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The public has a right to know how companies that pay no taxes pull it off

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Re: The public has a right to know how companies that pay no taxes pull it off

#91

Post by TheOtherHobbes »

Cthulhu_ wrote: post #70
ALittleLight wrote: post #26

I read about tax avoidance schemes like corporate inversions or sending all your patents to a company in some tax free haven and licensing your patents from your company for all your profits, and so on, and it makes me really mad. Companies making many billions of dollars paying no taxes. My intuition is that if I personally came up with a cute "gotcha" like this where I wound up paying zero in taxes because of some…

> My intuition is that if I personally came up with a cute "gotcha" like this where I wound up paying zero in taxes because of some loophole, I would go to prison. Why isn't the same standard applied to rich companies? I know of one "gotcha" that works in my country at least: work for low / no wage but instead have loads of assets like stocks; dividend taxes are much lower than income taxes. I could be wrong. I'm jus…

Really rich people do this with a complex network of shell organisations that's as opaque as possible.

It's not just that a corporation owns their house, it's that another corporation owns that corporation, and a holding company in the Cayman Islands with a nominee director who lives in a postbox owns everything, except the IP rights which are in Panama - this year. And personal spending goes through a credit card set up by their own personal offshore bank, which effectively makes it loan. Etc.

If there are enough shell companies you can decide your own tax payments, because you can hide everything you choose to hide. It's not that these networks can't be disassembled, it's that they can't be disassembled efficiently. It can literally take months or years of full-time auditing effort to trace all the relationships.

Re: The public has a right to know how companies that pay no taxes pull it off

#92

Post by lifeisstillgood »

This is a US specific comment but I was reading the David Shor article yesterday and he pointed out that the (vast) majority of funding (for democrats?) comes from individual (wealthy) donors - ie not the corporations who tend not to own the politicians so much anymore.

Re: The public has a right to know how companies that pay no taxes pull it off

#93

Post by berdario »

jusssi wrote: post #61
ALittleLight wrote: post #26

I read about tax avoidance schemes like corporate inversions or sending all your patents to a company in some tax free haven and licensing your patents from your company for all your profits, and so on, and it makes me really mad. Companies making many billions of dollars paying no taxes. My intuition is that if I personally came up with a cute "gotcha" like this where I wound up paying zero in taxes because of some…

An alternative to attempting to tax companies, is to tax people. There is no company that would just exist to forever eat money away from the public. Eventually they intend to pay the profits to a real person (either in money, or other benefits). Taxing that dividend or salary transaction might be simple enough to just work. And you have a real person to put to jail when the taxes were avoided.

Maybe?

Ingvar Kamprad net worth was "only" 3 billion $

That's about 25 billion $ lower than if he had unfettered access to all of IKEA's worth.

https://www.forbes.com/profile/ingvar-kamprad/

If you like how the company you built spends money more than how the state spends money, you're going to want your company to capture more money/worth without relinquishing it to the public. Another rationale could also be when you can give a stake in your company to your family, that way you won't ever have need to pay profits during your lifetime, since the company (which could be a charity) will actually work as a cross-generational fund.

Also, this works well with the ethos of some companies (like Amazon, allegedly) which reinvest a lot of their profits to cut margins/develop new products... And overall just tighten their hold on the market

Re: The public has a right to know how companies that pay no taxes pull it off

#94

Post by DanBC »

ALittleLight wrote: post #26

I read about tax avoidance schemes like corporate inversions or sending all your patents to a company in some tax free haven and licensing your patents from your company for all your profits, and so on, and it makes me really mad. Companies making many billions of dollars paying no taxes. My intuition is that if I personally came up with a cute "gotcha" like this where I wound up paying zero in taxes because of some…

> Why isn't the same standard applied to rich companies?

Prosecuting you is cheap and easy. Prosecuting a multinational billion dollar company is expensive and difficult.

One of the reasons it's difficult is that they're not (usually) outright evading tax. They're avoiding tax. The law is what's written, but also how that's interpreted by the courts. Sometimes the courts have not yet decided how to interpret a bit of the written law, and so companies will continue to use those bits in interesting ways.

Finally, some places have a "light touch" approach to regulation and they use courts as a measure of last resort, for the worst offenders. Everyone else will be persuaded to change their tax affairs. One consequence of this is that courts only rule on the obvious stuff, and we don't build up case law for the gray areas that get used in tax avoidance schemes.

I agree it's baffling that we let them get away with it. In the UK we think there are between £30bn and £120bn in tax that's evaded, avoided, or uncollected.

Re: The public has a right to know how companies that pay no taxes pull it off

#95

Post by simonh »

As usual The Economist has a lot that’s very sensible to say about tax reform. In particular putting more emphasis on taxing investors (you can shift your profits between jurisdictions but not your investors), property and inheritances. The main target should be rents.

https://www.economist.com/leaders/2018/08/09/overhaul-tax-fo...

Re: The public has a right to know how companies that pay no taxes pull it off

#96

Post by chrismcb »

ALittleLight wrote: post #26

I read about tax avoidance schemes like corporate inversions or sending all your patents to a company in some tax free haven and licensing your patents from your company for all your profits, and so on, and it makes me really mad. Companies making many billions of dollars paying no taxes. My intuition is that if I personally came up with a cute "gotcha" like this where I wound up paying zero in taxes because of some…

If you found a cute gotcha, then you would do just fine. You would get thrown in jail if you lied, or didn't have the cute gotcha. But the odds that you find a loophole like that, that you could take advantage of, is fairly slim

Re: The public has a right to know how companies that pay no taxes pull it off

#97

Post by [deleted] »

goatinaboat wrote: post #81
Cthulhu_ wrote: post #70

Earlier quoted context omitted.

> My intuition is that if I personally came up with a cute "gotcha" like this where I wound up paying zero in taxes because of some loophole, I would go to prison. Why isn't the same standard applied to rich companies? I know of one "gotcha" that works in my country at least: work for low / no wage but instead have loads of assets like stocks; dividend taxes are much lower than income taxes. I could be wrong. I'm jus…

I know of one "gotcha" that works in my country at least: work for low / no wage but instead have loads of assets like stocks; dividend taxes are much lower than income taxes. This is a common trick in the UK, or at least it was before the IR35 crackdown. Programmers, sportsmen, celebrities, even politicians and civil servants would run single-person companies and get their salaries paid to them. Then those companies…

[deleted]

Re: The public has a right to know how companies that pay no taxes pull it off

#98

Post by berdario »

triceratops wrote: post #60
bagels wrote: post #59

Earlier quoted context omitted.

Where can we learn how to do this?

Here's one case study: https://www.gocurrycracker.com/never-pay-taxes-again/

"Once income and spending exceed this level, taxes must be paid. Unless…

Unless that income comes from qualified dividends or long-term capital gains. In this case, a married couple can have $24,400 a year in income AND $78,750 in investment income, TAX-FREE"

If you can get 78k$ yearly investment income from index funds, you already have a net worth of several million $, and you're thus already among the people that don't need to work (or you had some incredible luck for smaller investments)

Re: The public has a right to know how companies that pay no taxes pull it off

#100

Post by ponker »

ALittleLight wrote: post #26

I read about tax avoidance schemes like corporate inversions or sending all your patents to a company in some tax free haven and licensing your patents from your company for all your profits, and so on, and it makes me really mad. Companies making many billions of dollars paying no taxes. My intuition is that if I personally came up with a cute "gotcha" like this where I wound up paying zero in taxes because of some…

Well look at the Sacklers. Kill 500,000 people and you pay a $225 million fine out of the $8 billion you made from their deaths. Kill 10 people and they give you a lethal injection.
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