Paradise Papers: Dear Tim Cook • Hacker News Board

Re: Paradise Papers: Dear Tim Cook

#331

Post by Cakez0r » Wed, Nov 08, 2017, 1:56 PM UTC

mprev wrote: post #302

Cakez0r wrote: post #267

Earlier quoted context omitted.

That's an interesting case to bring up. In the UK, it is very common (I'd go as far as to say it's the norm) for software contractors to start a single-person limited company and pay themselves through a mixture of salary and dividend in order to optimise their taxes. I wonder how many of these people consider that they are committing "tax avoidance" and "exploiting legal loopholes" too.

Maybe 15 years ago. IR35 has made that approach tax-neutral, at best.

I am new to the contracting game in the UK, but I haven't met a software contractor yet who isn't using this approach. My accountant even recommended it to me when I set up. It is definitely a non-trivial tax saving.

Do you pay yourself dividends from your company? Or do you use your profits to increase your director salary so that you pay tax at the same rate as a full-time PAYE employee?

Not meaning to call you out personally on this, but I want to highlight that "tax avoidance" is a weasel word. Most people can and do optimise their taxes if the law allows it and don't consider themselves to be "avoiding tax" or acting immorally.

Re: Paradise Papers: Dear Tim Cook

#332

Post by ptaipale » Wed, Nov 08, 2017, 1:57 PM UTC

Yizahi wrote: post #321

tyingq wrote: post #240

Earlier quoted context omitted.

They aren't, for the most part, doing anything illegal though. They are using the existing laws to their best advantage. The fix for this can't be trying to appeal to their morals. It would have to be something else that just limits the legal choices. Edit: If you disagree, are you saying that shaming them into not doing this solely on some moral compass is the right fix? Does that scale?

They don't break a letter of the law (probably), but they break spirit of the law. Laws do not exist like a puzzle challenge to be beaten by clever lawyers with a reward being factual exemption from the law. They are usually intended for everyone.

Most of the criticism (of Nike and Apple, for instance) isn't for breaking even the spirit of the law.

Most often the companies are acting precisely as the law is intended to work, and criticism is based on a misunderstanding of what is turnover and what is profit, and how taxes should be calculated. Very commonly the complaint is that Nike (for instance) pays no corporate income tax to a country even though it sells a lot of goods there. This is a misunderstanding: the vehicle for collecting sales-based taxes is VAT, not corporate income tax. Corporate income tax is paid where the company operates.

A major thing people don't seem to understand is that within EU, it is perfectly OK for a company operating in one EU country to sell goods and services to another country. Free movement of goods and capital.

The very foundation of EU which infuriates people.

Re: Paradise Papers: Dear Tim Cook

#333

Post by qaq » Wed, Nov 08, 2017, 1:57 PM UTC

I am a bit confused what does sales in a given jurisdiction have to do with amount of taxes payed on profits in that jurisdiction? Apple does same thing every german company in US is doing e.g. shifting money flows in such a way as to optimize profits.

Re: Paradise Papers: Dear Tim Cook

#334

Post by urza » Wed, Nov 08, 2017, 1:57 PM UTC

gyaru wrote: post #307

nickpp wrote: post #266

Earlier quoted context omitted.

You raise some good points. But I strongly believe in the innovative solutions brought forth by the free markets. It's not called "the invisible hand" for nothing. I am old enough to remember when whole IT industry used to be in the shadow of Microsoft (and IBM before that). Nobody could see a solution out of it! The government even tried to fix the problem and failed. Ten years later, Microsoft is becoming a nice pl…

I really can't understand if you're being ironic or not, but I hope you are because Microsoft has been under fire for a long time for their behaviour and even fined for it in the past. No "invisible hand" there, more like someone yelling loudly at them.

Do you really believe the fines Microsoft was ordered to pay had any effect on the direction of the company? It was on a level of mosquito bite for them. What really forced them to change in last few years is the changing landscape of the whole IT ecosystem. Their market shares dropping, because there are viable alternatives, new kinds and classes of products, the whole opensource movement etc etc. So yes, the invisible hand of market, rather then some silly fines by government.

Re: Paradise Papers: Dear Tim Cook

#335

Post by tyingq » Wed, Nov 08, 2017, 1:58 PM UTC

Yizahi wrote: post #326

m12k wrote: post #269

Earlier quoted context omitted.

Agreed, the only sane solution to this is a massive overhaul of international tax law. Shaming companies just isn't a scalable solution in any way. There's a massive opposition against this both from multinationals and tax haven countries though - this article is a good way to start making it obvious to normal citizens that this issue should be on the ballot.

But overhaul can't happen like "now". It need some initial impulse, an outrage bigger than average etc. Apple case may help this.

That's a good point. I'm not dismissing the PR and awareness value of raging about Apple.

Just hoping that the fix isn't perceived as "going after apple". Going after existing law, tax havens, etc, is more productive.

Re: Paradise Papers: Dear Tim Cook

#336

Post by dontreact » Wed, Nov 08, 2017, 1:58 PM UTC

cm2187 wrote: post #268

dontreact wrote: post #258

Earlier quoted context omitted.

I don't think getting rid of these foreign loopholes is as simple as you think it is. 1. What counts as a "US Company"? 2. So you're proposing that Apple pay the U.S. taxes on sales in Germany? Also that every country should do this?

1. Companies which parent owner is based in the US. Companies are already paying taxes based on consolidated regime, it is just that they consolidate all entities within a tax jurisdiction. So the concept exists, it could just be extended. 2. You wouldn't have a double taxation. You would apply to companies what the US applies to US individuals. If you have a subsidiary in Germany and paying local taxes of 10, but th…

Alright here are my new loopholes to evade your amendments: I'll set it up so that my other company in the other country is sharing profits with my main company. Maybe I'll have a family member or someone I trust actually own that company. Perhaps this doesn't work for some reason that already exists in the tax code, but I've already met the letter of the law that you spelled out here. Obviously that would be easy to fix with some further amendments but the problem is that this back and forth we are having is happening at a larger scale through the years. And in real life I have 10-1000 times as much money to figure out how to defeat or get around your tax codes.

Re: Paradise Papers: Dear Tim Cook

#337

Post by cr1895 » Wed, Nov 08, 2017, 1:58 PM UTC

mrmekon wrote: post #289

CamTin wrote: post #140

Earlier quoted context omitted.

There are actually things like the expatriation tax and "name and shame" provisions which discourage people from renouncing for tax purposes. Also (note that I am not an accountant or lawyer and this is not advice), most ordinary people won't see any problem with taxation while abroad beyond the actual inconvenience of filing a 1040 because the foreign earned income exclusion ( https://www.irs.gov/individuals/interna…

I guess it depends on your definition of "ordinary people", but if you're going abroad for long-term work in any "middle class" industry, you're eventually going to have extremely complicated taxes. Retirement savings, stock options, real estate, and any sort of investment account makes your U.S. tax return go from "a 1040" to a towering mountain of special forms. A lot of them also lose you the right to e-file, for…

> They tell you to make your investments in the U.S.

And, extra maddeningly, a number of American institutions won't even talk to you, either.

Try calling up Vanguard or Charles Schwab if you're just a normal person who lives abroad and see how quickly they'll tell you "sorry! we don't want your business"

Even if you still have a permanent US address (i.e., not just some post box).

Re: Paradise Papers: Dear Tim Cook

#338

Post by belorn » Wed, Nov 08, 2017, 1:59 PM UTC

slimshady94 wrote: post #286

belorn wrote: post #274

Earlier quoted context omitted.

Not only do they get tax cuts and cheap real estate from governments, they also get direct money. When google decided to create a data center in Sweden, the Swedish government gifted them $20 million in "establishment support". Money sent from the tax payer directly to the bank account of Google. Reason? So that google would pick Sweden. The politicians argument is that Sweden grain prestige if google has their data…

Wouldn't that increase the number of highly skilled individuals working in Sweden, who pay more tax/increase the jobs available? Which is a good thing?

Lets imagine we made a general law and applied this.

Any company who moved X number of highly skilled individuals to Sweden that's equal to the number of those working in that data center get $20 millions.

Personally I doubt that would work. Such action can only exist as a special deal between the Swedish government and companies which politicians believe brings enough prestige to be worth it.

Re: Paradise Papers: Dear Tim Cook

#339

Post by nickpp » Wed, Nov 08, 2017, 1:59 PM UTC

gyaru wrote: post #307

nickpp wrote: post #266

Earlier quoted context omitted.

You raise some good points. But I strongly believe in the innovative solutions brought forth by the free markets. It's not called "the invisible hand" for nothing. I am old enough to remember when whole IT industry used to be in the shadow of Microsoft (and IBM before that). Nobody could see a solution out of it! The government even tried to fix the problem and failed. Ten years later, Microsoft is becoming a nice pl…

I really can't understand if you're being ironic or not, but I hope you are because Microsoft has been under fire for a long time for their behaviour and even fined for it in the past. No "invisible hand" there, more like someone yelling loudly at them.

No irony here. All that yelling and fines had zero result in changing Microsoft's behavior. They just paid up.

You know what worked? Some good, old fashioned competition. And that raised up naturally, through free market.

Re: Paradise Papers: Dear Tim Cook

#340

Post by makapuf » Wed, Nov 08, 2017, 1:59 PM UTC

I cannot count the number of times I've heard the word "Legal" in the news in the last few days. As in "everything we do is legal". What's implied is therefore ... I can do it. What I understand is : therefore... change the 'fing law. And make it very public who is blocking this change of laws. Any country such as isle of Man or Ireland can have its own laws. My country has a system where infrastructure is build from transactions. You don't want it, you cannot have access to its customers. simple on principle. Some laws can be bent to avoid it ? change them. Have issues changing them ? Please explain them clearly. Act on those & iterate.