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Tim O'Reilly's Reflections on Apple's Tax Avoidance Tactics

53 points by scottkduncan 14y ago

jerf 14y ago
A classic substitution, substituting an argument that government should exist for an argument that a government should get a given bit of money. It's not the same question, and following that substitution to its logical conclusion leads to the government needing 100% of the money. (And I do mean logical conclusion, not extreme conclusion. This is a fallacious argument.) Those libertarians he references are strawmen.
- skore 14y ago
  I disagree. From what I understand, he is not talking about government needing the money, but society needing the money (in his example, which is, after all, the central reason for his post, he talks about him taking in money for a group of people to organize an event for everybody). This maps well to his addressing those "strawmen" libertarians. Most libertarian rhetoric builds on the fact that people have been made suspicious of government and are suggested to think of government as "the other". Likewise, you seem to try to force his argument on its head - Nobody argues whether government should exist and you suggesting it makes me wonder how closely you've read the post. "The Government" is the subgroup of society who have been elected by the rest of society to invest part of societies resources to the advantage to everybody. The basic math being that society will be better off having spent the money in that way than had it kept the money. Whether or not you agree that that is happening, that is the basic plan. Tims post simply says: If we want to be a society, that comes at a cost and somebody has to pick up the tab at the end of the night and the system to make that happen is called taxation. Claiming that this in itself "fallacious argument" because you actually know what his argument is seems ambitious, but I simply have no idea where you take that from. Let's argue the reverse: Since you don't seem to disagree that a government in itself is a good concept, who do you think should pay the price for it?
  - jimmyvanhalen 14y ago
    Everybody's favorite ad company is also doing the same thing btw. Google 2.4% Rate Shows How $60 Billion Lost to Tax Loopholes Google Inc. cut its taxes by $3.1 billion in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda. http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-shows-how-60-billion-u-s-revenue-lost-to-tax-loopholes.html http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-sho...
  - jerf 14y ago
    "If we want to be a society, that comes at a cost and somebody has to pick up the tab at the end of the night and the system to make that happen is called taxation." Your own summary simply repeats the fallacy. That someone must pick up the tab does not imply that the tab must be larger than it is today, or that the tab must be paid for by this particular chunk of money. It does not follow. It is not a logical argument. It isn't even about libertarianism. It doesn't even rise to the level of an argument against libertarianism, because it isn't well-formed enough to even be called a proper argument. "We need a thing" and "We need more of a thing" are two completely different arguments, and you shouldn't allow one argument to be substituted for another without noticing.
    - skore 14y ago
      Well, that's another thing that nobody is arguing. Maybe that really is where you misunderstand Tim's position: He does not say we need more taxation, he says that there are actors in the game that do not pay their fair share. You're doing your own argument a disservice by trying to modify the position of your opponent. That's not how discussions work. The position that Tim (and I) argue is simple: There is X amount of money that it costs to run society. While, yes, we constantly have to figure out what that amount is, there is no question that it should be paid by everybody in that society. And that the stronger players (who both benefit most from a well funded society and who have the most to give) should be decent enough to step in appropriately.
      - carbocation 14y ago
EricDeb 14y ago
I admittedly have a poor understanding of corporate taxation and offshore avoidance, but this example makes sense to me. Though government is not a family, and it is safe to say all parties will act selfishly. This may further his argument that there should be no tax exceptions or render it irrelevant, I'm not sure.
glenra 14y ago
I don't see how Tim's conclusions follow from his premises. If we are supposed to think of general taxation and the overall amount of government spending as reasonably justified on the grounds that these things were the outcome of a democratic process which "the people" (somewhat indirectly) agreed on, doesn't the same logic suggest that the loopholes are similarly reasonable and justified? Loopholes aren't a bug in an otherwise perfect system; they are part of the negotiating process that produces laws. If it weren't for the loopholes, legislators wouldn't be able to find support for tax rates as high as they are. The loopholes are there for a reason. The loopholes are part of the exact same "social contract" that produced the taxes.
- skore 14y ago
  No, that would be overly relativistic. There is a huge corporate culture that drives tax law lobbying. This has created a situation where tax law more likely reveals the will of the corporations, not the will of the people.
  - yummyfajitas 14y ago
    There is a huge government union culture that drives spending law lobbying. This has created a situation where spending laws more likely reveals the will of unions, not the will of the people.
    - skore 14y ago
      That may or may not add to the problem, yes, I'm not an expert in that area. If I was forced to guess, though, I would still say that most of the money influx comes from corporations.
      - yummyfajitas 14y ago
        You'd be wrong. Plenty of money comes from unions. http://www.opensecrets.org/orgs/list.php?order=A http://www.opensecrets.org/orgs/list.php?order=A However, the point I'm making is that once we claim the democratic process doesn't justify the taxation side due to lobbying, we also can't claim the democratic process justifies the spending side.
carbocation 14y ago
This is a classic example of singling out one particular actor for blame when the problem is clearly systemic. There is little value for society to spend its time saying, "Apple is bad because it minimizes, within the contours of the law, its tax burden." And, contrary to Mr. O'Reilly's assertions at the beginning of his piece, I don't say this because I think Apple can spend its money better than the US Government can. For this argument, I don't care either way because it's irrelevant; he merely dismissed a strawman. The question has to do with our tax code. Is it achieving the goals that we created it to achieve? If so, then there is nothing to discuss, so presumably it's not. If it's not achieving its goals, let's look at the entire picture and talk about where its failures are and how we should change it. Attacking any one particular company is merely a distraction that impedes our ability to discuss the things that actually matter.
- skore 14y ago
  This makes me wonder, again, whether I have read a different article. If you want to attack the NYT piece, maybe you should comment on that thread, but this is the discussion about Tim O'Reilly's post containing reflections on the general theme, not apple as an actor in particular. That makes your comment seems misplayed here.
  - carbocation 14y ago
    No, I read Mr. O'Reilly's piece and am responding to it. You seem to be saying that, because I reject the premises and false arguments that he makes in his introduction, therefore I didn't read it? Feel free to respond to my substantive point rather than just distracting from the actual conversation.
    - skore 14y ago
      Tims post has two parts. The first part is him explaining why he has wrote it (Hey, I've read the NYT piece as well!) and then what he has to say (Hey, let me elaborate on the theme of taxation). The NYT piece is not a premise in his argument, it's simply the reason why he writes about taxation.
brackishlake 14y ago
I'd love to hear about a PERSON who routinely went out of their way to overpay for a service. When was the last time you arrived at a store, saw a shirt, and said, "I'd like to pay you an extra $10 for this shirt because I believe in what you're doing." Never. For that matter, when was the last time you called up the IRS and said, "Dammit America, you're doing such a good job, I'm sending an extra $5,000." Never. In fact, the most you or I have ever given extra is the $3 election fund. Let's stop joking around, people. Companies, like people, are going to find ways to pay as little as possible, so long as it's legal. Let's stop blaming Apple and blame ourselves: reform the tax code to be simple, fair, and progressive.
- Lewton 14y ago
  Ever heard of tipping? Also, I am willing to pay more than required for products that I am particularly keen on, which is why I'm such a fan of Kickstarter
- vacri 14y ago
  I'd love to hear about a PERSON who routinely funnels their income tax through a different country so that they pay less tax, despite not really living or doing much business there, nor stamping Designed In Different Country on everything they make.
  - dap 14y ago
    You can't legally do that. That's an important difference. But you can do other things to reduce your tax burden, and people do hire tax professionals to do that. H&R Block even has a "Maximum Refund Guarantee".
- josephcooney 14y ago
  I've overpaid for goods and services that I thought were exceptionally good.
- skore 14y ago
  Just off the top of my head - I frequently pay more than is asked on Bandcamp and Humble Bundle. I once paid $20 for an mp3 of a song to its artist, even though it was readily available on youtube.
waratuman 14y ago
His family example doesn't really work. If we had all agreed to throw this big party then each person who agreed stated his obligations to the party. If someone had not agreed to the party, they simply would have not payed and not come. This is not how it works with the government. You are forced to come to the party and pay for it to make everyone else happy. It does not matter that it cost you or that it is not what you want to do. You must surrender yourself for societies "greater good." It is also worth mentioning that happiness is a subjective value. It is pointless to draw a conclusion about what make society happy when only individuals can be happy. If someone goes their own way, they are not leaving happiness on the table, they are seeking it out elsewhere.
DennisP 14y ago
The whole point of taxes is that we can't rely on voluntary donations to fund public goods. It's pointless to argue that people or corporations should voluntarily pay more taxes than they're legally required to pay.
- skore 14y ago
  > It's pointless to argue that people or corporations should voluntarily pay more taxes than they're legally required to pay. [[Citation needed]] - don't see what you're talking about in the post - who is arguing that?
  - eli 14y ago
    Are there major corporations already doing this ?
    - skore 14y ago
      I don't know and that's not what I was asking - I tried to clarify that I was asking OP to cite where in the post that this discussion is about somebody argued that corporations pay voluntary, additional taxes.
- Aethaeryn 14y ago
  The whole point of taxes is that we can't rely on voluntary donations to fund public goods. Actually, the Romans did just that. https://en.wikipedia.org/wiki/Aedile https://en.wikipedia.org/wiki/Aedile Note this part from the article in particular: Because Aediles were not reimbursed for any of their public expenditures, most individuals who sought the office were independently wealthy. Since this office was a stepping stone to higher office and the Senate, it helped to ensure that only wealthy individuals (mostly landowners) would win election to high office. So, yes, it's possible to organize things that way, but the side effect is that it limits political power and offices to those who are wealthy. And, yes, the Romans also had taxes so they didn't rely on this method entirely, but this is an alternative model of funding public expenses without taxation and hence a counterexample to your claim. On the other hand, there's a lot of money that is being spent on campaign advertisements. Perhaps it would be a net gain for society if politicians 'advertised' by spending that cash on public goods instead. Perhaps we can learn from the Romans. :-P
jbarham 14y ago
The family analogy is heart-warming, but scaled up to a societal/country level it can lead to destructive practices like nepotism and tribalism.
- 3pt14159 14y ago
  The way I usually say it is like this: Communism works best between two spouses, a little worse with immediate family, a little worse with extended family, a little worse with orthodox religious communities. People can see the trend. As the number of people that get involved goes up the total number of connections goes up n + 1 choose two and the chance that you deeply care for them goes down.

53 points by scottkduncan 14y ago

jerf 14y ago

A classic substitution, substituting an argument that government should exist for an argument that a government should get a given bit of money. It's not the same question, and following that substitution to its logical conclusion leads to the government needing 100% of the money. (And I do mean logical conclusion, not extreme conclusion. This is a fallacious argument.) Those libertarians he references are strawmen.

skore 14y ago
I disagree. From what I understand, he is not talking about government needing the money, but society needing the money (in his example, which is, after all, the central reason for his post, he talks about him taking in money for a group of people to organize an event for everybody). This maps well to his addressing those "strawmen" libertarians. Most libertarian rhetoric builds on the fact that people have been made suspicious of government and are suggested to think of government as "the other". Likewise, you seem to try to force his argument on its head - Nobody argues whether government should exist and you suggesting it makes me wonder how closely you've read the post. "The Government" is the subgroup of society who have been elected by the rest of society to invest part of societies resources to the advantage to everybody. The basic math being that society will be better off having spent the money in that way than had it kept the money. Whether or not you agree that that is happening, that is the basic plan. Tims post simply says: If we want to be a society, that comes at a cost and somebody has to pick up the tab at the end of the night and the system to make that happen is called taxation. Claiming that this in itself "fallacious argument" because you actually know what his argument is seems ambitious, but I simply have no idea where you take that from. Let's argue the reverse: Since you don't seem to disagree that a government in itself is a good concept, who do you think should pay the price for it?
- jimmyvanhalen 14y ago
  Everybody's favorite ad company is also doing the same thing btw. Google 2.4% Rate Shows How $60 Billion Lost to Tax Loopholes Google Inc. cut its taxes by $3.1 billion in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda. http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-shows-how-60-billion-u-s-revenue-lost-to-tax-loopholes.html http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-sho...
- jerf 14y ago
  "If we want to be a society, that comes at a cost and somebody has to pick up the tab at the end of the night and the system to make that happen is called taxation." Your own summary simply repeats the fallacy. That someone must pick up the tab does not imply that the tab must be larger than it is today, or that the tab must be paid for by this particular chunk of money. It does not follow. It is not a logical argument. It isn't even about libertarianism. It doesn't even rise to the level of an argument against libertarianism, because it isn't well-formed enough to even be called a proper argument. "We need a thing" and "We need more of a thing" are two completely different arguments, and you shouldn't allow one argument to be substituted for another without noticing.
  - skore 14y ago
    Well, that's another thing that nobody is arguing. Maybe that really is where you misunderstand Tim's position: He does not say we need more taxation, he says that there are actors in the game that do not pay their fair share. You're doing your own argument a disservice by trying to modify the position of your opponent. That's not how discussions work. The position that Tim (and I) argue is simple: There is X amount of money that it costs to run society. While, yes, we constantly have to figure out what that amount is, there is no question that it should be paid by everybody in that society. And that the stronger players (who both benefit most from a well funded society and who have the most to give) should be decent enough to step in appropriately.
    - carbocation 14y ago

EricDeb 14y ago

I admittedly have a poor understanding of corporate taxation and offshore avoidance, but this example makes sense to me. Though government is not a family, and it is safe to say all parties will act selfishly. This may further his argument that there should be no tax exceptions or render it irrelevant, I'm not sure.

glenra 14y ago

I don't see how Tim's conclusions follow from his premises. If we are supposed to think of general taxation and the overall amount of government spending as reasonably justified on the grounds that these things were the outcome of a democratic process which "the people" (somewhat indirectly) agreed on, doesn't the same logic suggest that the loopholes are similarly reasonable and justified? Loopholes aren't a bug in an otherwise perfect system; they are part of the negotiating process that produces laws. If it weren't for the loopholes, legislators wouldn't be able to find support for tax rates as high as they are. The loopholes are there for a reason. The loopholes are part of the exact same "social contract" that produced the taxes.

skore 14y ago
No, that would be overly relativistic. There is a huge corporate culture that drives tax law lobbying. This has created a situation where tax law more likely reveals the will of the corporations, not the will of the people.
- yummyfajitas 14y ago
  There is a huge government union culture that drives spending law lobbying. This has created a situation where spending laws more likely reveals the will of unions, not the will of the people.
  - skore 14y ago
    That may or may not add to the problem, yes, I'm not an expert in that area. If I was forced to guess, though, I would still say that most of the money influx comes from corporations.
    - yummyfajitas 14y ago
      You'd be wrong. Plenty of money comes from unions. http://www.opensecrets.org/orgs/list.php?order=A http://www.opensecrets.org/orgs/list.php?order=A However, the point I'm making is that once we claim the democratic process doesn't justify the taxation side due to lobbying, we also can't claim the democratic process justifies the spending side.

carbocation 14y ago

This is a classic example of singling out one particular actor for blame when the problem is clearly systemic. There is little value for society to spend its time saying, "Apple is bad because it minimizes, within the contours of the law, its tax burden." And, contrary to Mr. O'Reilly's assertions at the beginning of his piece, I don't say this because I think Apple can spend its money better than the US Government can. For this argument, I don't care either way because it's irrelevant; he merely dismissed a strawman. The question has to do with our tax code. Is it achieving the goals that we created it to achieve? If so, then there is nothing to discuss, so presumably it's not. If it's not achieving its goals, let's look at the entire picture and talk about where its failures are and how we should change it. Attacking any one particular company is merely a distraction that impedes our ability to discuss the things that actually matter.

skore 14y ago
This makes me wonder, again, whether I have read a different article. If you want to attack the NYT piece, maybe you should comment on that thread, but this is the discussion about Tim O'Reilly's post containing reflections on the general theme, not apple as an actor in particular. That makes your comment seems misplayed here.
- carbocation 14y ago
  No, I read Mr. O'Reilly's piece and am responding to it. You seem to be saying that, because I reject the premises and false arguments that he makes in his introduction, therefore I didn't read it? Feel free to respond to my substantive point rather than just distracting from the actual conversation.
  - skore 14y ago
    Tims post has two parts. The first part is him explaining why he has wrote it (Hey, I've read the NYT piece as well!) and then what he has to say (Hey, let me elaborate on the theme of taxation). The NYT piece is not a premise in his argument, it's simply the reason why he writes about taxation.

brackishlake 14y ago

I'd love to hear about a PERSON who routinely went out of their way to overpay for a service. When was the last time you arrived at a store, saw a shirt, and said, "I'd like to pay you an extra $10 for this shirt because I believe in what you're doing." Never. For that matter, when was the last time you called up the IRS and said, "Dammit America, you're doing such a good job, I'm sending an extra $5,000." Never. In fact, the most you or I have ever given extra is the $3 election fund. Let's stop joking around, people. Companies, like people, are going to find ways to pay as little as possible, so long as it's legal. Let's stop blaming Apple and blame ourselves: reform the tax code to be simple, fair, and progressive.

Lewton 14y ago
Ever heard of tipping? Also, I am willing to pay more than required for products that I am particularly keen on, which is why I'm such a fan of Kickstarter
vacri 14y ago
I'd love to hear about a PERSON who routinely funnels their income tax through a different country so that they pay less tax, despite not really living or doing much business there, nor stamping Designed In Different Country on everything they make.
- dap 14y ago
  You can't legally do that. That's an important difference. But you can do other things to reduce your tax burden, and people do hire tax professionals to do that. H&R Block even has a "Maximum Refund Guarantee".
josephcooney 14y ago
I've overpaid for goods and services that I thought were exceptionally good.
skore 14y ago
Just off the top of my head - I frequently pay more than is asked on Bandcamp and Humble Bundle. I once paid $20 for an mp3 of a song to its artist, even though it was readily available on youtube.

waratuman 14y ago

His family example doesn't really work. If we had all agreed to throw this big party then each person who agreed stated his obligations to the party. If someone had not agreed to the party, they simply would have not payed and not come. This is not how it works with the government. You are forced to come to the party and pay for it to make everyone else happy. It does not matter that it cost you or that it is not what you want to do. You must surrender yourself for societies "greater good." It is also worth mentioning that happiness is a subjective value. It is pointless to draw a conclusion about what make society happy when only individuals can be happy. If someone goes their own way, they are not leaving happiness on the table, they are seeking it out elsewhere.

DennisP 14y ago

The whole point of taxes is that we can't rely on voluntary donations to fund public goods. It's pointless to argue that people or corporations should voluntarily pay more taxes than they're legally required to pay.

skore 14y ago
> It's pointless to argue that people or corporations should voluntarily pay more taxes than they're legally required to pay. [[Citation needed]] - don't see what you're talking about in the post - who is arguing that?
- eli 14y ago
  Are there major corporations already doing this ?
  - skore 14y ago
    I don't know and that's not what I was asking - I tried to clarify that I was asking OP to cite where in the post that this discussion is about somebody argued that corporations pay voluntary, additional taxes.
Aethaeryn 14y ago
The whole point of taxes is that we can't rely on voluntary donations to fund public goods. Actually, the Romans did just that. https://en.wikipedia.org/wiki/Aedile https://en.wikipedia.org/wiki/Aedile Note this part from the article in particular: Because Aediles were not reimbursed for any of their public expenditures, most individuals who sought the office were independently wealthy. Since this office was a stepping stone to higher office and the Senate, it helped to ensure that only wealthy individuals (mostly landowners) would win election to high office. So, yes, it's possible to organize things that way, but the side effect is that it limits political power and offices to those who are wealthy. And, yes, the Romans also had taxes so they didn't rely on this method entirely, but this is an alternative model of funding public expenses without taxation and hence a counterexample to your claim. On the other hand, there's a lot of money that is being spent on campaign advertisements. Perhaps it would be a net gain for society if politicians 'advertised' by spending that cash on public goods instead. Perhaps we can learn from the Romans. :-P

jbarham 14y ago

The family analogy is heart-warming, but scaled up to a societal/country level it can lead to destructive practices like nepotism and tribalism.

3pt14159 14y ago
The way I usually say it is like this: Communism works best between two spouses, a little worse with immediate family, a little worse with extended family, a little worse with orthodox religious communities. People can see the trend. As the number of people that get involved goes up the total number of connections goes up n + 1 choose two and the chance that you deeply care for them goes down.