Ikea founder leaves fortune to no one, structures it to ensure it lasts forever • Hacker News Board

Re: Ikea founder leaves fortune to no one, structures it to ensure it lasts forever

#321

Post by anonacct37 » Fri, Feb 02, 2018, 10:41 PM UTC

0xfeba wrote: post #144

gaius wrote: post #134

Earlier quoted context omitted.

If you aren't seeking out the loopholes that apply to you, then you are paying more in taxes than you are legally required to. Complete nonsense. Finding a loophole in the tax code is no different to finding a flaw in some computer code that gives you some access you were never intended to have. Should we all hire professional hackers too?

> Finding a loophole in the tax code is no different to finding a flaw in some computer code that gives you some access you were never intended to have. But the former is not illegal while the latter most definitely is (unless it's your own software, etc.). Loophole has negative connotations. But it really depends on many factors. A prosperity gospel preacher buying a second LearJet tax free is not the same as a comp…

Good point. People voluntarily parted with money to pay for the first.

The second company, well if you take a minute to read this article it explains the price society pays for the second policy: https://www.nytimes.com/2017/09/03/upshot/to-understand-risi...

I'm not really defending the first example, but america has a bit too much "privatize profits, externalize losses" for my taste. These policies do have impacts on the life of the median american.

Re: Ikea founder leaves fortune to no one, structures it to ensure it lasts forever

#322

Post by anonacct37 » Fri, Feb 02, 2018, 10:45 PM UTC

gaius wrote: post #154

saosebastiao wrote: post #139

Earlier quoted context omitted.

Are you kidding me? Loopholes like that don't exist. The tax code starts from the assumption that you owe them money, but for very specific reasons allows you to deduct or credit from that amount owed. They simply do not naively put in deductions that shouldn't be there. The idea that "loopholes" are unintentional vulnerabilities is completely disconnected from reality.

The legislators intended that via a complex web of shell companies obscuring ultimate ownership no taxes would be owed? I call shenanigans.

You're trying to make it sound like an overly complicated and not that likely situation. It's quite simple: money is free speech and legislators are listening. It's absolutely, 100% the case that tax laws are written to favor large businesses.

https://www.vox.com/policy-and-politics/2017/11/7/16618038/h...

Re: Ikea founder leaves fortune to no one, structures it to ensure it lasts forever

#323

Post by msla » Fri, Feb 02, 2018, 10:46 PM UTC

viraptor wrote: post #45

> The foundation owns itself, so no Kamprad family members hold shares. Late stage capitalism... Anyway, I don't really get why the article claims he didn't care about money. It's known for a while that IKEA avoids taxes in many dodgy ways. If he really didn't care, the connected companies could pay a reasonable amount.

"Late stage" capitalism?

This is pre-capitalism, feudalism.

Besides, "late-stage capitalism" is a meaningless buzzword.

Re: Ikea founder leaves fortune to no one, structures it to ensure it lasts forever

#324

Post by Jach » Fri, Feb 02, 2018, 10:47 PM UTC

wahern wrote: post #292

bsbechtel wrote: post #256

Earlier quoted context omitted.

51k going to an accountant in your community is probably a more moral way to spend your money than 50k going to fund a war. If one is going to judge a client's morality by his eagerness to spend more money than his tax bill in order to avoid paying that bill, that same moral lens needs to be applied to the accountant knowingly charging his client more than the client would save in taxes.

OTOH, the fervor with which some people avoid taxes evidences a lack of civic responsibility. If people don't feel invested in their government to the point of spitefully taking a loss just to avoid paying a tax it makes it easier for ethically bankrupt people to assume the reigns of power. That kind of leadership is how we get into wars in the first place.

I don't think it's much evidence, if any, that civic responsibility is lacking. It's hilarious to think the contrapositive -- that not doing any inspection or effort or money-spending to validate and potentially legally 'avoid' what the authorities say is due and just paying the bill, evidences presence of civic responsibility. You can't just buy such things.

Re: Ikea founder leaves fortune to no one, structures it to ensure it lasts forever

#325

Post by kartan » Fri, Feb 02, 2018, 10:50 PM UTC

charlesdm wrote: post #308

seanmcdirmid wrote: post #304

Earlier quoted context omitted.

If he didn't care about money personally, why did he move to Switzerland from Sweden to avoid paying taxes? There is also that weird non-profit cooperative that IKEA masquerades as to avoid paying corporate taxes as well. Whatever can be said about the founder of IKEA, he really knew how to avoid taxes!

Because there is no point in being frugal if you have to pay significant corporate tax. And it helped expand "the empire" he was building, because he could reinvest everything. He most likely hated wasting money, whether that was on excessive expenses or taxes -- it makes no difference. The money is gone either way. I have a friend whose grandfather built quite a large retail business (in the billions). He said his g…

> Because there is no point in being frugal if you have to pay significant corporate tax. And it helped expand "the empire" he was building, because he could reinvest everything.

Only profits are taxed, not sales. So if you "reinvest everything" you are not going to pay taxes.

You can hire more people, buy other companies, rent more equipment, etc. The net result is that the company grows but has no profits. It doesn't work if it buys real-estate, for example, as that increases the company value and the owner then needs to pay for the increase of the value of the company. But then it's on the share value increase, and not in profits.

High taxes can incentive grow as spending money to grow it's less costly than to capitalize profits. That's why lowering taxes is seen as an opportunity to withdraw money and reduce investment.

Re: Ikea founder leaves fortune to no one, structures it to ensure it lasts forever

#326

Post by lenzm » Fri, Feb 02, 2018, 10:52 PM UTC

charlesdm wrote: post #308

seanmcdirmid wrote: post #304

Earlier quoted context omitted.

If he didn't care about money personally, why did he move to Switzerland from Sweden to avoid paying taxes? There is also that weird non-profit cooperative that IKEA masquerades as to avoid paying corporate taxes as well. Whatever can be said about the founder of IKEA, he really knew how to avoid taxes!

Because there is no point in being frugal if you have to pay significant corporate tax. And it helped expand "the empire" he was building, because he could reinvest everything. He most likely hated wasting money, whether that was on excessive expenses or taxes -- it makes no difference. The money is gone either way. I have a friend whose grandfather built quite a large retail business (in the billions). He said his g…

It's not wasting money - his business benefited from having an educated, healthy, safe workforce; from having roads to deliver products and customers to stores; and from a justice system to enforce laws and protect all of that property. He was just greedy and didn't want to pay his fair share.

Re: Ikea founder leaves fortune to no one, structures it to ensure it lasts forever

#327

Post by charlesdm » Fri, Feb 02, 2018, 10:53 PM UTC

kartan wrote: post #325

charlesdm wrote: post #308

Earlier quoted context omitted.

Because there is no point in being frugal if you have to pay significant corporate tax. And it helped expand "the empire" he was building, because he could reinvest everything. He most likely hated wasting money, whether that was on excessive expenses or taxes -- it makes no difference. The money is gone either way. I have a friend whose grandfather built quite a large retail business (in the billions). He said his g…

> Because there is no point in being frugal if you have to pay significant corporate tax. And it helped expand "the empire" he was building, because he could reinvest everything. Only profits are taxed, not sales. So if you "reinvest everything" you are not going to pay taxes. You can hire more people, buy other companies, rent more equipment, etc. The net result is that the company grows but has no profits. It doesn…

Sure, but you might not want to reinvest everything today, or within the same tax year, or perhaps you can't tax depreciate an entire property in the same year, etc. Acquisitions of stock (i.e. when acquiring competitors) can't also generally be offset against corporate tax.

There will always be some 'leakage' and taxes to be paid. Non-profits are generally exempt from all corporate taxes. If you don't care about putting profits in your pocket, they tend to be very tax efficient.

In the case of Ikea, a royalty on all sales (for use of the brand name) is paid to a low taxed for-profit entity. That's how he made his money. The larger the empire, the more royalties he gets, so the structure does make some sense. Not as perfect as running a pure for-profit entity, but probably one of the most tax efficient.

Re: Ikea founder leaves fortune to no one, structures it to ensure it lasts forever

#328

Post by charlesdm » Fri, Feb 02, 2018, 10:57 PM UTC

lenzm wrote: post #326

charlesdm wrote: post #308

Earlier quoted context omitted.

Because there is no point in being frugal if you have to pay significant corporate tax. And it helped expand "the empire" he was building, because he could reinvest everything. He most likely hated wasting money, whether that was on excessive expenses or taxes -- it makes no difference. The money is gone either way. I have a friend whose grandfather built quite a large retail business (in the billions). He said his g…

It's not wasting money - his business benefited from having an educated, healthy, safe workforce; from having roads to deliver products and customers to stores; and from a justice system to enforce laws and protect all of that property. He was just greedy and didn't want to pay his fair share.

Looks like he clearly didn't believe that was worthy of paying the taxes he would be paying.

Re: Ikea founder leaves fortune to no one, structures it to ensure it lasts forever

#329

Post by mulmen » Fri, Feb 02, 2018, 10:58 PM UTC

charlesdm wrote: post #318

mulmen wrote: post #315

Earlier quoted context omitted.

If you're paying significant corporate tax isn't being frugal even more important?

Flip the situation: a) I can be frugal and pay corporate tax; or b) I can be frugal and pay no corporate tax. He picked option b.. which is fine. You don't start a business from the notion of funding the state.

But you said there's no point in being frugal if you are paying significant corporate tax. If you have a heavy tax burden surely it is important to allocate your remaining resources frugally?

I'm saying option a is better than option c) spend wastefully because you pay high taxes.

Your comment seemed to advocate for this third option.

I now understand your meaning to be "paying high taxes is not frugal" which I disagree with for other reasons. Specifically paying unnecessary taxes would not be frugal but a company can still be frugal and pay high tax rates. To put it another way I do not believe tax avoidance is a frugal necessity.

Re: Ikea founder leaves fortune to no one, structures it to ensure it lasts forever

#330

Post by charlesdm » Fri, Feb 02, 2018, 11:01 PM UTC

mulmen wrote: post #329

charlesdm wrote: post #318

Earlier quoted context omitted.

Flip the situation: a) I can be frugal and pay corporate tax; or b) I can be frugal and pay no corporate tax. He picked option b.. which is fine. You don't start a business from the notion of funding the state.

But you said there's no point in being frugal if you are paying significant corporate tax. If you have a heavy tax burden surely it is important to allocate your remaining resources frugally? I'm saying option a is better than option c) spend wastefully because you pay high taxes. Your comment seemed to advocate for this third option. I now understand your meaning to be "paying high taxes is not frugal" which I disag…

Perhaps I phrased it wrong -- I believe, if you are a person who is extremely frugal, you will also automatically want to reduce your tax liability. Because at the end of the day the result is the same: an expense means money leaves the business, taxes mean that money leaves the business.

It's not necessary.. but probably a personally trait of frugal people. You reduce expenses.

You're absolutely right however that high taxes tend to incentivise reinvestment (so you can tax deduct). But too high taxes also deter entrepreneurship to some extent, because past a certain point a lot of people will feel they're working more for the state than for themselves.