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These laws are enormously complex and there will always be loopholes. You can prosecute someone for maliciously exploiting your computing system, even though t

These laws are enormously complex and there will always be loopholes. You can prosecute someone for maliciously exploiting your computing system, even though technically "they're just using the rules you wrote", because there will never not be such rules that allow for exploitation.

ergocoder 6y ago
Then, close the obvious one first. This double Dutch Irish thing. It's so obvious that we even have a nick name for it. The law is hardly perfect as it is. Will never be. Just because there are more holes. It's not the reason to not close the most obvious/impactful one.
- Jon_Lowtek 6y ago
  The double irish was closed on January 1st 2020, after a five year grace period for the multinationals to restructure.
tialaramex 6y ago
This is why the UK ended up with a General Anti-Avoidance Rule (in the UK this rule is named the "Anti-Abuse Rule" but it's a General Anti-Avoidance Rule just with a different name) The way a general anti-avoidance rule works is it says you can't do things that are just to avoid paying tax. The tricky part, obviously, is figuring out how a jury can decide if it was really just to avoid paying tax. The UK's approach is a Double Reasonableness test. The jurors are asked to consider not merely what they, personally might think would be reasonable, but anything any conceivable reasonable person might think is reasonable. So maybe you can't personally imagine why anybody would want multiple sports cars, but you can imagine somebody else who might think it's reasonable to buy them, so the person who avoided tax by purchasing sixty sports cars passes the Double Reasonableness test. On the other hand, you may be unable to conceive of any person who could think that it was reasonable to open over 4000 bank accounts and then deposit £99999 into each account, if not for the fact that it avoided a tax on larger deposits and so that fails the Double Reasonableness test. [These examples are hypotheticals, feel free to go dig up actual schemes which have passed or failed the test] This provides appropriate latitude. And even if your strategy fails the Double Reasonableness test, you don't go to jail or anything, you just don't avoid taxes, you owe taxes exactly as if your behaviour didn't result in a favourable tax outcome. Which, if you really didn't do it just to avoid taxes as you've claimed, should surely be fine... The other trick which was introduced at the same time imposes a duty on tax avoidance lawyers. If you help people plan to avoid taxes, that's cool but you have to explain how your scheme works to the taxman. You likely charge for your help, that's legal, and you keep that money even if the scheme doesn't actually work (that's legal and it's just smart business) but your duty ensures that the taxman already knows about the scheme before it's used, and can decide if they want government to legislate to close it next year, if they want to go to court to claim it doesn't work (because of GAAR), or if they just let it carry on.
- brundolf 6y ago
  Both of those are fascinating. Thanks for the additional context!
- bostonsre 6y ago
  That sounds incredibly logical and intuitive. It seems so weird that something like that hasn't been proposed for the US (or i haven't heard of it if it was at least).
  - sneak 6y ago
    To me it sounds double subjective, which, in my view, is the opposite of "logical", perhaps not so for "intuitive". I really think if you need complicated (and entirely subjective!) thought experiments like this to apply the law, your law is far too complex and unfair and should probably be scrapped.
    - bostonsre 6y ago
      To me that british tax law that he described is incredibly simple compared to the loop hole filled tangle that the united states has. Companies like google in the posted article wouldn't be able to spend millions of dollars to find these loop holes. I would think that most people would agree that their actions are clearly an effort to dodge taxes and that law would stop this and similar behavior. Relying on a captured congress to intricately craft incredibly complex tax laws where loop holes are left in a way that affords plausible deniability hasn't seemed to work so far.
  - bjourne 6y ago
    It is because of a Supreme Court decision that ruled that citizens have the right to do everything in their power to avoid paying taxes. Therefore it is only the letter of the law that can be enforced, not the spirit of the law. This makes tax code different from all other legal domains. It also means that intent is a moot point since tax evasion isn't illegal.
    - 6y ago

ergocoder 6y ago

Then, close the obvious one first. This double Dutch Irish thing. It's so obvious that we even have a nick name for it. The law is hardly perfect as it is. Will never be. Just because there are more holes. It's not the reason to not close the most obvious/impactful one.

Jon_Lowtek 6y ago
The double irish was closed on January 1st 2020, after a five year grace period for the multinationals to restructure.

tialaramex 6y ago

This is why the UK ended up with a General Anti-Avoidance Rule (in the UK this rule is named the "Anti-Abuse Rule" but it's a General Anti-Avoidance Rule just with a different name) The way a general anti-avoidance rule works is it says you can't do things that are just to avoid paying tax. The tricky part, obviously, is figuring out how a jury can decide if it was really just to avoid paying tax. The UK's approach is a Double Reasonableness test. The jurors are asked to consider not merely what they, personally might think would be reasonable, but anything any conceivable reasonable person might think is reasonable. So maybe you can't personally imagine why anybody would want multiple sports cars, but you can imagine somebody else who might think it's reasonable to buy them, so the person who avoided tax by purchasing sixty sports cars passes the Double Reasonableness test. On the other hand, you may be unable to conceive of any person who could think that it was reasonable to open over 4000 bank accounts and then deposit £99999 into each account, if not for the fact that it avoided a tax on larger deposits and so that fails the Double Reasonableness test. [These examples are hypotheticals, feel free to go dig up actual schemes which have passed or failed the test] This provides appropriate latitude. And even if your strategy fails the Double Reasonableness test, you don't go to jail or anything, you just don't avoid taxes, you owe taxes exactly as if your behaviour didn't result in a favourable tax outcome. Which, if you really didn't do it just to avoid taxes as you've claimed, should surely be fine... The other trick which was introduced at the same time imposes a duty on tax avoidance lawyers. If you help people plan to avoid taxes, that's cool but you have to explain how your scheme works to the taxman. You likely charge for your help, that's legal, and you keep that money even if the scheme doesn't actually work (that's legal and it's just smart business) but your duty ensures that the taxman already knows about the scheme before it's used, and can decide if they want government to legislate to close it next year, if they want to go to court to claim it doesn't work (because of GAAR), or if they just let it carry on.

brundolf 6y ago
Both of those are fascinating. Thanks for the additional context!
bostonsre 6y ago
That sounds incredibly logical and intuitive. It seems so weird that something like that hasn't been proposed for the US (or i haven't heard of it if it was at least).
- sneak 6y ago
  To me it sounds double subjective, which, in my view, is the opposite of "logical", perhaps not so for "intuitive". I really think if you need complicated (and entirely subjective!) thought experiments like this to apply the law, your law is far too complex and unfair and should probably be scrapped.
  - bostonsre 6y ago
    To me that british tax law that he described is incredibly simple compared to the loop hole filled tangle that the united states has. Companies like google in the posted article wouldn't be able to spend millions of dollars to find these loop holes. I would think that most people would agree that their actions are clearly an effort to dodge taxes and that law would stop this and similar behavior. Relying on a captured congress to intricately craft incredibly complex tax laws where loop holes are left in a way that affords plausible deniability hasn't seemed to work so far.
- bjourne 6y ago
  It is because of a Supreme Court decision that ruled that citizens have the right to do everything in their power to avoid paying taxes. Therefore it is only the letter of the law that can be enforced, not the spirit of the law. This makes tax code different from all other legal domains. It also means that intent is a moot point since tax evasion isn't illegal.
  - 6y ago