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It's not shaming them for their tax rates -- we should shame Congress for not raising taxes, if we all agree taxes should be higher on large corporations. It's

by ebbv 15y ago

It's not shaming them for their tax rates -- we should shame Congress for not raising taxes, if we all agree taxes should be higher on large corporations. It's shaming them for legal, but unethical behavior. There's a lot of behavior that falls into the area of "legal, but shitty." Large corporations gaming the system to avoid paying taxes falls into that. Don't kid yourself that we can ever totally eliminate this kind of thing. It's a moving goalpost. You pass laws to stop one kind of thing, their highly paid attorneys and accountants will find something else. It's cheaper for them to pay smart people really well to find loopholes than it is for them to pay their legitimate tax rates. If we all behaved the way corporations do -- sticking only to the letter of the law, and exploiting every other opportunity to better ourselves at the expense of everyone else around us -- the world would be a really awful place. We have to point out this behavior and shame the corporations, because negative public opinion possibly affecting their bottom line is the only thing they will respond to.

JumpCrisscross 15y ago
The article's gist is that there is the "right"* thing to do and the pragmatic thing, something I've seen discussed on HN before [1]. The pragmatic thing is recognising that there's juicier fruit on lower branches, i.e. personal income and consumption, in terms of cost of securing the tax income and risk of adverse effects/the taxee wiggling out. *I believe value destruction is unethical, sourcing my sense of ethics from the perspective of global long-run production. A company moving assets from the inefficient US government to its private, profitable book is thus good to me. This isn't to start a philosophical flame war on this but to point out that you can't assume this behaviour automatically falls into the "legal, but shitty" area for everyone. [1] http://www.marco.org/2012/02/25/right-vs-pragmatic http://www.marco.org/2012/02/25/right-vs-pragmatic
swombat 15y ago
Is exploiting tax loopholes really unethical? Some would argue that the government is the biggest waste of money there is. I'm not saying that's my belief, but let's entertain that thought for a minute. If you believe that the government wastes most, say 95%, of its money on stupid things that should never receive a dollar from anyone (like the war in Iraq, to pick a random one), and you believe that you personally can do more with that money in terms of "making the world a better place", then it follows that paying as little tax as possible is the ethical choice. Let's take an example: Bill Gates. Bill Gates is currently the second richest man on earth, according to http://en.wikipedia.org/wiki/Forbes_list_of_billionaires http://en.wikipedia.org/wiki/Forbes_list_of_billionaires . Did he use all those tax schemes on his way there? You bet your bottom dollar he did. Now he's using this money directly to solve problems like curing Africa of Malaria. Do you think he's using that money more efficiently than a government programme would? I'd bet on that too. Would the world be better off if the US government had $20b more and Bill Gates had $20b less? I don't think so. I think Bill Gates can use the money much more intelligently than the US government ever could. So, is it unethical to pour less money into the pointless furnace of wasteful government? I'm not saying this point of view is the only point of view out there. But to declare tax avoidance outright "unethical" is a failure in perspective.
- bicknergseng 15y ago
  Fabulous argument for benevolent dictatorships.
- jbooth 15y ago
  It's unethical because we're all on the hook for the money the government spends. That's the social contract. If you think the war in Iraq was a big waste of money (as I do), then great, lobby against that. But once the decision's made, we're all on the hook for the money and wiggling out is akin to welching on a bet or defaulting on a loan when you have the money to pay. Funnily enough, most of the people who complain about "wasteful government spending" were the the loudest advocates of the Iraq war and the expanded modern security state. It turns out everything became way more wasteful and tyrannical on a single day in January 2009.
  - clarky07 15y ago
    There is nothing unethical about following laws as they are written. The thing to lobby against is the absurd tax code we have in the US. If the tax code wasn't 16k pages we wouldn't have this "problem." You could put all the information needed on 1 page, and we wouldn't have to read these stories in the news anymore.
    - jbooth 15y ago
      Nothing unethical about following laws as they are written? That's a silly absolute. What about the nuremberg trials? There's all sorts of unethical things you can do legally, and if you have a bunch of lobbyists working to change the law in your favor, there's even more.
      - clarky07 15y ago
        That's a pretty big stretch of what I was talking about going from taking a deduction to murdering people. Would you feel better if I said there is nothing unethical about following our current tax laws? As it is the rich pay far more in taxes than what they make relative to the total so I have no problems with them working to minimize their tax bill just as I do. They simply have more resources with which to minimize their bill. They still pay far far more in taxes.
Symmetry 15y ago
I'm not sure you're right to single out corporations here. It seems like all the Real People I know who are aware of simple things they could do to pay less in taxes end up doing them as well.
- jbooth 15y ago
  Difference being that Real People can't spend 10 million setting up foreign subsidiaries in order to avoid taxation on a billion in income. Different math comes into play when you can fill an office building with lawyers for your tax policy.
  - olalonde 15y ago
    On the other hand, they can much more easily pass under the radar.
    - jbooth 15y ago
      But then you're talking fraud and running a big risk.
  - Symmetry 15y ago
    No, but I know plenty who pay H&R block to help them find all the deductions they're eligible for. This doesn't come out to 10 million, but the income they're sheltering. Its true that large corporations benefit from economies of scale when they try to avoid paying any more taxes than they have to, but I don't see any moral difference between what they're doing and what everyone else does.
- beagle3 15y ago
  and, in addition to what jbooth wrote above - these corporations lobby for the laws to be changed in their favor. How many Real People do you know who have done that? And is setting up 4 related corporations in 3 different international jurisdiction a "simple" thing?
  - 15y ago
byrneseyeview 15y ago
I don't understand why you'd trust a corporation more than Congress when it comes to how the tax code should work. If we all pay what we think we should owe, rather than what the rules tell us we actually owe, that would lead to chaos. "If we all behaved the way corporations do" doesn't really mean anything. Corporations are people. It would be much more accurate to say "If all people behaved like the people who work at Apple, the world would be a worse place," but I don't think that's defensible at all. If it does become a social norm to obey the law you wish Congress passed, instead of the law they actually passed, you're subsidizing people who ignore this norm. I wouldn't want to live in a world where RIMM out-competes Apple because Apple scrupulously follows good, imaginary rules, and RIMM scrupulously follows actual rules instead. This would all be a lot less meaningful if the US had lower corporate tax rates, but ours are effectively the highest in the world. Since the corporate tax rate is also the subsidy for hiding a given amount of income, it's no wonder that we lead the world in tax avoidance, too.
olalonde 15y ago
It really isn't that clear. A lot of people regard taxes as unethical.
gte910h 15y ago
That's full of crap. What they'll respond to is changing the law! They're just following the law. Beg off the companies, and change it.

by ebbv 15y ago

JumpCrisscross 15y ago

The article's gist is that there is the "right"* thing to do and the pragmatic thing, something I've seen discussed on HN before [1]. The pragmatic thing is recognising that there's juicier fruit on lower branches, i.e. personal income and consumption, in terms of cost of securing the tax income and risk of adverse effects/the taxee wiggling out. *I believe value destruction is unethical, sourcing my sense of ethics from the perspective of global long-run production. A company moving assets from the inefficient US government to its private, profitable book is thus good to me. This isn't to start a philosophical flame war on this but to point out that you can't assume this behaviour automatically falls into the "legal, but shitty" area for everyone. [1] http://www.marco.org/2012/02/25/right-vs-pragmatic http://www.marco.org/2012/02/25/right-vs-pragmatic

swombat 15y ago

Is exploiting tax loopholes really unethical? Some would argue that the government is the biggest waste of money there is. I'm not saying that's my belief, but let's entertain that thought for a minute. If you believe that the government wastes most, say 95%, of its money on stupid things that should never receive a dollar from anyone (like the war in Iraq, to pick a random one), and you believe that you personally can do more with that money in terms of "making the world a better place", then it follows that paying as little tax as possible is the ethical choice. Let's take an example: Bill Gates. Bill Gates is currently the second richest man on earth, according to http://en.wikipedia.org/wiki/Forbes_list_of_billionaires http://en.wikipedia.org/wiki/Forbes_list_of_billionaires . Did he use all those tax schemes on his way there? You bet your bottom dollar he did. Now he's using this money directly to solve problems like curing Africa of Malaria. Do you think he's using that money more efficiently than a government programme would? I'd bet on that too. Would the world be better off if the US government had $20b more and Bill Gates had $20b less? I don't think so. I think Bill Gates can use the money much more intelligently than the US government ever could. So, is it unethical to pour less money into the pointless furnace of wasteful government? I'm not saying this point of view is the only point of view out there. But to declare tax avoidance outright "unethical" is a failure in perspective.

bicknergseng 15y ago
Fabulous argument for benevolent dictatorships.
jbooth 15y ago
It's unethical because we're all on the hook for the money the government spends. That's the social contract. If you think the war in Iraq was a big waste of money (as I do), then great, lobby against that. But once the decision's made, we're all on the hook for the money and wiggling out is akin to welching on a bet or defaulting on a loan when you have the money to pay. Funnily enough, most of the people who complain about "wasteful government spending" were the the loudest advocates of the Iraq war and the expanded modern security state. It turns out everything became way more wasteful and tyrannical on a single day in January 2009.
- clarky07 15y ago
  There is nothing unethical about following laws as they are written. The thing to lobby against is the absurd tax code we have in the US. If the tax code wasn't 16k pages we wouldn't have this "problem." You could put all the information needed on 1 page, and we wouldn't have to read these stories in the news anymore.
  - jbooth 15y ago
    Nothing unethical about following laws as they are written? That's a silly absolute. What about the nuremberg trials? There's all sorts of unethical things you can do legally, and if you have a bunch of lobbyists working to change the law in your favor, there's even more.
    - clarky07 15y ago
      That's a pretty big stretch of what I was talking about going from taking a deduction to murdering people. Would you feel better if I said there is nothing unethical about following our current tax laws? As it is the rich pay far more in taxes than what they make relative to the total so I have no problems with them working to minimize their tax bill just as I do. They simply have more resources with which to minimize their bill. They still pay far far more in taxes.

Symmetry 15y ago

I'm not sure you're right to single out corporations here. It seems like all the Real People I know who are aware of simple things they could do to pay less in taxes end up doing them as well.

jbooth 15y ago
Difference being that Real People can't spend 10 million setting up foreign subsidiaries in order to avoid taxation on a billion in income. Different math comes into play when you can fill an office building with lawyers for your tax policy.
- olalonde 15y ago
  On the other hand, they can much more easily pass under the radar.
  - jbooth 15y ago
    But then you're talking fraud and running a big risk.
- Symmetry 15y ago
  No, but I know plenty who pay H&R block to help them find all the deductions they're eligible for. This doesn't come out to 10 million, but the income they're sheltering. Its true that large corporations benefit from economies of scale when they try to avoid paying any more taxes than they have to, but I don't see any moral difference between what they're doing and what everyone else does.
beagle3 15y ago
and, in addition to what jbooth wrote above - these corporations lobby for the laws to be changed in their favor. How many Real People do you know who have done that? And is setting up 4 related corporations in 3 different international jurisdiction a "simple" thing?
- 15y ago

byrneseyeview 15y ago

I don't understand why you'd trust a corporation more than Congress when it comes to how the tax code should work. If we all pay what we think we should owe, rather than what the rules tell us we actually owe, that would lead to chaos. "If we all behaved the way corporations do" doesn't really mean anything. Corporations are people. It would be much more accurate to say "If all people behaved like the people who work at Apple, the world would be a worse place," but I don't think that's defensible at all. If it does become a social norm to obey the law you wish Congress passed, instead of the law they actually passed, you're subsidizing people who ignore this norm. I wouldn't want to live in a world where RIMM out-competes Apple because Apple scrupulously follows good, imaginary rules, and RIMM scrupulously follows actual rules instead. This would all be a lot less meaningful if the US had lower corporate tax rates, but ours are effectively the highest in the world. Since the corporate tax rate is also the subsidy for hiding a given amount of income, it's no wonder that we lead the world in tax avoidance, too.

olalonde 15y ago

It really isn't that clear. A lot of people regard taxes as unethical.

gte910h 15y ago

That's full of crap. What they'll respond to is changing the law! They're just following the law. Beg off the companies, and change it.