9 ms·

Perhaps it makes me an evil fascist, but I really don't see the big deal in trying to avoid paying taxes, assuming you're doing so legally. Liberals tend to att

by pvnick 13y ago

Perhaps it makes me an evil fascist, but I really don't see the big deal in trying to avoid paying taxes, assuming you're doing so legally. Liberals tend to attach some sort of moral component to how much money you give the government, as in if you try to pay less than what they perceive to be your "fair share" (usually some unreasonably high number) then you must be evil. As if governments have any sort of decent track record on spending intelligently.

Goronmon 13y ago
I think it's the general sentiment that companies avoid things like paying taxes by skirting around the rules through means available to them due to their wealth and status. While a smaller company isn't going to have the resources at their disposal to gain such advantages. I guess it's similar to how it people feel like celebrities and executives can always avoid going to jail for things that a regular person would almost definitely end up in jail for. Or more succinctly, laws aren't perfect and corporations abuse those imperfections.
- icebraining 13y ago
  I agree it's the sentiment, but I'm not sure how many of those means are only available due to wealth, and how many could be used by many small companies if they knew about them. It's not like creating a company in a tax haven is particularly hard or expensive.
  - DanBC 13y ago
    Some of the schemes are pretty complicated. Routing the goods and money and paperwork needs to be done carefully to ensure you're still legal. Hiring KPMG, Deloitte, Earnst & Young, or PWC isn't cheap. And we have a really weird system here. These big four firms sent some of their accountants to help the government create tax laws. They then exploited the loopholes in the tax laws they had created. (http://www.guardian.co.uk/business/2013/apr/26/accountancy-firms-knowledge-treasury-avoid-tax http://www.guardian.co.uk/business/2013/apr/26/accountancy-f...) EDIT: Here's some discussion of the PAC report that's more balanced: (http://www.ion.icaew.com/TaxFaculty/26745 http://www.ion.icaew.com/TaxFaculty/26745)
    - hkmurakami 13y ago
      And we have a really weird system here. These big four firms sent some of their accountants to help the government create tax laws. They then exploited the loopholes in the tax laws they had created. Said "weird" system actually aligns with their incentives perfectly. Create a system of laws that can be exploited, but only through the advisory services of accounting professionals like themselves. Complexity creates exploitation opportunities, which results in more monetary rewards for themselves.
      - untog 13y ago
        Create a system of laws that can be exploited, but only through the advisory services of accounting professionals like themselves. Right, but the weird part is that the government is complicit in this. They have no such incentives.
  - pfortuny 13y ago
    Well, it is hard for department stores to claim they do not sell goods where their cashiers are, despite their address being perhaps in a tax haven. However, Amazon have this unfair advantage as well as google. IIRC. Or for small service companies to claim they do not do 'sales' in a country when their business is done there. It is not just a business address.
  - klaruz 13y ago
    It's not knowing about them, it's being able to defend them. A gray area loophole is much safer to exploit if you have a large legal team to back up your interpretation.
  - davorak 13y ago
    Are the rules really that static that once you know the trick it will last for years if not decades? Or do you have to pay a staff yearly to keep up with the small changes to stay a little ahead of the tax law to make sure you have all the `i`s doted and all the `t`'s crossed less pay overwhelming fines?
  - brown9-2 13y ago
    As a point of reference, GE employs about 1000 people in it's tax department (http://www.propublica.org/article/5-ways-ge-plays-the-tax-game http://www.propublica.org/article/5-ways-ge-plays-the-tax-ga...), although to be fair, according to other reports the returns they file are about 57,000 pages in length.
- talmand 13y ago
  Sure, but by all means the people who write the tax code are more than welcome to close such loopholes, or even better, stop making them. It's incredibly stupid to complain about a company legally reducing (saying they are avoiding is unfair since that implies illegal actions) their tax liability when you are the one of those responsible for making it possible.
  - Nursie 13y ago
    I would say naive, rather than incredibly stupid. One might expect companies that pride themselves on ethics and corporate citizenship to go along with the spirit of the law rather than the letter. But I agree it's the government's responsibility to fix this. --edit-- Two more things. Firstly avoiding does not really imply illegal. Evasion tends to be the illegal one. Secondly, where google are concerned, there does seem to be some doubt over which country various sales activities could actually be said to have happened in, so there may be grounds for an investigation and they may be found to have been in contravention of the law.
    - talmand 13y ago
      Avoidance and evasion are much the same thing. If one implies negativity in this matter then so does the other. Reduction versus evasion is better to me. If Google broke the law, then sure, punish them for it. At that point one can say they evaded paying their "fair share" of taxes and did not act in good faith.
      - Nursie 13y ago
        Both can imply negativity while only one is illegal.
        talmand 13y ago
        That's just the accepted legal term. By definition they both can be the same thing. When the law was written they could have just as easily as gone with tax avoidance as tax evasion. But in the context of the discussion, avoiding taxes is being used in a negative way by implying that the companies are not paying taxes that they should be paying by whatever criteria society dreams up, such as "fair share". I simply object to this characterization since these companies are following the law until a tax court says otherwise.
duaneb 13y ago
Because its something only rich companies can afford to do---so for the same reason people dislike the 1%, people dislike multibillion$ companies dodging tax responsibilities. The rich should not be exempt from the law.
- fein 13y ago
  > The rich should not be exempt from the law. This is kind of a funny statement. In most cases, the rich are still within the law; they've just figured out where to (legally) spend the right money to circumvent more annoying legislature. I'm not commenting on ethics at all here, just that our legal system has these "features" built in for people with enough cash to use. The real WTF here is the structure of the tax system and the governmental bodies that try to oversee it.
- icebraining 13y ago
  The rich should not be exempt from the law. Yes, but pvnick specifically said, "assuming you're doing so legally".
  - Nursie 13y ago
    >> The rich should not be exempt from the law. >> Yes, but pvnick specifically said, "assuming you're doing so legally". These two things are not incompatible. You could have a law that said "the rich are exempt from tax", for example. A lot of people feel that the system already works that way, even if it's not explicit right now, and ought to be changed.
  - duaneb 13y ago
    I consider loopholes (e.g. the double irish with a dutch sandwich) to be exemptions from the law—I should have made that clear.
threeseed 13y ago
No but your entire argument is weakened when you use loaded terms like "fascist" or "liberals". Ultimately paying taxes IS a moral issue since at least some of the money will be used to pay for human services i.e. health, education. And so when companies deliberately avoid paying taxes it does in a small way equate to a reduction in the quality of life for at least some of the population.
- icebraining 13y ago
  When someone drives a car they're polluting, and therefore reducing the quality of life for at least some of the population. Does that mean driving cars is immoral? Surely something more is needed to make it immoral.
  - anon1385 13y ago
    >Does that mean driving cars is immoral? Yes.
    - icebraining 13y ago
      What about polluting by using electricity by posting on HN? ;)
  - SEMW 13y ago
    > Surely something more is needed to make it immoral. Depends what you mean by immoral. A moral consequentialist might argue that negative externalities (like pollution) are inherently immoral - though that doesn't necessarily mean every activity with negative externalities is necessarily immoral, since its positive consequences might outweigh that.
    - icebraining 13y ago
      Sure, but I'm not trying to define an absolute moral rule (I don't think the concept even makes sense), I'm arguing with threeseed on what s/he thinks is immoral.
polymatter 13y ago
Your "fair share" of tax is what is detailed in the tax code. It is not a number picked out at random to punish companies for doing well or something. Granted the tax code is unwieldy and complex, but the intent is pretty clearly spelt out. I speak from 3 years experience working and training fulltime in the UK towards accreditation as an accountant. If you munchkin a string of infinite wishes don't act all surprised when your DM just says no (or if they're a particularly good DM, "yes, but").
- icebraining 13y ago
  But if you're avoiding it legally, like pvnick said, what you pay is by your definition the fair share.
  - Nursie 13y ago
    That's some pretty bizarre logic there. If there was a law that said "icebraining gets an effective tax rate of 0%" and you paid no tax, it would be legal but not necessarily fair by a lot of folks definition. I know this is an absurd example, but I just wanted to point out that "fair share" and "in line with the law" do not necessarily mean the same thing.
    - talmand 13y ago
      That's just because "fair share" is just an abstract concept that means next to nothing. If society wants to determine what "fair share" means they can do so through the tax laws. If a company follows the law then they are in effect paying their "fair share" as defined by society. When society thinks someone is not paying what they should then they have the means to resolve the matter. Whining about it is just grandstanding and accomplishes nothing.
      - Nursie 13y ago
        >> If society wants to determine what "fair share" means they can do so through the tax laws. Well yes, and it turns out that the societal expectation of 'fair share' and the side-effects of the current tax laws are out of whack here. >>If a company follows the law then they are in effect paying their "fair share" as defined by society. Well no, they're paying the legal minimum they can get away with under the tax code and international trade agreements as written, not necessarily paying what the society they operate within intended when the laws were drawn up. Paying your 'fair share' would mean playing by the intended rules and the spirit of the laws, not seeing what you can get away with. >> Whining about it is just grandstanding and accomplishes nothing. I agree, and the politicians ought to be doing something about this in order to make the current concept of 'fair share' and the implementation more in line. Particularly when it's clear that many actors in society are not really acting in good faith. However in the case of Google here there has been some suggestion that they may not have worked within the law in their sales practices, so an investigation may be needed.
DanBC 13y ago
> assuming you're doing so legally. Avoiding taxes is fine, but the extent that Google (and Amazon, and Starbucks) do it is unacceptable to the British public. There's a possibility that it's not legal. These companies have huge budgets and staff, and they can hire very expensive accountants (who also have very many staff) and they come up with complex schemes. Some of these are legal, some are borderline. UK tax authorities don't have many staff so forensic investigations of complex probably legal gets less attention than the people who are evading tax. The outrage isn't that these companies have avoided some tax. Everyone expects it, and they'd be doing it too if they could. The outrage is when Starbucks charges a couple of quid for a coffee and then claim that they make no profit in the UK. You're right that in the UK there's a weird attitude around very rich companies. It's changing, slowly. [1] avoiding = legal methods to reduce tax bill; evading = illegal methods to avoid paying tax.
JoelSutherland 13y ago
I'm with you up until the corporations ask for a repatriation tax holiday for the cash in the havens.
seivan 13y ago
The problem I have, is that common workers pay taxes, but these very profitable companies don't. I hate taxes, I really do. You can offer free healthcare and education and proper infrastructure without the fucked up taxes some countries take. But it's the unfairness here. The richer you are, the easier it is for you to dodge taxes, while workers are forced to because they don't know all the cool tricks or can afford a lawyer.
Shivetya 13y ago
Governments needs to be honest with their citizens and detail how the taxes on the corporation are merely embedded taxes that they, the people, are the true payers. So all that is being done here is taxes collected by Google on behalf the government are not being paid to the government through one tax rule or another. Do no evil, sorry but the people claiming they are doing evil in regards to taxes need to look in the mirror. The dishonesty in taxation starts at government, everyone else just has different abilities to play the game.
- Erwin 13y ago
  Are you claiming that multinational corporations automatically adjust their country local pricing based on the corporate tax rate in that country? For a single-country corporation, I can see the argument. Why add a complex corporate tax -- instead make sure to tax only those that extract money from the corporation. The tricky part is ensuring this extraction is properly taxed (i.e. if you as a CEO get a $5 million dollar Ferrari as your corporate car, that is tax-equivalent of getting the money). Things get awfully complex though when your $10 billion/year in profit corporation happens to have to pay $10 billion in intellectual property fees to the Virgin Islands holding company.
lmm 13y ago
"The government" is not some alien entity; we're governed by the people for the people. We didn't vote to impose taxation for fun; we did so because we hold that society should provide certain things for the people. Avoiding making a fair contribution to the various common services for which tax is used - whether that be defence, social security, education or healthcare - is so obviously evil that I'm seriously struggling to understand your position here. Surely you're not claiming that morality is defined by law and anything legal must be moral (and vice versa)? The track records of countries without government is not exactly stellar either.
codeulike 13y ago
Ability to legally exploit complex loopholes is concentrated among larger, richer entities. Hence you end up with a system that gives an advantage to those that are already large and powerful. Which then tends towards concentration of power and monopoly rather than a fair market.
grey-area 13y ago
Google's position seems to be that no matter how much of their business is conducted in the UK, as long as they send any money received through a tax haven, they are not liable for tax for their activities there. That is an absurd interpretation of the tax rules, and the logical endpoint of this thinking would be that no country in the world would receive any corporation tax save one, since all sales could be instantly sent through the lowest tax country, regardless of where they are actually processed, booked, or who they are sold to. So the debate is whether what Google is doing is legal, or whether they are misrepresenting their position in saying that they don't conduct this business in the UK. Having watched the exchange, I'm inclined to say that Google are dissembling and trying to hide the truth about their activities in the UK in an attempt to pay no tax. Here is the head of Google's North European sales, based in Britain of course, claiming that Google's sales are dealt with in Ireland: http://www.guardian.co.uk/technology/2013/may/16/google-told-by-mp-you-do-do-evil http://www.guardian.co.uk/technology/2013/may/16/google-told... I do think the UK should clarify the tax laws to deal with this and make it clear that where a sale was booked and who deals with the clients is more important than which offshore shell corporation it was shuffled through. At present Google seem to be saying that doesn't matter. Something similar happend over VAT evasion by Amazon recently, and they have been obliged to start paying VAT, so it's perfectly possible for them to do this and these interviews are part of a long investigation by HMRC. Shell companies are a serious problem for all tax regimes, and it's only going to get worse as globalisation spreads and moving companies becomes easier. As to your comment on whether governments spend intelligently, there's no discount on taxes (and rightly so) depending on whether you agree with the current government or their spending decisions. Spending priorities is a debate which should be had separately from whether corporations should pay tax at all.
strebler 13y ago
"As if governments have any sort of decent track record on spending intelligently." Samsung and Hyundai would be prime examples of companies that would not exist if not for direct intelligent investment of significant government money. How else could South Korea compete with China and Japan "next door" if not for a focused effort such as what was done there? It would be quite difficult and I strongly doubt they would be anything like what they are today. It's just regional perspective, I mean I'm quite happy with our taxation vs services provided (at both personal and corporate level). Free healthcare, 12 months maternity leave for my wife, subsidized daycare, clean water, decent EI just in case, etc, etc. Although it's Canada, so the weather sucks for most of the year.
james1071 13y ago
Please explain why Ireland should get the tax from Google's business activities in the UK.

by pvnick 13y ago

Goronmon 13y ago

I think it's the general sentiment that companies avoid things like paying taxes by skirting around the rules through means available to them due to their wealth and status. While a smaller company isn't going to have the resources at their disposal to gain such advantages. I guess it's similar to how it people feel like celebrities and executives can always avoid going to jail for things that a regular person would almost definitely end up in jail for. Or more succinctly, laws aren't perfect and corporations abuse those imperfections.

icebraining 13y ago
I agree it's the sentiment, but I'm not sure how many of those means are only available due to wealth, and how many could be used by many small companies if they knew about them. It's not like creating a company in a tax haven is particularly hard or expensive.
- DanBC 13y ago
  Some of the schemes are pretty complicated. Routing the goods and money and paperwork needs to be done carefully to ensure you're still legal. Hiring KPMG, Deloitte, Earnst & Young, or PWC isn't cheap. And we have a really weird system here. These big four firms sent some of their accountants to help the government create tax laws. They then exploited the loopholes in the tax laws they had created. (http://www.guardian.co.uk/business/2013/apr/26/accountancy-firms-knowledge-treasury-avoid-tax http://www.guardian.co.uk/business/2013/apr/26/accountancy-f...) EDIT: Here's some discussion of the PAC report that's more balanced: (http://www.ion.icaew.com/TaxFaculty/26745 http://www.ion.icaew.com/TaxFaculty/26745)
  - hkmurakami 13y ago
    And we have a really weird system here. These big four firms sent some of their accountants to help the government create tax laws. They then exploited the loopholes in the tax laws they had created. Said "weird" system actually aligns with their incentives perfectly. Create a system of laws that can be exploited, but only through the advisory services of accounting professionals like themselves. Complexity creates exploitation opportunities, which results in more monetary rewards for themselves.
    - untog 13y ago
      Create a system of laws that can be exploited, but only through the advisory services of accounting professionals like themselves. Right, but the weird part is that the government is complicit in this. They have no such incentives.
- pfortuny 13y ago
  Well, it is hard for department stores to claim they do not sell goods where their cashiers are, despite their address being perhaps in a tax haven. However, Amazon have this unfair advantage as well as google. IIRC. Or for small service companies to claim they do not do 'sales' in a country when their business is done there. It is not just a business address.
- klaruz 13y ago
  It's not knowing about them, it's being able to defend them. A gray area loophole is much safer to exploit if you have a large legal team to back up your interpretation.
- davorak 13y ago
  Are the rules really that static that once you know the trick it will last for years if not decades? Or do you have to pay a staff yearly to keep up with the small changes to stay a little ahead of the tax law to make sure you have all the `i`s doted and all the `t`'s crossed less pay overwhelming fines?
- brown9-2 13y ago
  As a point of reference, GE employs about 1000 people in it's tax department (http://www.propublica.org/article/5-ways-ge-plays-the-tax-game http://www.propublica.org/article/5-ways-ge-plays-the-tax-ga...), although to be fair, according to other reports the returns they file are about 57,000 pages in length.
talmand 13y ago
Sure, but by all means the people who write the tax code are more than welcome to close such loopholes, or even better, stop making them. It's incredibly stupid to complain about a company legally reducing (saying they are avoiding is unfair since that implies illegal actions) their tax liability when you are the one of those responsible for making it possible.
- Nursie 13y ago
  I would say naive, rather than incredibly stupid. One might expect companies that pride themselves on ethics and corporate citizenship to go along with the spirit of the law rather than the letter. But I agree it's the government's responsibility to fix this. --edit-- Two more things. Firstly avoiding does not really imply illegal. Evasion tends to be the illegal one. Secondly, where google are concerned, there does seem to be some doubt over which country various sales activities could actually be said to have happened in, so there may be grounds for an investigation and they may be found to have been in contravention of the law.
  - talmand 13y ago
    Avoidance and evasion are much the same thing. If one implies negativity in this matter then so does the other. Reduction versus evasion is better to me. If Google broke the law, then sure, punish them for it. At that point one can say they evaded paying their "fair share" of taxes and did not act in good faith.
    - Nursie 13y ago
      Both can imply negativity while only one is illegal.
      - talmand 13y ago
        That's just the accepted legal term. By definition they both can be the same thing. When the law was written they could have just as easily as gone with tax avoidance as tax evasion. But in the context of the discussion, avoiding taxes is being used in a negative way by implying that the companies are not paying taxes that they should be paying by whatever criteria society dreams up, such as "fair share". I simply object to this characterization since these companies are following the law until a tax court says otherwise.

duaneb 13y ago

Because its something only rich companies can afford to do---so for the same reason people dislike the 1%, people dislike multibillion$ companies dodging tax responsibilities. The rich should not be exempt from the law.

fein 13y ago
> The rich should not be exempt from the law. This is kind of a funny statement. In most cases, the rich are still within the law; they've just figured out where to (legally) spend the right money to circumvent more annoying legislature. I'm not commenting on ethics at all here, just that our legal system has these "features" built in for people with enough cash to use. The real WTF here is the structure of the tax system and the governmental bodies that try to oversee it.
icebraining 13y ago
The rich should not be exempt from the law. Yes, but pvnick specifically said, "assuming you're doing so legally".
- Nursie 13y ago
  >> The rich should not be exempt from the law. >> Yes, but pvnick specifically said, "assuming you're doing so legally". These two things are not incompatible. You could have a law that said "the rich are exempt from tax", for example. A lot of people feel that the system already works that way, even if it's not explicit right now, and ought to be changed.
- duaneb 13y ago
  I consider loopholes (e.g. the double irish with a dutch sandwich) to be exemptions from the law—I should have made that clear.

threeseed 13y ago

No but your entire argument is weakened when you use loaded terms like "fascist" or "liberals". Ultimately paying taxes IS a moral issue since at least some of the money will be used to pay for human services i.e. health, education. And so when companies deliberately avoid paying taxes it does in a small way equate to a reduction in the quality of life for at least some of the population.

icebraining 13y ago
When someone drives a car they're polluting, and therefore reducing the quality of life for at least some of the population. Does that mean driving cars is immoral? Surely something more is needed to make it immoral.
- anon1385 13y ago
  >Does that mean driving cars is immoral? Yes.
  - icebraining 13y ago
    What about polluting by using electricity by posting on HN? ;)
- SEMW 13y ago
  > Surely something more is needed to make it immoral. Depends what you mean by immoral. A moral consequentialist might argue that negative externalities (like pollution) are inherently immoral - though that doesn't necessarily mean every activity with negative externalities is necessarily immoral, since its positive consequences might outweigh that.
  - icebraining 13y ago
    Sure, but I'm not trying to define an absolute moral rule (I don't think the concept even makes sense), I'm arguing with threeseed on what s/he thinks is immoral.

polymatter 13y ago

Your "fair share" of tax is what is detailed in the tax code. It is not a number picked out at random to punish companies for doing well or something. Granted the tax code is unwieldy and complex, but the intent is pretty clearly spelt out. I speak from 3 years experience working and training fulltime in the UK towards accreditation as an accountant. If you munchkin a string of infinite wishes don't act all surprised when your DM just says no (or if they're a particularly good DM, "yes, but").

icebraining 13y ago
But if you're avoiding it legally, like pvnick said, what you pay is by your definition the fair share.
- Nursie 13y ago
  That's some pretty bizarre logic there. If there was a law that said "icebraining gets an effective tax rate of 0%" and you paid no tax, it would be legal but not necessarily fair by a lot of folks definition. I know this is an absurd example, but I just wanted to point out that "fair share" and "in line with the law" do not necessarily mean the same thing.
  - talmand 13y ago
    That's just because "fair share" is just an abstract concept that means next to nothing. If society wants to determine what "fair share" means they can do so through the tax laws. If a company follows the law then they are in effect paying their "fair share" as defined by society. When society thinks someone is not paying what they should then they have the means to resolve the matter. Whining about it is just grandstanding and accomplishes nothing.
    - Nursie 13y ago
      >> If society wants to determine what "fair share" means they can do so through the tax laws. Well yes, and it turns out that the societal expectation of 'fair share' and the side-effects of the current tax laws are out of whack here. >>If a company follows the law then they are in effect paying their "fair share" as defined by society. Well no, they're paying the legal minimum they can get away with under the tax code and international trade agreements as written, not necessarily paying what the society they operate within intended when the laws were drawn up. Paying your 'fair share' would mean playing by the intended rules and the spirit of the laws, not seeing what you can get away with. >> Whining about it is just grandstanding and accomplishes nothing. I agree, and the politicians ought to be doing something about this in order to make the current concept of 'fair share' and the implementation more in line. Particularly when it's clear that many actors in society are not really acting in good faith. However in the case of Google here there has been some suggestion that they may not have worked within the law in their sales practices, so an investigation may be needed.

DanBC 13y ago

> assuming you're doing so legally. Avoiding taxes is fine, but the extent that Google (and Amazon, and Starbucks) do it is unacceptable to the British public. There's a possibility that it's not legal. These companies have huge budgets and staff, and they can hire very expensive accountants (who also have very many staff) and they come up with complex schemes. Some of these are legal, some are borderline. UK tax authorities don't have many staff so forensic investigations of complex probably legal gets less attention than the people who are evading tax. The outrage isn't that these companies have avoided some tax. Everyone expects it, and they'd be doing it too if they could. The outrage is when Starbucks charges a couple of quid for a coffee and then claim that they make no profit in the UK. You're right that in the UK there's a weird attitude around very rich companies. It's changing, slowly. [1] avoiding = legal methods to reduce tax bill; evading = illegal methods to avoid paying tax.

JoelSutherland 13y ago

I'm with you up until the corporations ask for a repatriation tax holiday for the cash in the havens.

seivan 13y ago

The problem I have, is that common workers pay taxes, but these very profitable companies don't. I hate taxes, I really do. You can offer free healthcare and education and proper infrastructure without the fucked up taxes some countries take. But it's the unfairness here. The richer you are, the easier it is for you to dodge taxes, while workers are forced to because they don't know all the cool tricks or can afford a lawyer.

Shivetya 13y ago

Governments needs to be honest with their citizens and detail how the taxes on the corporation are merely embedded taxes that they, the people, are the true payers. So all that is being done here is taxes collected by Google on behalf the government are not being paid to the government through one tax rule or another. Do no evil, sorry but the people claiming they are doing evil in regards to taxes need to look in the mirror. The dishonesty in taxation starts at government, everyone else just has different abilities to play the game.

Erwin 13y ago
Are you claiming that multinational corporations automatically adjust their country local pricing based on the corporate tax rate in that country? For a single-country corporation, I can see the argument. Why add a complex corporate tax -- instead make sure to tax only those that extract money from the corporation. The tricky part is ensuring this extraction is properly taxed (i.e. if you as a CEO get a $5 million dollar Ferrari as your corporate car, that is tax-equivalent of getting the money). Things get awfully complex though when your $10 billion/year in profit corporation happens to have to pay $10 billion in intellectual property fees to the Virgin Islands holding company.

lmm 13y ago

"The government" is not some alien entity; we're governed by the people for the people. We didn't vote to impose taxation for fun; we did so because we hold that society should provide certain things for the people. Avoiding making a fair contribution to the various common services for which tax is used - whether that be defence, social security, education or healthcare - is so obviously evil that I'm seriously struggling to understand your position here. Surely you're not claiming that morality is defined by law and anything legal must be moral (and vice versa)? The track records of countries without government is not exactly stellar either.

codeulike 13y ago

Ability to legally exploit complex loopholes is concentrated among larger, richer entities. Hence you end up with a system that gives an advantage to those that are already large and powerful. Which then tends towards concentration of power and monopoly rather than a fair market.

grey-area 13y ago

Google's position seems to be that no matter how much of their business is conducted in the UK, as long as they send any money received through a tax haven, they are not liable for tax for their activities there. That is an absurd interpretation of the tax rules, and the logical endpoint of this thinking would be that no country in the world would receive any corporation tax save one, since all sales could be instantly sent through the lowest tax country, regardless of where they are actually processed, booked, or who they are sold to. So the debate is whether what Google is doing is legal, or whether they are misrepresenting their position in saying that they don't conduct this business in the UK. Having watched the exchange, I'm inclined to say that Google are dissembling and trying to hide the truth about their activities in the UK in an attempt to pay no tax. Here is the head of Google's North European sales, based in Britain of course, claiming that Google's sales are dealt with in Ireland: http://www.guardian.co.uk/technology/2013/may/16/google-told-by-mp-you-do-do-evil http://www.guardian.co.uk/technology/2013/may/16/google-told... I do think the UK should clarify the tax laws to deal with this and make it clear that where a sale was booked and who deals with the clients is more important than which offshore shell corporation it was shuffled through. At present Google seem to be saying that doesn't matter. Something similar happend over VAT evasion by Amazon recently, and they have been obliged to start paying VAT, so it's perfectly possible for them to do this and these interviews are part of a long investigation by HMRC. Shell companies are a serious problem for all tax regimes, and it's only going to get worse as globalisation spreads and moving companies becomes easier. As to your comment on whether governments spend intelligently, there's no discount on taxes (and rightly so) depending on whether you agree with the current government or their spending decisions. Spending priorities is a debate which should be had separately from whether corporations should pay tax at all.

strebler 13y ago

"As if governments have any sort of decent track record on spending intelligently." Samsung and Hyundai would be prime examples of companies that would not exist if not for direct intelligent investment of significant government money. How else could South Korea compete with China and Japan "next door" if not for a focused effort such as what was done there? It would be quite difficult and I strongly doubt they would be anything like what they are today. It's just regional perspective, I mean I'm quite happy with our taxation vs services provided (at both personal and corporate level). Free healthcare, 12 months maternity leave for my wife, subsidized daycare, clean water, decent EI just in case, etc, etc. Although it's Canada, so the weather sucks for most of the year.

james1071 13y ago

Please explain why Ireland should get the tax from Google's business activities in the UK.