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Facebook Tax Bill Over Ireland Move Could Cost $5B

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Re: Facebook Tax Bill Over Ireland Move Could Cost $5B

#41

Post by refurb »

ryanhuff wrote: post #10
drcross wrote: post #6

I cannot understand the indignation, the system is working exactly as designed- board members have responsibilities to the shareholders to maximise profits, it would be imprudent if they didn't move to reduce tax burden. The miles of column inches written on this topic is being tediuos. Solutions are simple, anyone telling you otherwise are the same people who hold economists in high regard- 1. Reduce your local tax…

Wouldn't #1 result in a race to the bottom? Why wouldn't a foreign country use tax policy to lower their corp rates towards zero in order to attract foreign tax revenue? After all, some tax is better than no tax.

You'd end up with a country like Singapore, where the taxes are lower, but more wisely spent.

Re: Facebook Tax Bill Over Ireland Move Could Cost $5B

#42

Post by sp332 »

billyhoffman wrote: post #38
wyager wrote: post #31

Earlier quoted context omitted.

I'm not sure why you put value in scare quotes. By avoiding excessive US taxes, Facebook is now a more efficient company. That is how taxes work. The government introduces friction into economic transactions, which sucks up some amount of productivity from those who produce value, which the government can then use for its own ends. By moving to a country with more reasonable taxes, Facebook's economic interactions no…

This has nothing to do with taxes or business efficiency. The IRS is saying that Facebook undervalued their assets when transferring them to Ireland. It's the implications of that deal that are being discussed

This is 100% about taxes. The only reason the IRS cares about valuing assets is for the amount of tax they can levy on them. And saving $5B sounds darn efficient to me.

Re: Facebook Tax Bill Over Ireland Move Could Cost $5B

#43

Post by unabst »

rm999 wrote: post #3

>The IRS claims Facebook’s tax adviser Ernst & Young LLP undervalued the company’s property as it was transferred to Facebook Ireland Holdings Ltd. by evaluating pieces of the online platform separately, according to court filings ... “I don’t think Facebook is necessarily hiding anything, but it’s a fight over pricing,” said Stephen Hamilton, a tax lawyer in Philadelphia. “This is what companies do when they transfe…

Yes, but without those developers there would be no facebook :) (pat yourself on the back)

Re: Facebook Tax Bill Over Ireland Move Could Cost $5B

#44

Post by rayiner »

People should actually read up on the tax structure Facebook used: http://www.bloomberg.com/news/articles/2016-07-28/facebook-g.... It's not reliant on some crazy lobbied-for loopholes in the tax code. It actually relies on some fairly mundane provisions of various countries' tax laws.

Just getting rid of, say, transfer pricing rules wouldn't make tax avoidance harder, it would make it easier. Say you do all your R&D in the U.S. But you set up a subsidiary in a low-tax jurisdiction, and license the U.S.-made IP to that subsidiary for $0. Boom the U.S. company now has no profits to show and all profits are in the low-tax jurisdiction.

Re: Facebook Tax Bill Over Ireland Move Could Cost $5B

#45

Post by mentos »

I often wonder about a tax system that just works on inflation. Why does a govt go out of its way to collect taxes if it's also going to print money? To me it's so that you can tax different entities at different rates. But if we're willing to adopt a flat tax of X% I wonder if it could be collected through inflating everyone's dollar?

Re: Facebook Tax Bill Over Ireland Move Could Cost $5B

#46

Post by sp332 »

tn13 wrote: post #13
rm999 wrote: post #3

>The IRS claims Facebook’s tax adviser Ernst & Young LLP undervalued the company’s property as it was transferred to Facebook Ireland Holdings Ltd. by evaluating pieces of the online platform separately, according to court filings ... “I don’t think Facebook is necessarily hiding anything, but it’s a fight over pricing,” said Stephen Hamilton, a tax lawyer in Philadelphia. “This is what companies do when they transfe…

Accountants and Lawyers end up doing value addition because government regulations are far too complex.

The only reason for Facebook to move assets to Ireland is to take advantage of more complexity in the interactions of multiple legal systems instead of sticking with the relative simplicity of one.

Re: Facebook Tax Bill Over Ireland Move Could Cost $5B

#47

Post by bluecalm »

My view is that corporate income tax is just a very bad idea. It will always introduce a lot of judgement problems and you will always need to assess every single transaction. Is it "fair price" or is it done to funnel money somewhere?

Those questions are impossible to answer objectively and we shouldn't really care. Tax owners of the corporation. Tax people for living in a nice place (land tax, real estate tax, all kinds of consumption taxes). If you really want you can tax companies' revenue (not profits). Some taxes for polluting the environment, using the infrastructure would be great as well. Try to understand what makes your country an attractive place to operate from and charge for those things.

Taxing income is just a recipe for problems and unfair treatment (companies with access to top lawyers pay less, small companies pay more).

Re: Facebook Tax Bill Over Ireland Move Could Cost $5B

#48

Post by samfisher83 »

refurb wrote: post #32
samfisher83 wrote: post #5

Earlier quoted context omitted.

Companies want to pay no taxes, but they want protection from the legal system infrastructure etc. that allows a company to be successful.

There is so much inefficieny in gov't spending that your statement is meaningless. The biggest line items in the gov't budgets have nothing to do with the legal system or infrastructure.

Medicare and social security pays for the millions of people who have help build this country. Yes the government might be inefficient. How many google, Facebook, and apples are coming out of Ireland or India?

Re: Facebook Tax Bill Over Ireland Move Could Cost $5B

#49

Post by karma_vaccum123 »

thisisbad wrote: post #15

Corporate income taxes should be eliminated. Instead of focusing on building a company and good products, companies have to dedicate resources to figure out how to escape the taxation. Taxation should be done when profit is distributed to shareholders (similar to Estonia). There is also unfair double taxation - paying taxes after company pays them.

Then most of the upper and middle class would incorporate, leaving the poor to pay income tax.

Re: Facebook Tax Bill Over Ireland Move Could Cost $5B

#50

Post by bluecalm »

throwaway729 wrote: post #19
thisisbad wrote: post #15

Corporate income taxes should be eliminated. Instead of focusing on building a company and good products, companies have to dedicate resources to figure out how to escape the taxation. Taxation should be done when profit is distributed to shareholders (similar to Estonia). There is also unfair double taxation - paying taxes after company pays them.

Wow. I mean, if you're going to argue that corporate tax rates should be lower, just make that argument . But the argument that corporations should be able to pay fewer taxes because they (and/or other corporations) lobbied to create a byzantine tax law that they then exploited is... a special kind of argument.

The argument is that income tax for companies is a terrible idea and it's better to move taxation to different places. Places where you can be both more efficient and more fair at collecting.

It's impossible to make income tax fair. The simplest example is selling rights to trademark or some licensing to friendly company located in tax heaven. You will never be able to assess fair value of a trademark and you will always be left with litigation hell. It's just the worst possible tax.

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