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This is interesting but the problem that I see with this argument is that you are ignoring transfer pricing agreements. Basically companies like Twitter (and go

by cluda01 15y ago

This is interesting but the problem that I see with this argument is that you are ignoring transfer pricing agreements. Basically companies like Twitter (and google, facebook, etc.) use a bunch of complex tax structures in different countries to legally avoid paying corporate income tax. Google paid something like a 2.6% effective tax rate. Others like GE paid a negative percentage. So the issue here is that in the case of google or any major tech company investors + company only pay the 15% + marginal effective rate of 1 or 2% which is only 17%.

yummyfajitas 15y ago
...Twitter (and google, facebook, etc.) use a bunch of complex tax structures in different countries to legally avoid paying corporate income tax. Yes, many companies use complex tax structures to avoid paying US corporate income taxes on non-US profits. So what? They don't consume any US government services either, and Fred Wilson paid appropriate taxes to whatever nation Twitter Europe lives in. Similarly, my employees (all located here in India) don't pay any US income taxes. Is there some reason they should? GE paid a negative percentage of taxes because they lost money in prior years and used a loss carryforward. The loss carryforward is a necessary hack to the system to prevent taxation from penalizing businesses with volatile income streams. Consider two investments - one makes $10 with P=1. Another makes +$60 with P=0.5, $-40 with $P=0.5. Without the loss carryforward, the volatile company would pay an average tax rate of 45% (15% of $60 when they make money, 0% of -$40 when they lose money).
- onenine 15y ago
  http://www.state.gov/secretary/rm/2010/01/135105.htm http://www.state.gov/secretary/rm/2010/01/135105.htm Google, and of course virtually every multi-national corporation based in the US, does make use of many US government capabilities. I don't think it makes any sense to say: >They don't consume any US government services either However, I do think the corporate income tax issue is a subtle one. It'd be interesting to compare what Larry and Sergey will pay in taxes versus government outlays for the things that have made Google possible.
- cluda01 15y ago
  >They don't consume any US government services either These sorts of arguments always bother me because they over simplify the complexities of how one benefits from a public good or service. One example would be that Google doesn't have to worry about their engineers getting into a car crash on the way to work because the governments (federal and state) collectively spend billions of dollars ensuring that our roadways are safe for vehicles. Another example would be that google doesn't have to spend money hiring private militaries or police forces to enforce their contracts because we have a judicial system that is paid for by the tax payers. This particular example is where your "consumption" argument falls down rather directly. Although it's true that they hire their own counsel, they are not the ones paying the salaries of all the various court officials. They "consume" these resources but in many peoples minds, myself included, do not pay their fair share. >Similarly, my employees (all located here in India) don't pay any US income taxes. Is there some reason they should? Of course not. The company that you set up and domiciled in America pays income taxes on the profit that you generate. Profit is usually defined as revenue minus expenses. Taxes paid in other countries are considered expenses and as such are accounted for. >The loss carryforward is a necessary hack to the system to prevent taxation from penalizing businesses with volatile income streams. Although we can both agree that GE's tax situation is very complex the problems that I and others have is that they directly lobby the government to get these tax incentives. The example I am thinking of is their lobbying arm advocating for an increased depreciation schedule on some of their capital equipment. This isn't fair. The summary of my problem with your argument is that you benefit from all the things that America provides (government services, easy access to higher education, educated working class, pro-business climate, etc) but don't think that you should have to pay for any of this because "you didn't consume it." Just by living in America and being able to take advantage of these things you have consumed these things and you should have to pay your fair share. Consumption doesn't necessarily mean somebody handing you a check or waiting in a welfare line.
  - thurn 15y ago
    Obviously Google Inc. consumes US government services. The point is that Google Ireland Inc. probably doesn't. Google Inc. pays its fair share of U.S. corporate tax on domestic revenue, and Google Ireland pays tax in Ireland. Why should Google Ireland's revenue, which never comes into America, be subject to U.S. tax law? They don't rely on U.S. government services, they rely on Irish government services.
shareme 15y ago
Yes, but lets say w talk about the $5 million dollar company..if we have no US corp taxes than that company can locate in the USA and save possibly $500,000 in corp taxes. We might get enough offsets in jobs, payroll taxes, etc to offset the corp taxes lost. And better yet it does skew certain manufacturing concerns to not out-source but in-source..

by cluda01 15y ago

yummyfajitas 15y ago

...Twitter (and google, facebook, etc.) use a bunch of complex tax structures in different countries to legally avoid paying corporate income tax. Yes, many companies use complex tax structures to avoid paying US corporate income taxes on non-US profits. So what? They don't consume any US government services either, and Fred Wilson paid appropriate taxes to whatever nation Twitter Europe lives in. Similarly, my employees (all located here in India) don't pay any US income taxes. Is there some reason they should? GE paid a negative percentage of taxes because they lost money in prior years and used a loss carryforward. The loss carryforward is a necessary hack to the system to prevent taxation from penalizing businesses with volatile income streams. Consider two investments - one makes $10 with P=1. Another makes +$60 with P=0.5, $-40 with $P=0.5. Without the loss carryforward, the volatile company would pay an average tax rate of 45% (15% of $60 when they make money, 0% of -$40 when they lose money).

onenine 15y ago
http://www.state.gov/secretary/rm/2010/01/135105.htm http://www.state.gov/secretary/rm/2010/01/135105.htm Google, and of course virtually every multi-national corporation based in the US, does make use of many US government capabilities. I don't think it makes any sense to say: >They don't consume any US government services either However, I do think the corporate income tax issue is a subtle one. It'd be interesting to compare what Larry and Sergey will pay in taxes versus government outlays for the things that have made Google possible.
cluda01 15y ago
>They don't consume any US government services either These sorts of arguments always bother me because they over simplify the complexities of how one benefits from a public good or service. One example would be that Google doesn't have to worry about their engineers getting into a car crash on the way to work because the governments (federal and state) collectively spend billions of dollars ensuring that our roadways are safe for vehicles. Another example would be that google doesn't have to spend money hiring private militaries or police forces to enforce their contracts because we have a judicial system that is paid for by the tax payers. This particular example is where your "consumption" argument falls down rather directly. Although it's true that they hire their own counsel, they are not the ones paying the salaries of all the various court officials. They "consume" these resources but in many peoples minds, myself included, do not pay their fair share. >Similarly, my employees (all located here in India) don't pay any US income taxes. Is there some reason they should? Of course not. The company that you set up and domiciled in America pays income taxes on the profit that you generate. Profit is usually defined as revenue minus expenses. Taxes paid in other countries are considered expenses and as such are accounted for. >The loss carryforward is a necessary hack to the system to prevent taxation from penalizing businesses with volatile income streams. Although we can both agree that GE's tax situation is very complex the problems that I and others have is that they directly lobby the government to get these tax incentives. The example I am thinking of is their lobbying arm advocating for an increased depreciation schedule on some of their capital equipment. This isn't fair. The summary of my problem with your argument is that you benefit from all the things that America provides (government services, easy access to higher education, educated working class, pro-business climate, etc) but don't think that you should have to pay for any of this because "you didn't consume it." Just by living in America and being able to take advantage of these things you have consumed these things and you should have to pay your fair share. Consumption doesn't necessarily mean somebody handing you a check or waiting in a welfare line.
- thurn 15y ago
  Obviously Google Inc. consumes US government services. The point is that Google Ireland Inc. probably doesn't. Google Inc. pays its fair share of U.S. corporate tax on domestic revenue, and Google Ireland pays tax in Ireland. Why should Google Ireland's revenue, which never comes into America, be subject to U.S. tax law? They don't rely on U.S. government services, they rely on Irish government services.

shareme 15y ago

Yes, but lets say w talk about the $5 million dollar company..if we have no US corp taxes than that company can locate in the USA and save possibly $500,000 in corp taxes. We might get enough offsets in jobs, payroll taxes, etc to offset the corp taxes lost. And better yet it does skew certain manufacturing concerns to not out-source but in-source..