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The possibility you’re not acknowledging is that the “spirit of the law” is trying to achieve something that cannot be done, or at least not done without massiv

The possibility you’re not acknowledging is that the “spirit of the law” is trying to achieve something that cannot be done, or at least not done without massively modifying the way a system works to an unacceptable level. Law makers know this, but it’s not really a problem for them because they can write their bad law, leave it full of “loopholes” to be “exploited”, and then just cry about some loophole exploiting boogeyman to their constituents and donors as the reason their law making efforts have failed. If you wanted to be cynical you might even suggest that this is the desired outcome and a way of managing circumstances where donor and constituent interest are in conflict, or perhaps just a way of signalling that you’re delivering on a policy promise, when in reality you can’t. Corporate tax avoidance is a great example of this. The only feature you need your laws to have to facilitate corporate tax avoidance is the ability to incur a deductible expense to an offshore entity. The only thing corporate tax law loophole closing ever achieves is to make corporate tax avoidance procedures more complicated, thus making them only accessible to more sophisticated tax avoiders. There is no conceivable way of closing these “loopholes” without extreme protectionism or isolationism. It would basically require ending globalization or at least removing your country from the globalized economy. A solution that most people would find completely unacceptable.

yunohn 2y ago
I fully agree that these loopholes are intentional, but I definitely don’t think they’re unavoidable. The problem is just that the ones (politicians and companies) writing the laws are the ones who want the loopholes. The lawyers who could work on improving laws, are instead helping companies find creative avoidance techniques.
- AmericanChopper 2y ago
  They’re not unavoidable, they can just potentially come at an unacceptable cost. In the corporate tax instance, literally the only thing you need to implement corporate tax avoidance is the ability to incur a deductible expense to an offshore company. No matter what other laws you write, if you can do that you can avoid corporate tax. If you can’t do that then you don’t have economic globalization (or you’re not participating in it at least). This unrealistic wishful thinking you seem to be exhibiting is something I think politicians intentionally prey on. If some politician can convince you that it is possible to “fix this”, but without the all the obviously mandatory costs and tradeoffs, then they can also potentially convince you that they can and will do it. This particular policy issue has been a part of many political platforms, yet nobody has ever “fixed it”, because it cannot be fixed (at least not without also ruining a lot of other things).
  - yunohn 2y ago
    > the only thing you need to implement corporate tax avoidance is the ability to incur a deductible expense to an offshore company > This unrealistic wishful thinking Quite the contrary, for some reason you seem to have a cognitive dissonance about the sheer complexity of tax laws. The loophole is not as simple as “anything can be offshored” - there’s a significant nuance involved in what is possible even now.
    - AmericanChopper 2y ago
      I own several companies that have a large pile of transfer pricing agreements, I’m very familiar with the nature and complexity of international tax laws. All corporate tax avoidance is, is incurring offshore expenses to shuffle profits offshore. As long as you can do that, there is literally no way to prevent the tax avoidance. The only thing you can do is make it more complicated. This is also the reason most developed economies have given up on regulating transfer pricing any more than they already have, and instead the strategy has shifted to trying to get the tax havens to implement or increase their corporate taxes. That’s why the “global minimum corporate tax rate” idea has recently emerged, and why the EU uses their black and grey lists to coerce foreign jurisdictions to write new tax laws. This strategy is arguably more effective, but still a complete failure, because you have some tax haven jurisdictions that simply ignore the pressure, and other tax havens are simply never sanctioned because they have sufficient leverage in the global economy to avoid the attention entirely. It is very literally a choice between corporate tax, or globalization. There is no way to have both.
      - yunohn 2y ago
        Honestly, I just don’t buy it’s impossible to properly handle global taxation. Governments do it just fine for normal individuals. Small to medium businesses also pay their taxes pretty fairly. It says something profound about the system, if the avoidance needs large complicated structures to do so. Something something lack of moral compass.
        2y ago

yunohn 2y ago

I fully agree that these loopholes are intentional, but I definitely don’t think they’re unavoidable. The problem is just that the ones (politicians and companies) writing the laws are the ones who want the loopholes. The lawyers who could work on improving laws, are instead helping companies find creative avoidance techniques.

AmericanChopper 2y ago
They’re not unavoidable, they can just potentially come at an unacceptable cost. In the corporate tax instance, literally the only thing you need to implement corporate tax avoidance is the ability to incur a deductible expense to an offshore company. No matter what other laws you write, if you can do that you can avoid corporate tax. If you can’t do that then you don’t have economic globalization (or you’re not participating in it at least). This unrealistic wishful thinking you seem to be exhibiting is something I think politicians intentionally prey on. If some politician can convince you that it is possible to “fix this”, but without the all the obviously mandatory costs and tradeoffs, then they can also potentially convince you that they can and will do it. This particular policy issue has been a part of many political platforms, yet nobody has ever “fixed it”, because it cannot be fixed (at least not without also ruining a lot of other things).
- yunohn 2y ago
  > the only thing you need to implement corporate tax avoidance is the ability to incur a deductible expense to an offshore company > This unrealistic wishful thinking Quite the contrary, for some reason you seem to have a cognitive dissonance about the sheer complexity of tax laws. The loophole is not as simple as “anything can be offshored” - there’s a significant nuance involved in what is possible even now.
  - AmericanChopper 2y ago
    I own several companies that have a large pile of transfer pricing agreements, I’m very familiar with the nature and complexity of international tax laws. All corporate tax avoidance is, is incurring offshore expenses to shuffle profits offshore. As long as you can do that, there is literally no way to prevent the tax avoidance. The only thing you can do is make it more complicated. This is also the reason most developed economies have given up on regulating transfer pricing any more than they already have, and instead the strategy has shifted to trying to get the tax havens to implement or increase their corporate taxes. That’s why the “global minimum corporate tax rate” idea has recently emerged, and why the EU uses their black and grey lists to coerce foreign jurisdictions to write new tax laws. This strategy is arguably more effective, but still a complete failure, because you have some tax haven jurisdictions that simply ignore the pressure, and other tax havens are simply never sanctioned because they have sufficient leverage in the global economy to avoid the attention entirely. It is very literally a choice between corporate tax, or globalization. There is no way to have both.
    - yunohn 2y ago
      Honestly, I just don’t buy it’s impossible to properly handle global taxation. Governments do it just fine for normal individuals. Small to medium businesses also pay their taxes pretty fairly. It says something profound about the system, if the avoidance needs large complicated structures to do so. Something something lack of moral compass.
      - 2y ago