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How IKEA is structured to minimize tax and maximize control

economist.com

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Re: How IKEA is structured to minimize tax and maximize control

#71

Post by wallflower »

To be fair, Ikea founder Ingvar Kamprad just recently admitted (2011) to the existence of the ownership foundation.

> In an email from Ikea sent to the TT news agency, Kamprad admits that the Interogo Foundation in Liechtenstein exists and that it owns Inter Ikea Holding SA, which in turn owns Inter Ikea.

"Interogo Foundation is a company foundation whose only goal is to invest in the expansion of the company business and secure its long-term survival. In other words, the assets of the Interogo Foundation are held as financial security and are only used if Inter Ikea has financial difficulties," wrote Kamprad.

"The assets can also be used to support individual Ikea dealers who have financial difficulties or for philanthropic purposes. Interogo Foundation is controlled by my family and is administered by a board of directors consisting only of outside representatives." he added.

http://www.thelocal.se/31650/20110126/

Re: How IKEA is structured to minimize tax and maximize control

#72

Post by yummyfajitas »

DanielBMarkham wrote: post #66
zizee wrote: post #18

Earlier quoted context omitted.

Replacing income tax with a consumption tax would see the super rich pay even less tax as they spend a smaller percentage of their income compared to those with a lower income. [edited to fixed a typo: "the" => "they"]

Replacing income tax with a consumption tax would see the super rich pay even less tax as they spend a smaller percentage of their income compared to those with a lower income. I've heard this argument before, and this is going to sound pedantic, so I apologize, but just exactly how rich can you be if you don't spend your money on things? Or, put a different way, the rich only (bother us/owe more/are easy targets/nee…

The problem is that consumption inequality is not nearly as large as income inequality. If your desire is to soak the rich, you pick the statistic which gives you the broadest base for doing so - consumption is simply not that statistic. In the US, the rich have iPhones while the poor are stuck with iClones [1].

As for why we want to soak the rich, it's clearly not (a) - most poor people work very little (by choice).

[1] Note: this is not my opinion on Android (I hate Steve Job's walled garden, and am very happy with my N1), but it is the opinion of several lower class people I know.

Re: How IKEA is structured to minimize tax and maximize control

#74

Post by sudonim »

The story would be much different if Ikea's owners were American.

American citizens don't have the same affordances as foreign nationals when it comes to tax minimization. If these foundations for Ikea were majority owned by Americans, they would be subject to taxation by the IRS, regardless of in which country they were created.

Re: How IKEA is structured to minimize tax and maximize control

#75

Post by bryanlarsen »

vitobcn wrote: post #36

This is a pretty common scenario for international companies. Maybe most of them do not go as far as IKEA and lock their whole corporate structure, but most of them manage to achieve pretty low corporate tax rates. As an example Google was estimated to achieve an effective tax rate of only 2.4% [1] [1] Source: http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-sho...

It says right in the article that Google's effective tax rate is 22.2%. It pays 2.4% only on a small part of its income.

Re: How IKEA is structured to minimize tax and maximize control

#76

Post by jasonlotito »

ErrantX wrote: post #70
jasonlotito wrote: post #68

Earlier quoted context omitted.

Are all those examples of "flat-pack furniture"? Self build is the cost plus labor plus the cost of the material to build, etc. Simply looking at the final product and comparing the price ignores a lot of what makes IKEA what it is, and what they provide.

Well true, but the end result is the same. First two (IKEA & Homebase) are flatpack. The local shop & second hand are pre-assembled (the second hand is real wood construction so was never flat pack), but it makes little difference. Self build, sure, there is a labour "cost" - but you're looking at a couple of weekends max construction, so if you have the interest it's no biggie :) I only included it because I thought…

What I mean is pricing isn't always the same on the pure product for an individual. Not everyone can load up a huge dresser into the trunk of their mini and get it to their flat. And if those places have delivery charges... =)

IKEA was founded on solving that exact problem.

That being said, I wish I had the room to do my own wood work. One day, one day. =)

Re: How IKEA is structured to minimize tax and maximize control

#77

Post by ErrantX »

jasonlotito wrote: post #76
ErrantX wrote: post #70

Earlier quoted context omitted.

Well true, but the end result is the same. First two (IKEA & Homebase) are flatpack. The local shop & second hand are pre-assembled (the second hand is real wood construction so was never flat pack), but it makes little difference. Self build, sure, there is a labour "cost" - but you're looking at a couple of weekends max construction, so if you have the interest it's no biggie :) I only included it because I thought…

What I mean is pricing isn't always the same on the pure product for an individual. Not everyone can load up a huge dresser into the trunk of their mini and get it to their flat. And if those places have delivery charges... =) IKEA was founded on solving that exact problem. That being said, I wish I had the room to do my own wood work. One day, one day. =)

Fair point. FWIW none of those places charge delivery in this case.

You are right; IKEA sell cheap. And they also sell convenience - and market economics means that cheaply convenient is more expensive than cheaply awkward.

Re: How IKEA is structured to minimize tax and maximize control

#78

Post by meric »

zizee wrote: post #28
meric wrote: post #21

Earlier quoted context omitted.

What it means is... The first $5000 of consumption will be tax free, the next $10000 at 5%, and the next yet at 15%, etc. So, the super rich would indeed pay a smaller percentage of their income, only if they spend the same as an ordinary consumer, but they would pay much more tax (e.g. 60% after 1 million) if they spend everything they earn. This would encourage them not to swap pieces of paper for real goods . It w…

I'm not sure how shutting down Porsche factories is going to make food cheaper? In western countries only a few percentage of people are in the business of producing food. By moving workers from building yachts into food production will not make food production cheaper. This plan would see the rich hording money, rather than spending it on luxuries. The kind of luxuries that are produced by western economies. When th…

http://www.paulgraham.com/wealth.html

To take an example to the extreme, it would be wasteful if Warren Buffet hired 10,000 painters to paint a portrait of himself everyday. The GDP would go up, but it wastes effort, effort that can be allocated more efficiently. (Using his own example here)

Re: How IKEA is structured to minimize tax and maximize control

#79

Post by smackfu »

forgottenpaswrd wrote: post #13

"FEW tasks are more exasperating than trying to assemble flat-pack furniture from IKEA" Am I the only one that enjoy assembling flat-pack furniture and believe it is extremely easy?.

They really could use a few words on some of the instructions, but that would violate their "one package for all countries" philosophy.

Also, have you ever tried to hang a pair of doors straight? Their hinges have like 9 degrees of freedom, which doesn't really help. Plus I don't think it is actually possible on this TV cabinet I have, since it isn't actually square once you put a TV on it.

Re: How IKEA is structured to minimize tax and maximize control

#80

Post by xtho »

nika wrote: post #49
xtho wrote: post #4

Earlier quoted context omitted.

I generally enjoy reading hn but such right wing ideologies make me feel sick in the stomach. Please take into account when making such statements the US (or whereever you live) is not the world. And just because you got brainwashed after decades of conservative government doesn't mean the rest of the world is. But the rest of the world also participates in this community.

I'm really saddened to see that so many people have come to believe that thinking differently is wrong and should be suppressed. That coercion and violence against the innocent is the norm and that people who think that we should live free from violence and coercion are "right wing" and "brainwashed". To tell him not to participate here because he thinks differently than you is to say that your mind is not open to ne…

I didn't tell him not to participate but I asked not to dump his view on other readers since this isn't a site about political or economic theory.
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