty meaning there is a 30% withholding depending on double tax treaties and rates between the two locations. Which for a zero tax foreign licensor would mean a 30% local tax on however much you send overseas.
    - cutemonster 6y ago
      Thanks, interesting example. I wonder how much the company saved on avoiding taxes in that way, until it didn't work any more. (Didn't see any numbers, having had a look at the linked page) I wonder if there's any table of all different methods companies use, to avoid taxes, and how much they typically save, and what could be ways to stop it Maybe could be helpful for lawmakers > required to pay 30% withholding tax That's quite a lot is it? Compared to company taxes. Seems like a strong incentive to stop cheating

stereolambda 6y ago

I'm growing increasingly weary about the cult of "reinvestment", which is also visible in some new corporate tax complications in my country. As sibling comments point out, this "reinvestment" can be phony IP purchases in tax havens. On the other hand, even if reinvestment is genuine, there's a question whether further concentration of capital and power in that one corporation is good for society. People say: wow, Amazon got people stuff delivered during lockdown. Truth is, even in a region where e-commerce and delivery markets are far more fragmented, it somehow happened. Pay the damn wages and dividends, I'd say. The former will go into consumption, the latter will go probably into other companies, especially if we discourage less productive uses of capital (like real estate). And also getting taxes from these is more straightforward. Maybe they don't even have to be that high percentage-wise, if there is less possibility of avoidance.

lotsofpulp 6y ago
> Pay the damn wages and dividends, I'd say. If the goal is to increase wages, then government should lower the supply of labor and increase the demand for labor. Provide minimum x weeks of vacation, parental leave, maximum 8 hours per day until overtime rates kick in, free higher education, etc. As for forcing companies to pay dividends, I’d rather the government not be able to tell me what to do with my company’s funds. If the government wants control of the funds, they should raise the tax rates.
- stereolambda 6y ago
  My comment was more about popular mindset than specific policy solutions. I was trying to say that maybe reinvestment is not always an unquestionably good/best thing. > As for forcing companies to pay dividends, I’d rather the government not be able to tell me what to do with my company’s funds I don't want to digress too much, but limited liability corporation and more complex structures with shareholders are creations of the government. You used to have to obtain a specific charter from the sovereign for each one of them. So unless you're an individual doing business with unlimited liability, it's debatable whether government (or the lawgiver, to be more specific) shouldn't get to make the rules for you.

oblio 6y ago

Yeah, and now they "reinvest" in stock buybacks to pump up the share prices. And the people at the top get... tons of shares. Thank you, loopholes!