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Microsoft Irish subsidiary paid zero corporate tax on £220bn profit last year

347 points by agd 5y ago

malux85 5y ago
I have to pay 40% of my income as income tax. I have HAD ENOUGH. This is infuriating. What can we do?
- ClumsyPilot 5y ago
  Corporations are people, we are the serfs
- MikeUt 5y ago
  Respect copyright and patents as much as Microsoft respects taxation.
  - howaboutnope 5y ago
    That's way too tame and already too hardcore for HN.
- deleted 5y ago
  [deleted]
- egman_ekki 5y ago
  I guess earn enough so that it makes sense to pay a lawyer and an accountant to create this setup for yourself... maybe a startup idea? :)
- deleted 5y ago
  [deleted]
- waterglassFull 5y ago
  If you are fortunate enough to be in a position where you're earning enough to pay 40% tax then great for you! Paying tax is good for society, what's not great is companies avoiding it. The latter doesn't negate the former.
  - callamdelaney 5y ago
    Oh, it's great that it's great society. Sucks pretty hard for him though.
    - um_ya 5y ago
      "Pay your fair share". I cringe every time I hear this from people. Rich people pay WAY more than what they get back from the gov.
      - dariosalvi78 5y ago
        well, the idea is that the richer you are the more you contribute to society.
        callamdelaney 5y ago
        Wouldn’t we achieve the same with a flat tax rate?
      - three14 5y ago
        Rich people don't usually get handouts from the government, but they get something more valuable - a social order, enforced by the government, that allows them to be rich. Suppose you were rich, but you lived in a place where rich people tended to get kidnapped and held for ransom - being rich wouldn't be quite as good of a deal. The social order disproportionately benefits the rich, so they should pay more to keep it going.
      - dragonwriter 5y ago
        > Rich people pay WAY more than what they get back from the gov. Only if you ignore the role of the government in defining and enforcing (violently, where necessary) property rights, which is what allows “rich people” —particularly rich through various forms of intangible, indirect, and directly-physical-but-beyond-immediate-personal-supervision property — to, as such, even exist.
      - medvezhenok 5y ago
- neilwilson 5y ago
  "What can we do?" Well you can look at it in the round and realise that your income is similarly higher than it otherwise would be because government spent money into the economy that it is now extracting as tax. Moving the tax around doesn't avoid you paying it. It just gets rolled into the price of what you buy instead. That's because in aggregate corporate costs including taxation are a component of final consumption expenditure. While there are fewer jobs than people that want them the incidence of charges on corporations will always end up being paid by workers one way or another. That's the whole point of the 'unemployment buffer' put in place during the neoliberal era - to make sure that price changes can't be easily passed through to wage rises and thereby resolve the distributional conflict in favour of capital.
- maccard 5y ago
  > I have to pay 40% of my income as income tax. So do all the engineers, PMs, etc working at Microsoft.
  - KMag 5y ago
    All of the MS engineers in the U.S. have an effective income tax rate of 40%, not a marginal tax rate of 40%? Assuming Washington State takes about 10% marginal tax... that's about half their income coming in above the 32% federal tax bracket which starts at $163k. Is a starting salary for an engineer at Microsoft really around $320,000/yr.? If they're really pulling in that, one would hope they'd have some long-term capital gains, which would further pull down their effective income tax rate.
    - maccard 5y ago
      Very few people _anywhere_ are paying a 40% effective tax rate. I wasn't aware of the Washington state tax rate though.
      - KMag 5y ago
        I'm not sure what it is in Washington. In New York 10 years ago, my marginal tax rate to the state was around 10%.
  - seanmcdirmid 5y ago
    Many of those are in Washington state, which doesn’t have an income tax. It is almost impossible to get to 40% with federal income taxes and payroll alone. They are probably maxing out their 401k as well as various other pre tax contributions that can be made.
    - maccard 5y ago
      I didn't know Washington state had no income tax! If you count 401k/marriage allowances, personal allowances etc, then there are very very few people anywhere paying 40% income tax. In Ireland, you're not paying 40% until you make 120k which is a very small amount of people.
- dalbasal 5y ago
  >>What can we do? It's a tough question. The tendency is to react superficially: Moralizing reactions, emotional reaction, first principles takes. The way tax actually works is via accounting "standards," tax law and corporation law... across multiple jurisdictions. A thousand-detail complex , where morals, emotions and first principles are literally meaningless. Actual meaning can only be derived with scenario plans and spreadsheets. Words like "profit," "company," "revenue" and such don't have inherent meanings, in that world. They're just objects with associated rules. The pro-corporate side of this debate (debate is the wrong word) deals entirely in the latter terms. Terms that the majority of journalists and politicians can't work with. They tend to win. When the other side does consider the reality of mess, they tend to conclude radical/unrealistic conclusions like "throw everything out and start from scratch." At this point, complexity is hardened by international agreements and trade rules. IMO the actual place to start is corporation law, not tax law. If entities can own other entities, or part thereof in an endless cascade...words like "tax rate" have no meaning. Another, more radical approach is rethinking the idea of public wealth. The currently ongoing collapse of monetarism is, perhaps, an opportunity. Tax public companies x% of their shares per year. Hold, to avoid price deflation. Offload shares as part of macroeconomic/monetary policy (ie, when we run deficits), to avoid inflationary scenarios such as the current one. I would take the same approach for wealth taxes. Capital gains, property, etc. Tax x% of current market value annually, not income or realized gains. It won't be perfect, but everything gets marked to market eventually.
  - gruez 5y ago
    >Another, more radical approach is rethinking the idea of public wealth. The currently ongoing collapse of monetarism is, perhaps, an opportunity. Tax public companies x% of their shares per year. 1. this disproportionately affects companies with higher capital requirements than lower ones. Think spacex compared to a SaaS. 2. this doesn't solve the underlying issue of moving to a jurisdiction with lower taxes. let's say US taxes 1% of shares every year, but the company offshores to bermuda. then what?
    - dalbasal 5y ago
      >> disproportionately affects companies with higher capital requirements How/Why? >> underlying issue of moving to a jurisdiction with lower taxes Well... nothing simple solves this in full. However, "loophole" in this article works by attributing income from IP licensing (an internal transaction between Apple owned entities) to Ireland, which does not consider this a taxable transaction. A "share tax" would apply to the same entity that shareholders own a stake in, it doesn't try to disentangle subsidiary structures. Companies might try to list on Bermuda's stock exchange. I wouldn't discount that possibility, but it won't happen overnight.
- rorykoehler 5y ago
  40%? Usually that kind of rate applies to an upper progressive tax band. Where do you live?
- I_am_tiberius 5y ago
  Sorry but this is not a good comparison. Microsoft created many jobs which are all paying this kind of income tax. This article is about corporate tax which is tax on the company's profit.
- DFHippie 5y ago
  Are you sure you pay 40%? Googling around a bit to find the US income tax rates (assuming you are in the US) I found this: https://www.bankrate.com/finance/taxes/tax-brackets.aspx https://www.bankrate.com/finance/taxes/tax-brackets.aspx This is really just the first thing I looked at, but it seems to provide the desired information. The highest bracket, for income above roughly 550k, is 37%. So considering only federal income tax it is impossible to pay 40% of your income in taxes, but also the first 550k or so of your income would be taxed at lower rates.
  - sethammons 5y ago
    Now toss on state income tax. And don’t forget about AMT (alternative minimum tax). Sure, you need a higher income to hit these thresholds, but it is not as functionally high of an income as you may think it is.
  - seanmcdirmid 5y ago
    If you throw in state income tax and consider payroll taxes, hitting 40% isn’t that hard, if your income is 1099, hitting 40% is pretty easy.
  - malux85 5y ago
    I’m not on the US
- markus_zhang 5y ago
  You can't do much under the current instituitions. The elites of United States spent huge effort these hundreds of years to make sure that 1) Their income mostly relies on the United States as a financial/military beast, and 2) Whatever ordinary people suffer from, be it high tax or flood or lightning bolts, the elites will not be affected and can safely live in areas well protected.
- Cthulhu_ 5y ago
  Vote for politicians that want to tax the rich. I mean this can be solved by forcing Bermuda to charge taxes for example. If they REALLY want to escalate things, Bermuda can be strongarmed into compliance - a country can put a boycott on Bermuda, like the US does with e.g. Iran and NK at the moment. Any company doing business with Bermuda then - directly or indirectly - will be in a lot of trouble. But they don't dare to take a firm stance, because the politicians that make the decisions benefit from the system. Just look at how many politicians had accounts revealed via the Panama Papers.
- dariosalvi78 5y ago
  I have an idea: Ireland could cut electricity, telecom, drain, rubbish collection, road access, police, firemen and health services just and only around those buildings where the company operates. Maybe they learn the value of paying taxes (or more probably not).
- adolph 5y ago
  Why should “we” (aka mostly other people) do something about your problem (aka HAD ENOUGH)? If the cost of getting to net Y cash inflow is X gross income where X = Y + (.66Y) then solve for X and move on, or perform the cost benefit analysis for moving to another tax jurisdiction. The solution is yours to execute.
- rmah 5y ago
  You can stop believing the idiocy printed by rags masquerading as newspapers. Microsoft did not even make £220B (apx $310B) revenue globally in the 2020 fiscal year, much less in one subsidiary. Their total global revenues were $143B and total global net income (aka profit) was $44. If The Guardian can't fact check the basics, how can you trust anything else they write?
- boudin 5y ago
  What is infuriating the fact that you pay taxes or that a company like Microsoft do not? If it's the first one I can't disagree more, I'm paying kinda the same percentage and I'm happy to do so personally. If it's the second one, I can't agree more that this is infuriating indeed.
tonfa 5y ago
Isn't the US levying corporate tax on worlwide income anyway (since the last tax reform). So it's "only" a matter of deciding whether those taxes should be paid in US vs. other countries (and if the intellectual property was developped mostly in the US, it seems fair for the US to get most of it).
- breakfastduck 5y ago
  That isn't fair at all. If you're opening a location in another country, and that location takes X in revenue, the tax should be paid in that country. Why on earth do you think its fair for US based organizations to spread across the globe, reap the huge profits from that but funnel all the cash back into the US?
  - oblio 5y ago
    > Why on earth do you think its fair for US based organizations to spread across the globe, reap the huge profits from that but funnel all the cash back into the US Random guess, they're American :-) Facebook, Google & co. are absolutely ravaging local economies, pardon me, disrupting legacy economies all over the world and a small chunk of that ends up as compensation in the US. The rest of that, FAANG are just sitting on it like a dragon hoarding gold, as far as I can see.
    - nivenkos 5y ago
      And the EU loves it! Absolutely no support or protection for local companies, Linux, etc. Where is our Baidu, Samsung, Yandex, or Sony, etc.? The whole continent is practically a vassal state of the US, under German administration.
      - breakfastduck 5y ago
        I’ve always found the “Brexit means the UK will become a US vassal” angle amusing for exactly that reason.
    - tonfa 5y ago
kowlo 5y ago
Meanwhile my (single-person) company is paying around 20% corporation tax, and then I'm getting taxed a further 20-40% on top of that when I pay myself.
- deafcalculus 5y ago
  Isn't salary a deductible expense?
  - kowlo 5y ago
    You're right - but it depends how and when you pay yourself... a balance of salary and dividends, where dividends are not deductible. For me I may have a good year followed by a weak year, so I use last year's profit to keep me going!
    - oarsinsync 5y ago
      If you're in the UK and still using dividends as a significant method to self-compensate, you may benefit from speaking to a (better) accountant. (Your circumstances may vary, this is not financial advice, YOLO, etc)
      - tailspin2019 5y ago
        > If you're in the UK and still using dividends as a significant method to self-compensate, you may benefit from speaking to a (better) accountant. I'm curious what you're eluding to here? Using dividends as a significant method to self-compensate (for single-person companies) seems to be a pretty common practice recommended by every UK accountant I've spoken to / used. EDIT: Updated for clarification
        kowlo 5y ago
        It's the advice I've received too, but I'm also new to most of it. One downside (I think) is that I can't take advantage of the R&D tax credits with this approach!
sbennettmcleish 5y ago
220bn profit? Really? Surely they mean "revenue"
- kowlo 5y ago
  In the UK you only pay corporation tax on profit
  - nly 5y ago
    The Republic of Ireland isn't part of the UK, but your point still applies.
    - rwmj 5y ago
      The company is tax "resident" in Bermuda, a British Overseas Territory. In fact I'm not even sure what the Ireland connection is here except that there is a registered office in Dublin. It seems like all the action is taking place in Bermuda, so this is really a story about UK overseas tax havens.
      - billyruffian 5y ago
        Just for clarification, British Overseas Territories are not part of the UK. They set their own laws and manage their own internal affairs while their foreign relations and defence are managed by the UK.
      - disgruntledphd2 5y ago
        The Irish part is there to allow it to funnel EU profits, and ireland allows for countries to be registered there, but not tax-resident. Interestingly enough though, almost all of the zero tax places are British Crown dependencies, so presumably the UK government could exert pressure on them, if it really wanted to.
        nivenkos 5y ago
        Why haven't Germany, France, etc. pressured Ireland to stop this?
fallingknife 5y ago
Why can't governments learn that taxing corporations is pointless? The same revenue is can be raised more simply through sales tax and personal income tax on salaries and distributions.
- throwaway6734 5y ago
  Populism is a hell of a drug.
- neilwilson 5y ago
  The best tax is one that is imposed on an individual but paid at source by the corporation paying them. Individuals shouldn't see tax. That way the voters don't complain when you need to put it up. Sales tax is similarly a pain - particularly when you have differing rates. At which point we get into the famous is it a cake or a biscuit type cases to decide where the dividing line is.
  - adolph 5y ago
    People not knowing their tax burden: feature or bug?
    - aNoob7000 5y ago
      I think paying your state and federal taxes in the United States should be seamless. Your employer should take the taxes out of your paycheck. At the end of the month/year, you should get a statement showing all the taxes you paid. I recently had to update my W4 form at work for tax withholding, and what a pain in the ass to read and decipher. Add to that, and I had to do the same thing for my state taxes. I want to point out that Congress has shot down the idea of making it easier to pay your taxes many times. I'm not sure if it is Intuit or some other entity, but paying your taxes should be easy. If you don't like the level of taxation, then work to reduce them, but paying them should be easy.
      - nly 5y ago
        Do most Americans have to do their own taxes? It boggles my mind that this is the case.
CryptoPunk 5y ago
1. It's infeasible that Microsoft had profits of 200 billion euros. 2. A comment on the Guardian's journalists' potential financial conflicts of interest: https://news.ycombinator.com/item?id=27352245 https://news.ycombinator.com/item?id=27352245
- DrBazza 5y ago
  And for non-UK HN readers, the Guardian is a rather left-of-political-centre newspaper. Or generally, each UK newspaper has a particular take on UK politics, and generally employs journalists or freelancers that have the same or more extreme views.
  - crocal 5y ago
    I find ironic to portray as extremists journalists who report on a company that pays zero (0) taxes on revenues expressed in billions. I would rather apply the adjective to the reported company for some reason, but maybe we have different measuring scales.
    - DrBazza 5y ago
      Well, what's ironic, is that I read the Guardian, amongst other newspapers. I personally find it helpful, when a newspaper from a country that is not my own, is linked-to on HN, what political leanings it has, as that helps understand the story and provide some background, and in some cases the particular views of a journalist. I like balance, or at least reading stories with views I may not necessarily agree with, but at least I make the effort to read those. And perhaps I'll learn something, or change my views on a topic.
- maccard 5y ago
  > It's infeasible that Microsoft had profits of 200 billion euros. The guardian's headline is definitely mildly inflammatory, but it's a headline, and it's true. This particularly subsidiary had an income of €200bn, and very little expenditure. That's the textbook definition of profit, although it's definitely creative accounting!
deleted 5y ago
[deleted]
davidgaw 5y ago
Microsoft's Irish subsidiary paid zero tax because it owed zero tax—and there's no reason it should have paid, or that this should change in future, apart from the greed and envy of others who want to take money from others to which they are not entitled. Those who are unhappy at the taxes they are paying should perhaps take it up with the tax attorneys and/or legislators who have failed them.
- throwaway210222 5y ago
  I upvoted you [after the red brigade had had a pass :) ] because you raise an important point: imagine what the tax rates would be if politicians - armed with a police force and judiciary - knew that no other nation could complete by offering lower tax rates? The corrupt bolsheviks where I live would ratchet it up to 95% in a few years. As would everyone else's government.
- willtim 5y ago
  In case you are unaware, tax is needed to pay for schools, universities, research, health care, social care, police, civil infrastructure, environmental agencies, regulators, defence, bank bailouts, pandemic bailouts, etc. The Big tech firms benefit from all of the above, but are not contributing anything back. The system is broken and needs to be fixed, so let's not pretend there is no problem.
- dariosalvi78 5y ago
  so those who are unhappy with paying taxes should probably stop using roads, schools, hospitals, drainage, defence, police, firemen, universities, grants, etc. There are a few places where such things do not exist: they don't do very well.
I_am_tiberius 5y ago
Time for corporate tax to disappear, - worldwide.
rorykoehler 5y ago
We should stop all taxation and use inflation to pay for everything instead. Much simpler and no one can get out of it.
- juandazapata 5y ago
  Can you expand on this? How would this work?
  - deleted 5y ago
    [deleted]
  - rorykoehler 5y ago
    Government sets an annual budget and then creates the money to pay for it out of thin air every year.
  - jefftk 5y ago
    The idea is that the government prints money to cover expenses. If you could somehow force everyone to hold all their wealth in cash, this would act as a wealth tax. This doesn't work, however, because with very high planned inflation no one wants to use your currency, and without taxation there's no reason they have to.
    - rorykoehler 5y ago
      They use your currency because they get paid in it. Government spending doesn't disappear into a black hole never to be seen again. [FALSE]>>> Also it's illegal to use other currencies as tender in (probably?) all countries in the world (Zimbabwe uses/used(?) the US dollar but I'm not aware of any other instances).
      - Lionga 5y ago
        People of Venezuela would like to have a word with you
nob0dyasked 5y ago
Meanwhile, its founder preaches redistribution and calls the governments to raise taxes. "The wealthy should make a bigger effort to clean public finances"
nob0dyasked 5y ago
I think I take back my comments for a different occasion given that the headlines and likely the article body are blatantly false.
jFriedensreich 5y ago
can someone explain how an irish company be tax resident of bermuda in the first place?
- csomar 5y ago
  Like an American person can be a tax resident of France? Oh, wait, companies do not travel or move… or do they? /justkidding
williesleg 5y ago
Everybody needs to pay more tax, that's the genius of the spenders, they put it to good use always. Anybody can donate to their government. Who here does?
EMM_386 5y ago
What is the solution to this? I've wracked my brain and can't come up with anything. Companies will just continue to flee to whatever country is now offering 0%. Christmas Island has a new 0% corporate tax policy? Let's go buy a mailbox there and move our "headquarters". The old-school thinking is that low corporate tax policies encourage business, creating jobs in the process and boosting that country's economy. In the real world it's a shell company with zero employees that pays that country zero in taxes. This push for a global minimum tax is interesting, and obviously scares the hell out of a lot of conservatives and others who want nothing to do with "global" anything. Also, how would that even work? Countries would simply not agree to play along, no? The only thing I can think is that this entire thing has to be flipped into some sort of "VAT"/usage situation. So if a US company is using Microsoft Azure and pays them $1 million annually to do this, Microsoft has to pay US taxes on that $1 million. Track where the customer is based and pay tax based on that countries tax policy. I'm clearly no tax person, so my ideas mean nothing. But I've put a lot of thought into this "race to the bottom" and it's difficult to come up with a solution.
- gruez 5y ago
  >The only thing I can think is that this entire thing has to be flipped into some sort of "VAT"/usage situation. Then it's a consumption tax (aka sales tax), which we already have and is generally regressive.
  - EMM_386 5y ago
    So there is no solution then. The entire concept of "corporate taxes" can be thrown out the window because they will just set up "shop" wherever is offering 0%. And whichever country that happens to be at the moment gains nothing other than a shell company with zero employees.
- bramjans 5y ago
  I can recommend "The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay" by economists Emmanuel Saez and Gabriel Zucman for some concrete ideas on how to fix this problem. Some ideas seemed a bit unlikely, but overall great refreshing read in my opinion.
1vuio0pswjnm7 5y ago
Previously Microsoft shifted 39 billion in North and South American profits to Puerto Rico. (It used Singapore for Asian profits and Ireland for EU profits.) The IRS's case against the company is still active. This was the largest IRS audit in history by dollar amount. https://www.propublica.org/article/the-irs-decided-to-get-tough-against-microsoft-microsoft-got-tougher https://www.propublica.org/article/the-irs-decided-to-get-to... The ProPublica reporting apparently inspired the Judge to get things moving again. https://thehill.com/policy/technology/479417-microsoft-ordered-to-turn-over-records-for-historic-irs-audit https://thehill.com/policy/technology/479417-microsoft-order... Truly sickening.
TheGigaChad 5y ago
Based
new_here 5y ago
Take a moment to comprehend those numbers: FY18/19 - under $10bn profit FY19/20 - $314.7bn profit (3/4 of Ireland's GDP) and paid no tax on it. > The subsidiary, which collects licence fees for use of copyrighted Microsoft software around the world, recorded an annual profit of $314.7bn in the year to the end of June 2020, according to accounts filed at the Irish Companies Registration Office. Its profits jumped from just under $10bn the previous year and compare with Ireland’s 2020 GDP of €357bn ($437bn). > Tax transparency campaigners described the “tax aggression displayed by Microsoft, and facilitated by Ireland” as “beyond belief”.
- akudha 5y ago
  One company’s single year profit is three quarters of GDP of a nation of 5 million people!!! With that much economic power, it is no wonder these multinationals write the rules as they please
  - thatguy0900 5y ago
    Makes you wonder when we'll get back to the point they have their own militaries
    - piva00 5y ago
      I have a feeling that's something Elon Musk might have considered more than once in his own head...
- ornornor 5y ago
  And seen in another thread: Microsoft is lobbying the US govt to spend 250 million to make more software engineers by introducing computer courses in schools so that there are more SE on the market in the future so that they can hire for cheaper. Meanwhile, individuals are paying 20–50% income tax. What a wonderful world.
  - echopom 5y ago
    > is lobbying the US govt to spend 250 million to make more software engineers It cost money to "train" engineers , better use taxpayer money to train those damn "human ressource" rather than those 300Billions of Profit.
ctdonath 5y ago
The legislature decided more good is done without taxation in some cases.
dr-detroit 5y ago
So they pay ~$2.44Billion more than Tesla is what youre telling me?
TimPC 5y ago
Most economists around the world support eliminating the corporate tax and raising capital gains to compensate. In addition to vastly reducing the amount of accounting needed it would make structures like this pointless. Perhaps governments should get on this as a priority. It seems like early movers would attract a lot of investment.
- dalbasal 5y ago
  It's extremely easy to speculate about this stuff academically. Economists tend to delight in theory-adjacent discussions. These have very little bearing on the real world. TRW, in this case, is a cascading infinity of corporate law, tax law, accounting practices, jurisdictions, lobbyists, parliaments and special interests. None of these exist in economist's models, unless they're modeling public choice theory or somesuch. Capital gains is just as gameable as corporate income, in practice... and more politically explosive. IMO, if there is an actual interest in taxing wealth, just tax wealth. Assume 5%-8% return on wealth, and tax total wealth on this basis.
  - TimPC 5y ago
    Taxing wealth is a terrible idea because it requires government to get balance sheets from the masses. If you miscalibrate earnings minus inflation it’s also punitive. Lastly for many families most of their wealth is their home which isn’t exactly liquid even if it grows in value. Wealth taxes would force many to sell their houses.
    - dalbasal 5y ago
      The masses don't have wealth, especially if you exclude personal dwellings. In any case, you need "balance sheets" to have CGT, which in theory we do.
      - TimPC 5y ago
        Capital gains taxes are based on difference between buy and sell price of specific assets and require only those two data points. That’s very different from accurately pricing an asset yearly.
pulse7 5y ago
This is unjust and unfair! Advice to local governments in EU countries and elsewhere: just write laws to tax such companies locally with "internet tax for companies with over 100 million USD in revenue" and do it NOW! These corporations will do this for so long as it is possible... they don't have any intent to stop it... it is legal, but it is unjust and unfair...
- sumtechguy 5y ago
  Split your company in 2. This one gathers money for product A. This one gathers money for product B. Look at that each is 99million. That is just a very simple way around it, until another law is written. Your method sounds like a good start but you need to remember for every idea anyone has they have 2 accountants they can afford to get it back. If you want to understand why we ended up here you need to get at the root of the issue. Exemptions, tax breaks, and writeoffs. Once those were created there will be an accountant that will max/min that thing. You may think 'oh flat tax'. The problem is unless everyone does flat tax no one can. This is due to putting yourself at an economic disadvantage in relation to other countries. An interesting prisoners' dilemma if you will.
zimbatm 5y ago
How much does it cost to setup and Ireland+Bermuda combo? I suppose the overhead is not worth it for small companies.
Opt_Out_Fed_IRS 5y ago
I'd rather have my money in the hands of Microsoft and Google vis-a-vis Federal and State Government (in the case of Europe it's Regional) They not only return money to government via their mega cash warchest (which is made up of T-bills) but they also have more productive ways to employ those dollars compared to governments. Also even if they were to pocket them, at least they are far away, whereas the corruption of governments causes your hated neighbor or the asshole mayor to pocket government cash .
seaourfreed 5y ago
Congress is corrupt (via lobbyists). Congress would make this illegal if congress men/women didn't sell out American Citizens. 88% of the cost of the US Fed gov is paid for by taxes by workers (income taxes). Less than 12% comes from all corp/business taxes combined with capital gains (taxing the rich 1%). Business shifting tax burden to workers is a massive scale problem. $3.5 Trillion = US Tax Revenues (2019) and 88% came from workers. US Federal Tax Revenues (2019): $3.5 Trillion SOURCE: https://www.google.com/search?q=us+tax+revenues+2019&oq=us+tax+revenues+2019&aqs=chrome..69i57j0i390.5893j0j7&sourceid=chrome&ie=UTF-8 https://www.google.com/search?q=us+tax+revenues+2019&oq=us+t... US Capital Gains (2018): $170 Billion (4.8%) SOURCE: https://taxfoundation.org/federal-capital-gains-tax-collections-historical-data/ https://taxfoundation.org/federal-capital-gains-tax-collecti... US Corporate Taxes: 3.9% of US Tax Revenues https://taxfoundation.org/us-tax-revenue-2021/#:~:text=Corporate%20income%20taxes%20accounted%20for,income%20taxes%20and%20property%20taxes https://taxfoundation.org/us-tax-revenue-2021/#:~:text=Corpo...
- kilroy123 5y ago
  Historically it was the opposite. Overtime, all our policies changed to squeeze the regular citizens to protect and enrich the top 1%. It's wealth redistribution to the top. Instead Americans would rather flight each other instead of banning together to reverse course. It doesn't have to be this way. I love how this website shows this in data: https://wtfhappenedin1971.com https://wtfhappenedin1971.com
  - stinos 5y ago
    I knew it has been different, didn't know that website though. Anyway this should be repeated more often, also in response to the 'but if we tax them they'll go elsewhere, there is no other way'. Because people simply do not know this.
- cheph 5y ago
  > 88% of the cost of the US Fed gov is paid for by taxes by workers (income taxes). Less than 12% comes from all corp/business taxes combined with capital gains (taxing the rich 1%). "the rich" pay income taxes as well: https://itep.org/who-pays-taxes-in-america-in-2020/ https://itep.org/who-pays-taxes-in-america-in-2020/ In fact, the top 1% paid 24.3% of all income tax. And the top 5% paid 40.6% of all income tax. So it is most definitely taxing the rich. The top 25% paid 66.4% of all income taxes, so to suggest that this is somehow a very regressive tax system seems to not hold water.
pembrook 5y ago
It sounds sinister in a headline, but from a general theory perspective, why shouldn't we just dump corporate tax altogether and simply raise personal capital gains taxes to match income taxes? Corporate tax is ultimately a double-tax. All of those profits will eventually be paid to investors (dividends, buybacks, acquisition) or employees (bonuses, profit sharing, stock options), where it will be taxed. If both types of income were taxed the same...it wouldn't matter who got the money, or how. Companies creating bizarre international corporate structures and governments spending time competing to untangle them is a giant waste of human bandwidth. We should just dump this charade altogether and focus on more important things.
- ProAm 5y ago
  There are a thousands ways to change taxes and there will be a thousand more to skirt paying them. Flat tax, eliminate tax loop holes, eliminate all deductions, only corp tax, only personal gains, only income, none will work because people are inherently greedy.
hemantv 5y ago
I am wondering if as an individual I can do these same arrangement so I am not taxed to death in California
G3rn0ti 5y ago
There shouldn’t be „corporate taxes“. They tend to be difficult to collect, troublesome to declare and actually can not contribute much to national budgets. Think about it: Employees of multinational companies pay billions of income tax. Customers buying products and services from multinational pay billions in VAT. Shareholders of multinationals receiving dividends pay billions of capital gains tax. So what exactly is left for a corporate tax to collect?
- empira 5y ago
  Well it all depends on your ideas about taxation, society and the role of government. It is true that huge corporations already "give back" a lot of the money they collected under various forms (income tax, VAT, etc.) But if you think that the role of government is necessary, then you agree that it should collect taxe to exercise this role. And money is taken where money is. We tax corporations because they make benefits, and a benefit is just a way of saying that even after deducting everything they can think of, they still have money they don't need. So why not take a part of it and re-invest it elsewhere where it is needed ? Ultimately there is no proper justification for any tax, except its necessity to let society fonction properly.
  - G3rn0ti 5y ago
    > Ultimately there is no proper justification for any tax, except its necessity to let society fonction properly. But a tax law should adhere to the same standard of quality as other sections of the law. Under the rule of law I -- for one -- expect tax laws at least not to be arbitrary. Just the fact there is money on the table does not entitle the society to grab it.
    - empira 5y ago
      Of course. And that is not the case at the moment. Microsoft will not get fine for 'avoiding' corporate taxe if what they do is legal. But governments will sure try to change the law so that they grab as much as is needed.
- chipsambos 5y ago
Proven 5y ago
Good. That's why we can get free Hotmail and Github. Taxation is theft.
xony 5y ago
EU , you have a problem
pg5 5y ago
Is it really that bad that Microsoft pursues all the legal means for minimizing their corporate tax? Microsoft employees pay the same rates as we do. Also, most people in this thread are Microsoft shareholders, unless they have some unusual choices for their retirement. 5% of SP500 is Microsoft stock, and SP500 tracking funds are a common pick.
- czottmann 5y ago
  It's unethical AF. Technically, it might be legal, but that doesn't make it less immoral. You know, from a societal standpoint. It's not like they have to scramble to get by, unlike many people in those countries whose tax systems they (ab)use.
deleted 5y ago
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brobdingnagians 5y ago
Reminds me of "rich man's war and poor man's fight". The rich are always moralizing about how everyone should pay their fair share, but it is the poor man who ends up paying. Why do we think that a system controlled by the rich man will ever really allow it to overtax the rich. Better to stop raising taxes that only the poor will pay.
apercu 5y ago
This is really, really, really a problem. I know a lot of us make decent money and we write large "checks" to the government because we're in high tax brackets, but seriously. The middle class has gotten smaller. If you live in a city a house costs a million dollars. Many people don't have adequate healthcare. Yet we are allowing the richest people in the world to have astronomical profits and pay no tax to help cover the costs of society, while we squeeze the "working rich" (high earners that don't get most of their income from dividends/capital gains) and working class . Now, maybe if you are making 300+ you don't feel squeezed. But in all fairness, not that many people make $300k.
- gher-shyu3i 5y ago
  What do you recommend as a solution? Do you honestly think if MS and a few other companies paid more in tax things will magically get better? Do you trust the government to send that money properly? The problem runs much much deeper. This is only scratching the surface.
  - apercu 5y ago
    I can't speak for places outside of the Americas because I've only travelled in the Americas for the last 10 years. But from Northern Quebec to Idaho to Florida to Nassau to Saskatoon bridges are cracking, rail is buckling, public transportation is lacking, etc. Health care wait times are bad or prices are ridiculous because of the false market we have created. So do I think governments having more money NOT by squeezing me and all those I live near more is a good thing? Why yes, yes I do. The wealthiest being job creators is bullshit. It's always been bullshit. Microsoft is anti-consumer. Fuck them, let them pay taxes like the rest of us.
    - gher-shyu3i 5y ago
      > So do I think governments having more money NOT by squeezing me and all those I live near more is a good thing? Why yes, yes I do. Unfortunately, those same governments don't see it as a mutually exclusive matter. They want to both tax you and everyone else. Not only that, they will end up wasting that money and nothing will get accomplished. You said it yourself, Canada has very bad wait times for healthcare. We need a fundamental solution.
gadders 5y ago
Good old Guardian. Always first with the hypocrisy. https://www.rt.com/uk/401323-guardian-newspaper-tax-avoidance/ https://www.rt.com/uk/401323-guardian-newspaper-tax-avoidanc...
cannabis_sam 5y ago
How much of that money comes from them competing with European businesses that actually pay back to the community they’re earning money from servicing?

347 points by agd 5y ago

malux85 5y ago

I have to pay 40% of my income as income tax. I have HAD ENOUGH. This is infuriating. What can we do?

ClumsyPilot 5y ago
Corporations are people, we are the serfs
MikeUt 5y ago
Respect copyright and patents as much as Microsoft respects taxation.
- howaboutnope 5y ago
  That's way too tame and already too hardcore for HN.
deleted 5y ago
[deleted]
egman_ekki 5y ago
I guess earn enough so that it makes sense to pay a lawyer and an accountant to create this setup for yourself... maybe a startup idea? :)
deleted 5y ago
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waterglassFull 5y ago
If you are fortunate enough to be in a position where you're earning enough to pay 40% tax then great for you! Paying tax is good for society, what's not great is companies avoiding it. The latter doesn't negate the former.
- callamdelaney 5y ago
  Oh, it's great that it's great society. Sucks pretty hard for him though.
  - um_ya 5y ago
    "Pay your fair share". I cringe every time I hear this from people. Rich people pay WAY more than what they get back from the gov.
    - dariosalvi78 5y ago
      well, the idea is that the richer you are the more you contribute to society.
      - callamdelaney 5y ago
        Wouldn’t we achieve the same with a flat tax rate?
    - three14 5y ago
      Rich people don't usually get handouts from the government, but they get something more valuable - a social order, enforced by the government, that allows them to be rich. Suppose you were rich, but you lived in a place where rich people tended to get kidnapped and held for ransom - being rich wouldn't be quite as good of a deal. The social order disproportionately benefits the rich, so they should pay more to keep it going.
    - dragonwriter 5y ago
      > Rich people pay WAY more than what they get back from the gov. Only if you ignore the role of the government in defining and enforcing (violently, where necessary) property rights, which is what allows “rich people” —particularly rich through various forms of intangible, indirect, and directly-physical-but-beyond-immediate-personal-supervision property — to, as such, even exist.
    - medvezhenok 5y ago
neilwilson 5y ago
"What can we do?" Well you can look at it in the round and realise that your income is similarly higher than it otherwise would be because government spent money into the economy that it is now extracting as tax. Moving the tax around doesn't avoid you paying it. It just gets rolled into the price of what you buy instead. That's because in aggregate corporate costs including taxation are a component of final consumption expenditure. While there are fewer jobs than people that want them the incidence of charges on corporations will always end up being paid by workers one way or another. That's the whole point of the 'unemployment buffer' put in place during the neoliberal era - to make sure that price changes can't be easily passed through to wage rises and thereby resolve the distributional conflict in favour of capital.
maccard 5y ago
> I have to pay 40% of my income as income tax. So do all the engineers, PMs, etc working at Microsoft.
- KMag 5y ago
  All of the MS engineers in the U.S. have an effective income tax rate of 40%, not a marginal tax rate of 40%? Assuming Washington State takes about 10% marginal tax... that's about half their income coming in above the 32% federal tax bracket which starts at $163k. Is a starting salary for an engineer at Microsoft really around $320,000/yr.? If they're really pulling in that, one would hope they'd have some long-term capital gains, which would further pull down their effective income tax rate.
  - maccard 5y ago
    Very few people _anywhere_ are paying a 40% effective tax rate. I wasn't aware of the Washington state tax rate though.
    - KMag 5y ago
      I'm not sure what it is in Washington. In New York 10 years ago, my marginal tax rate to the state was around 10%.
- seanmcdirmid 5y ago
  Many of those are in Washington state, which doesn’t have an income tax. It is almost impossible to get to 40% with federal income taxes and payroll alone. They are probably maxing out their 401k as well as various other pre tax contributions that can be made.
  - maccard 5y ago
    I didn't know Washington state had no income tax! If you count 401k/marriage allowances, personal allowances etc, then there are very very few people anywhere paying 40% income tax. In Ireland, you're not paying 40% until you make 120k which is a very small amount of people.
dalbasal 5y ago
>>What can we do? It's a tough question. The tendency is to react superficially: Moralizing reactions, emotional reaction, first principles takes. The way tax actually works is via accounting "standards," tax law and corporation law... across multiple jurisdictions. A thousand-detail complex , where morals, emotions and first principles are literally meaningless. Actual meaning can only be derived with scenario plans and spreadsheets. Words like "profit," "company," "revenue" and such don't have inherent meanings, in that world. They're just objects with associated rules. The pro-corporate side of this debate (debate is the wrong word) deals entirely in the latter terms. Terms that the majority of journalists and politicians can't work with. They tend to win. When the other side does consider the reality of mess, they tend to conclude radical/unrealistic conclusions like "throw everything out and start from scratch." At this point, complexity is hardened by international agreements and trade rules. IMO the actual place to start is corporation law, not tax law. If entities can own other entities, or part thereof in an endless cascade...words like "tax rate" have no meaning. Another, more radical approach is rethinking the idea of public wealth. The currently ongoing collapse of monetarism is, perhaps, an opportunity. Tax public companies x% of their shares per year. Hold, to avoid price deflation. Offload shares as part of macroeconomic/monetary policy (ie, when we run deficits), to avoid inflationary scenarios such as the current one. I would take the same approach for wealth taxes. Capital gains, property, etc. Tax x% of current market value annually, not income or realized gains. It won't be perfect, but everything gets marked to market eventually.
- gruez 5y ago
  >Another, more radical approach is rethinking the idea of public wealth. The currently ongoing collapse of monetarism is, perhaps, an opportunity. Tax public companies x% of their shares per year. 1. this disproportionately affects companies with higher capital requirements than lower ones. Think spacex compared to a SaaS. 2. this doesn't solve the underlying issue of moving to a jurisdiction with lower taxes. let's say US taxes 1% of shares every year, but the company offshores to bermuda. then what?
  - dalbasal 5y ago
    >> disproportionately affects companies with higher capital requirements How/Why? >> underlying issue of moving to a jurisdiction with lower taxes Well... nothing simple solves this in full. However, "loophole" in this article works by attributing income from IP licensing (an internal transaction between Apple owned entities) to Ireland, which does not consider this a taxable transaction. A "share tax" would apply to the same entity that shareholders own a stake in, it doesn't try to disentangle subsidiary structures. Companies might try to list on Bermuda's stock exchange. I wouldn't discount that possibility, but it won't happen overnight.
rorykoehler 5y ago
40%? Usually that kind of rate applies to an upper progressive tax band. Where do you live?
I_am_tiberius 5y ago
Sorry but this is not a good comparison. Microsoft created many jobs which are all paying this kind of income tax. This article is about corporate tax which is tax on the company's profit.
DFHippie 5y ago
Are you sure you pay 40%? Googling around a bit to find the US income tax rates (assuming you are in the US) I found this: https://www.bankrate.com/finance/taxes/tax-brackets.aspx https://www.bankrate.com/finance/taxes/tax-brackets.aspx This is really just the first thing I looked at, but it seems to provide the desired information. The highest bracket, for income above roughly 550k, is 37%. So considering only federal income tax it is impossible to pay 40% of your income in taxes, but also the first 550k or so of your income would be taxed at lower rates.
- sethammons 5y ago
  Now toss on state income tax. And don’t forget about AMT (alternative minimum tax). Sure, you need a higher income to hit these thresholds, but it is not as functionally high of an income as you may think it is.
- seanmcdirmid 5y ago
  If you throw in state income tax and consider payroll taxes, hitting 40% isn’t that hard, if your income is 1099, hitting 40% is pretty easy.
- malux85 5y ago
  I’m not on the US
markus_zhang 5y ago
You can't do much under the current instituitions. The elites of United States spent huge effort these hundreds of years to make sure that 1) Their income mostly relies on the United States as a financial/military beast, and 2) Whatever ordinary people suffer from, be it high tax or flood or lightning bolts, the elites will not be affected and can safely live in areas well protected.
Cthulhu_ 5y ago
Vote for politicians that want to tax the rich. I mean this can be solved by forcing Bermuda to charge taxes for example. If they REALLY want to escalate things, Bermuda can be strongarmed into compliance - a country can put a boycott on Bermuda, like the US does with e.g. Iran and NK at the moment. Any company doing business with Bermuda then - directly or indirectly - will be in a lot of trouble. But they don't dare to take a firm stance, because the politicians that make the decisions benefit from the system. Just look at how many politicians had accounts revealed via the Panama Papers.
dariosalvi78 5y ago
I have an idea: Ireland could cut electricity, telecom, drain, rubbish collection, road access, police, firemen and health services just and only around those buildings where the company operates. Maybe they learn the value of paying taxes (or more probably not).
adolph 5y ago
Why should “we” (aka mostly other people) do something about your problem (aka HAD ENOUGH)? If the cost of getting to net Y cash inflow is X gross income where X = Y + (.66Y) then solve for X and move on, or perform the cost benefit analysis for moving to another tax jurisdiction. The solution is yours to execute.
rmah 5y ago
You can stop believing the idiocy printed by rags masquerading as newspapers. Microsoft did not even make £220B (apx $310B) revenue globally in the 2020 fiscal year, much less in one subsidiary. Their total global revenues were $143B and total global net income (aka profit) was $44. If The Guardian can't fact check the basics, how can you trust anything else they write?
boudin 5y ago
What is infuriating the fact that you pay taxes or that a company like Microsoft do not? If it's the first one I can't disagree more, I'm paying kinda the same percentage and I'm happy to do so personally. If it's the second one, I can't agree more that this is infuriating indeed.

tonfa 5y ago

Isn't the US levying corporate tax on worlwide income anyway (since the last tax reform). So it's "only" a matter of deciding whether those taxes should be paid in US vs. other countries (and if the intellectual property was developped mostly in the US, it seems fair for the US to get most of it).

breakfastduck 5y ago
That isn't fair at all. If you're opening a location in another country, and that location takes X in revenue, the tax should be paid in that country. Why on earth do you think its fair for US based organizations to spread across the globe, reap the huge profits from that but funnel all the cash back into the US?
- oblio 5y ago
  > Why on earth do you think its fair for US based organizations to spread across the globe, reap the huge profits from that but funnel all the cash back into the US Random guess, they're American :-) Facebook, Google & co. are absolutely ravaging local economies, pardon me, disrupting legacy economies all over the world and a small chunk of that ends up as compensation in the US. The rest of that, FAANG are just sitting on it like a dragon hoarding gold, as far as I can see.
  - nivenkos 5y ago
    And the EU loves it! Absolutely no support or protection for local companies, Linux, etc. Where is our Baidu, Samsung, Yandex, or Sony, etc.? The whole continent is practically a vassal state of the US, under German administration.
    - breakfastduck 5y ago
      I’ve always found the “Brexit means the UK will become a US vassal” angle amusing for exactly that reason.
  - tonfa 5y ago

kowlo 5y ago

Meanwhile my (single-person) company is paying around 20% corporation tax, and then I'm getting taxed a further 20-40% on top of that when I pay myself.

deafcalculus 5y ago
Isn't salary a deductible expense?
- kowlo 5y ago
  You're right - but it depends how and when you pay yourself... a balance of salary and dividends, where dividends are not deductible. For me I may have a good year followed by a weak year, so I use last year's profit to keep me going!
  - oarsinsync 5y ago
    If you're in the UK and still using dividends as a significant method to self-compensate, you may benefit from speaking to a (better) accountant. (Your circumstances may vary, this is not financial advice, YOLO, etc)
    - tailspin2019 5y ago
      > If you're in the UK and still using dividends as a significant method to self-compensate, you may benefit from speaking to a (better) accountant. I'm curious what you're eluding to here? Using dividends as a significant method to self-compensate (for single-person companies) seems to be a pretty common practice recommended by every UK accountant I've spoken to / used. EDIT: Updated for clarification
      - kowlo 5y ago
        It's the advice I've received too, but I'm also new to most of it. One downside (I think) is that I can't take advantage of the R&D tax credits with this approach!

sbennettmcleish 5y ago

220bn profit? Really? Surely they mean "revenue"

kowlo 5y ago
In the UK you only pay corporation tax on profit
- nly 5y ago
  The Republic of Ireland isn't part of the UK, but your point still applies.
  - rwmj 5y ago
    The company is tax "resident" in Bermuda, a British Overseas Territory. In fact I'm not even sure what the Ireland connection is here except that there is a registered office in Dublin. It seems like all the action is taking place in Bermuda, so this is really a story about UK overseas tax havens.
    - billyruffian 5y ago
      Just for clarification, British Overseas Territories are not part of the UK. They set their own laws and manage their own internal affairs while their foreign relations and defence are managed by the UK.
    - disgruntledphd2 5y ago
      The Irish part is there to allow it to funnel EU profits, and ireland allows for countries to be registered there, but not tax-resident. Interestingly enough though, almost all of the zero tax places are British Crown dependencies, so presumably the UK government could exert pressure on them, if it really wanted to.
      - nivenkos 5y ago
        Why haven't Germany, France, etc. pressured Ireland to stop this?

fallingknife 5y ago

Why can't governments learn that taxing corporations is pointless? The same revenue is can be raised more simply through sales tax and personal income tax on salaries and distributions.

throwaway6734 5y ago
Populism is a hell of a drug.
neilwilson 5y ago
The best tax is one that is imposed on an individual but paid at source by the corporation paying them. Individuals shouldn't see tax. That way the voters don't complain when you need to put it up. Sales tax is similarly a pain - particularly when you have differing rates. At which point we get into the famous is it a cake or a biscuit type cases to decide where the dividing line is.
- adolph 5y ago
  People not knowing their tax burden: feature or bug?
  - aNoob7000 5y ago
    I think paying your state and federal taxes in the United States should be seamless. Your employer should take the taxes out of your paycheck. At the end of the month/year, you should get a statement showing all the taxes you paid. I recently had to update my W4 form at work for tax withholding, and what a pain in the ass to read and decipher. Add to that, and I had to do the same thing for my state taxes. I want to point out that Congress has shot down the idea of making it easier to pay your taxes many times. I'm not sure if it is Intuit or some other entity, but paying your taxes should be easy. If you don't like the level of taxation, then work to reduce them, but paying them should be easy.
    - nly 5y ago
      Do most Americans have to do their own taxes? It boggles my mind that this is the case.

CryptoPunk 5y ago

1. It's infeasible that Microsoft had profits of 200 billion euros. 2. A comment on the Guardian's journalists' potential financial conflicts of interest: https://news.ycombinator.com/item?id=27352245 https://news.ycombinator.com/item?id=27352245

DrBazza 5y ago
And for non-UK HN readers, the Guardian is a rather left-of-political-centre newspaper. Or generally, each UK newspaper has a particular take on UK politics, and generally employs journalists or freelancers that have the same or more extreme views.
- crocal 5y ago
  I find ironic to portray as extremists journalists who report on a company that pays zero (0) taxes on revenues expressed in billions. I would rather apply the adjective to the reported company for some reason, but maybe we have different measuring scales.
  - DrBazza 5y ago
    Well, what's ironic, is that I read the Guardian, amongst other newspapers. I personally find it helpful, when a newspaper from a country that is not my own, is linked-to on HN, what political leanings it has, as that helps understand the story and provide some background, and in some cases the particular views of a journalist. I like balance, or at least reading stories with views I may not necessarily agree with, but at least I make the effort to read those. And perhaps I'll learn something, or change my views on a topic.
maccard 5y ago
> It's infeasible that Microsoft had profits of 200 billion euros. The guardian's headline is definitely mildly inflammatory, but it's a headline, and it's true. This particularly subsidiary had an income of €200bn, and very little expenditure. That's the textbook definition of profit, although it's definitely creative accounting!

deleted 5y ago

[deleted]

davidgaw 5y ago

Microsoft's Irish subsidiary paid zero tax because it owed zero tax—and there's no reason it should have paid, or that this should change in future, apart from the greed and envy of others who want to take money from others to which they are not entitled. Those who are unhappy at the taxes they are paying should perhaps take it up with the tax attorneys and/or legislators who have failed them.

throwaway210222 5y ago
I upvoted you [after the red brigade had had a pass :) ] because you raise an important point: imagine what the tax rates would be if politicians - armed with a police force and judiciary - knew that no other nation could complete by offering lower tax rates? The corrupt bolsheviks where I live would ratchet it up to 95% in a few years. As would everyone else's government.
willtim 5y ago
In case you are unaware, tax is needed to pay for schools, universities, research, health care, social care, police, civil infrastructure, environmental agencies, regulators, defence, bank bailouts, pandemic bailouts, etc. The Big tech firms benefit from all of the above, but are not contributing anything back. The system is broken and needs to be fixed, so let's not pretend there is no problem.
dariosalvi78 5y ago
so those who are unhappy with paying taxes should probably stop using roads, schools, hospitals, drainage, defence, police, firemen, universities, grants, etc. There are a few places where such things do not exist: they don't do very well.

I_am_tiberius 5y ago

Time for corporate tax to disappear, - worldwide.

rorykoehler 5y ago

We should stop all taxation and use inflation to pay for everything instead. Much simpler and no one can get out of it.

juandazapata 5y ago
Can you expand on this? How would this work?
- deleted 5y ago
  [deleted]
- rorykoehler 5y ago
  Government sets an annual budget and then creates the money to pay for it out of thin air every year.
- jefftk 5y ago
  The idea is that the government prints money to cover expenses. If you could somehow force everyone to hold all their wealth in cash, this would act as a wealth tax. This doesn't work, however, because with very high planned inflation no one wants to use your currency, and without taxation there's no reason they have to.
  - rorykoehler 5y ago
    They use your currency because they get paid in it. Government spending doesn't disappear into a black hole never to be seen again. [FALSE]>>> Also it's illegal to use other currencies as tender in (probably?) all countries in the world (Zimbabwe uses/used(?) the US dollar but I'm not aware of any other instances).
    - Lionga 5y ago
      People of Venezuela would like to have a word with you

nob0dyasked 5y ago

Meanwhile, its founder preaches redistribution and calls the governments to raise taxes. "The wealthy should make a bigger effort to clean public finances"

nob0dyasked 5y ago

I think I take back my comments for a different occasion given that the headlines and likely the article body are blatantly false.

jFriedensreich 5y ago

can someone explain how an irish company be tax resident of bermuda in the first place?

csomar 5y ago
Like an American person can be a tax resident of France? Oh, wait, companies do not travel or move… or do they? /justkidding

williesleg 5y ago

Everybody needs to pay more tax, that's the genius of the spenders, they put it to good use always. Anybody can donate to their government. Who here does?

EMM_386 5y ago

What is the solution to this? I've wracked my brain and can't come up with anything. Companies will just continue to flee to whatever country is now offering 0%. Christmas Island has a new 0% corporate tax policy? Let's go buy a mailbox there and move our "headquarters". The old-school thinking is that low corporate tax policies encourage business, creating jobs in the process and boosting that country's economy. In the real world it's a shell company with zero employees that pays that country zero in taxes. This push for a global minimum tax is interesting, and obviously scares the hell out of a lot of conservatives and others who want nothing to do with "global" anything. Also, how would that even work? Countries would simply not agree to play along, no? The only thing I can think is that this entire thing has to be flipped into some sort of "VAT"/usage situation. So if a US company is using Microsoft Azure and pays them $1 million annually to do this, Microsoft has to pay US taxes on that $1 million. Track where the customer is based and pay tax based on that countries tax policy. I'm clearly no tax person, so my ideas mean nothing. But I've put a lot of thought into this "race to the bottom" and it's difficult to come up with a solution.

gruez 5y ago
>The only thing I can think is that this entire thing has to be flipped into some sort of "VAT"/usage situation. Then it's a consumption tax (aka sales tax), which we already have and is generally regressive.
- EMM_386 5y ago
  So there is no solution then. The entire concept of "corporate taxes" can be thrown out the window because they will just set up "shop" wherever is offering 0%. And whichever country that happens to be at the moment gains nothing other than a shell company with zero employees.
bramjans 5y ago
I can recommend "The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay" by economists Emmanuel Saez and Gabriel Zucman for some concrete ideas on how to fix this problem. Some ideas seemed a bit unlikely, but overall great refreshing read in my opinion.

1vuio0pswjnm7 5y ago

Previously Microsoft shifted 39 billion in North and South American profits to Puerto Rico. (It used Singapore for Asian profits and Ireland for EU profits.) The IRS's case against the company is still active. This was the largest IRS audit in history by dollar amount. https://www.propublica.org/article/the-irs-decided-to-get-tough-against-microsoft-microsoft-got-tougher https://www.propublica.org/article/the-irs-decided-to-get-to... The ProPublica reporting apparently inspired the Judge to get things moving again. https://thehill.com/policy/technology/479417-microsoft-ordered-to-turn-over-records-for-historic-irs-audit https://thehill.com/policy/technology/479417-microsoft-order... Truly sickening.

TheGigaChad 5y ago

Based

new_here 5y ago

Take a moment to comprehend those numbers: FY18/19 - under $10bn profit FY19/20 - $314.7bn profit (3/4 of Ireland's GDP) and paid no tax on it. > The subsidiary, which collects licence fees for use of copyrighted Microsoft software around the world, recorded an annual profit of $314.7bn in the year to the end of June 2020, according to accounts filed at the Irish Companies Registration Office. Its profits jumped from just under $10bn the previous year and compare with Ireland’s 2020 GDP of €357bn ($437bn). > Tax transparency campaigners described the “tax aggression displayed by Microsoft, and facilitated by Ireland” as “beyond belief”.

akudha 5y ago
One company’s single year profit is three quarters of GDP of a nation of 5 million people!!! With that much economic power, it is no wonder these multinationals write the rules as they please
- thatguy0900 5y ago
  Makes you wonder when we'll get back to the point they have their own militaries
  - piva00 5y ago
    I have a feeling that's something Elon Musk might have considered more than once in his own head...
ornornor 5y ago
And seen in another thread: Microsoft is lobbying the US govt to spend 250 million to make more software engineers by introducing computer courses in schools so that there are more SE on the market in the future so that they can hire for cheaper. Meanwhile, individuals are paying 20–50% income tax. What a wonderful world.
- echopom 5y ago
  > is lobbying the US govt to spend 250 million to make more software engineers It cost money to "train" engineers , better use taxpayer money to train those damn "human ressource" rather than those 300Billions of Profit.

ctdonath 5y ago

The legislature decided more good is done without taxation in some cases.

dr-detroit 5y ago

So they pay ~$2.44Billion more than Tesla is what youre telling me?

TimPC 5y ago

Most economists around the world support eliminating the corporate tax and raising capital gains to compensate. In addition to vastly reducing the amount of accounting needed it would make structures like this pointless. Perhaps governments should get on this as a priority. It seems like early movers would attract a lot of investment.

dalbasal 5y ago
It's extremely easy to speculate about this stuff academically. Economists tend to delight in theory-adjacent discussions. These have very little bearing on the real world. TRW, in this case, is a cascading infinity of corporate law, tax law, accounting practices, jurisdictions, lobbyists, parliaments and special interests. None of these exist in economist's models, unless they're modeling public choice theory or somesuch. Capital gains is just as gameable as corporate income, in practice... and more politically explosive. IMO, if there is an actual interest in taxing wealth, just tax wealth. Assume 5%-8% return on wealth, and tax total wealth on this basis.
- TimPC 5y ago
  Taxing wealth is a terrible idea because it requires government to get balance sheets from the masses. If you miscalibrate earnings minus inflation it’s also punitive. Lastly for many families most of their wealth is their home which isn’t exactly liquid even if it grows in value. Wealth taxes would force many to sell their houses.
  - dalbasal 5y ago
    The masses don't have wealth, especially if you exclude personal dwellings. In any case, you need "balance sheets" to have CGT, which in theory we do.
    - TimPC 5y ago
      Capital gains taxes are based on difference between buy and sell price of specific assets and require only those two data points. That’s very different from accurately pricing an asset yearly.

pulse7 5y ago

This is unjust and unfair! Advice to local governments in EU countries and elsewhere: just write laws to tax such companies locally with "internet tax for companies with over 100 million USD in revenue" and do it NOW! These corporations will do this for so long as it is possible... they don't have any intent to stop it... it is legal, but it is unjust and unfair...

sumtechguy 5y ago
Split your company in 2. This one gathers money for product A. This one gathers money for product B. Look at that each is 99million. That is just a very simple way around it, until another law is written. Your method sounds like a good start but you need to remember for every idea anyone has they have 2 accountants they can afford to get it back. If you want to understand why we ended up here you need to get at the root of the issue. Exemptions, tax breaks, and writeoffs. Once those were created there will be an accountant that will max/min that thing. You may think 'oh flat tax'. The problem is unless everyone does flat tax no one can. This is due to putting yourself at an economic disadvantage in relation to other countries. An interesting prisoners' dilemma if you will.

zimbatm 5y ago

How much does it cost to setup and Ireland+Bermuda combo? I suppose the overhead is not worth it for small companies.

Opt_Out_Fed_IRS 5y ago

I'd rather have my money in the hands of Microsoft and Google vis-a-vis Federal and State Government (in the case of Europe it's Regional) They not only return money to government via their mega cash warchest (which is made up of T-bills) but they also have more productive ways to employ those dollars compared to governments. Also even if they were to pocket them, at least they are far away, whereas the corruption of governments causes your hated neighbor or the asshole mayor to pocket government cash .

seaourfreed 5y ago

Congress is corrupt (via lobbyists). Congress would make this illegal if congress men/women didn't sell out American Citizens. 88% of the cost of the US Fed gov is paid for by taxes by workers (income taxes). Less than 12% comes from all corp/business taxes combined with capital gains (taxing the rich 1%). Business shifting tax burden to workers is a massive scale problem. $3.5 Trillion = US Tax Revenues (2019) and 88% came from workers. US Federal Tax Revenues (2019): $3.5 Trillion SOURCE: https://www.google.com/search?q=us+tax+revenues+2019&oq=us+tax+revenues+2019&aqs=chrome..69i57j0i390.5893j0j7&sourceid=chrome&ie=UTF-8 https://www.google.com/search?q=us+tax+revenues+2019&oq=us+t... US Capital Gains (2018): $170 Billion (4.8%) SOURCE: https://taxfoundation.org/federal-capital-gains-tax-collections-historical-data/ https://taxfoundation.org/federal-capital-gains-tax-collecti... US Corporate Taxes: 3.9% of US Tax Revenues https://taxfoundation.org/us-tax-revenue-2021/#:~:text=Corporate%20income%20taxes%20accounted%20for,income%20taxes%20and%20property%20taxes https://taxfoundation.org/us-tax-revenue-2021/#:~:text=Corpo...

kilroy123 5y ago
Historically it was the opposite. Overtime, all our policies changed to squeeze the regular citizens to protect and enrich the top 1%. It's wealth redistribution to the top. Instead Americans would rather flight each other instead of banning together to reverse course. It doesn't have to be this way. I love how this website shows this in data: https://wtfhappenedin1971.com https://wtfhappenedin1971.com
- stinos 5y ago
  I knew it has been different, didn't know that website though. Anyway this should be repeated more often, also in response to the 'but if we tax them they'll go elsewhere, there is no other way'. Because people simply do not know this.
cheph 5y ago
> 88% of the cost of the US Fed gov is paid for by taxes by workers (income taxes). Less than 12% comes from all corp/business taxes combined with capital gains (taxing the rich 1%). "the rich" pay income taxes as well: https://itep.org/who-pays-taxes-in-america-in-2020/ https://itep.org/who-pays-taxes-in-america-in-2020/ In fact, the top 1% paid 24.3% of all income tax. And the top 5% paid 40.6% of all income tax. So it is most definitely taxing the rich. The top 25% paid 66.4% of all income taxes, so to suggest that this is somehow a very regressive tax system seems to not hold water.

pembrook 5y ago

It sounds sinister in a headline, but from a general theory perspective, why shouldn't we just dump corporate tax altogether and simply raise personal capital gains taxes to match income taxes? Corporate tax is ultimately a double-tax. All of those profits will eventually be paid to investors (dividends, buybacks, acquisition) or employees (bonuses, profit sharing, stock options), where it will be taxed. If both types of income were taxed the same...it wouldn't matter who got the money, or how. Companies creating bizarre international corporate structures and governments spending time competing to untangle them is a giant waste of human bandwidth. We should just dump this charade altogether and focus on more important things.

ProAm 5y ago
There are a thousands ways to change taxes and there will be a thousand more to skirt paying them. Flat tax, eliminate tax loop holes, eliminate all deductions, only corp tax, only personal gains, only income, none will work because people are inherently greedy.

hemantv 5y ago

I am wondering if as an individual I can do these same arrangement so I am not taxed to death in California

G3rn0ti 5y ago

There shouldn’t be „corporate taxes“. They tend to be difficult to collect, troublesome to declare and actually can not contribute much to national budgets. Think about it: Employees of multinational companies pay billions of income tax. Customers buying products and services from multinational pay billions in VAT. Shareholders of multinationals receiving dividends pay billions of capital gains tax. So what exactly is left for a corporate tax to collect?

empira 5y ago
Well it all depends on your ideas about taxation, society and the role of government. It is true that huge corporations already "give back" a lot of the money they collected under various forms (income tax, VAT, etc.) But if you think that the role of government is necessary, then you agree that it should collect taxe to exercise this role. And money is taken where money is. We tax corporations because they make benefits, and a benefit is just a way of saying that even after deducting everything they can think of, they still have money they don't need. So why not take a part of it and re-invest it elsewhere where it is needed ? Ultimately there is no proper justification for any tax, except its necessity to let society fonction properly.
- G3rn0ti 5y ago
  > Ultimately there is no proper justification for any tax, except its necessity to let society fonction properly. But a tax law should adhere to the same standard of quality as other sections of the law. Under the rule of law I -- for one -- expect tax laws at least not to be arbitrary. Just the fact there is money on the table does not entitle the society to grab it.
  - empira 5y ago
    Of course. And that is not the case at the moment. Microsoft will not get fine for 'avoiding' corporate taxe if what they do is legal. But governments will sure try to change the law so that they grab as much as is needed.
chipsambos 5y ago

Proven 5y ago

Good. That's why we can get free Hotmail and Github. Taxation is theft.

xony 5y ago

EU , you have a problem

pg5 5y ago

Is it really that bad that Microsoft pursues all the legal means for minimizing their corporate tax? Microsoft employees pay the same rates as we do. Also, most people in this thread are Microsoft shareholders, unless they have some unusual choices for their retirement. 5% of SP500 is Microsoft stock, and SP500 tracking funds are a common pick.

czottmann 5y ago
It's unethical AF. Technically, it might be legal, but that doesn't make it less immoral. You know, from a societal standpoint. It's not like they have to scramble to get by, unlike many people in those countries whose tax systems they (ab)use.

deleted 5y ago

[deleted]

brobdingnagians 5y ago

Reminds me of "rich man's war and poor man's fight". The rich are always moralizing about how everyone should pay their fair share, but it is the poor man who ends up paying. Why do we think that a system controlled by the rich man will ever really allow it to overtax the rich. Better to stop raising taxes that only the poor will pay.

apercu 5y ago

This is really, really, really a problem. I know a lot of us make decent money and we write large "checks" to the government because we're in high tax brackets, but seriously. The middle class has gotten smaller. If you live in a city a house costs a million dollars. Many people don't have adequate healthcare. Yet we are allowing the richest people in the world to have astronomical profits and pay no tax to help cover the costs of society, while we squeeze the "working rich" (high earners that don't get most of their income from dividends/capital gains) and working class . Now, maybe if you are making 300+ you don't feel squeezed. But in all fairness, not that many people make $300k.

gher-shyu3i 5y ago
What do you recommend as a solution? Do you honestly think if MS and a few other companies paid more in tax things will magically get better? Do you trust the government to send that money properly? The problem runs much much deeper. This is only scratching the surface.
- apercu 5y ago
  I can't speak for places outside of the Americas because I've only travelled in the Americas for the last 10 years. But from Northern Quebec to Idaho to Florida to Nassau to Saskatoon bridges are cracking, rail is buckling, public transportation is lacking, etc. Health care wait times are bad or prices are ridiculous because of the false market we have created. So do I think governments having more money NOT by squeezing me and all those I live near more is a good thing? Why yes, yes I do. The wealthiest being job creators is bullshit. It's always been bullshit. Microsoft is anti-consumer. Fuck them, let them pay taxes like the rest of us.
  - gher-shyu3i 5y ago
    > So do I think governments having more money NOT by squeezing me and all those I live near more is a good thing? Why yes, yes I do. Unfortunately, those same governments don't see it as a mutually exclusive matter. They want to both tax you and everyone else. Not only that, they will end up wasting that money and nothing will get accomplished. You said it yourself, Canada has very bad wait times for healthcare. We need a fundamental solution.

gadders 5y ago

Good old Guardian. Always first with the hypocrisy. https://www.rt.com/uk/401323-guardian-newspaper-tax-avoidance/ https://www.rt.com/uk/401323-guardian-newspaper-tax-avoidanc...

cannabis_sam 5y ago

How much of that money comes from them competing with European businesses that actually pay back to the community they’re earning money from servicing?