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

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

#131

Post by equivocating000 » Tue, Nov 03, 2020, 9:46 AM UTC

yeahNo00 wrote: post #119

gnicholas wrote: post #79

Earlier quoted context omitted.

I do have opinions about various tax provisions that I know well. But the topics I mentioned in my prior comment were not about a specific tax provision, or even tax policy generally. I was just stating the facts of life. It will always be the case that big companies will find it efficient to engage in certain revenue-producing activities that smaller companies/individuals will not. Just as I don't have feelings abou…

So you don’t have any emotional opinions on the work of others that has real effect on your life? Physicists can be wrong. Economists can be wrong. At some point technical nonsense becomes “imperfect people choosing.” A fix might simply be change tax laws? Kind of like how the billionaires changed them to be less distributed. But you don’t have feelings enough about economics being purposely wielded at scale to manip…

Laws of physics are discovered by human experiment.

Economics are defined by humans.

They’re taught to each other by humans.

It’s all wrapped in how we treat each other at scale.

Separating the two is impossible except as a semantics game.

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

#132

Post by youngtaff » Tue, Nov 03, 2020, 9:47 AM UTC

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…

The saving is more from a National Insurance perspective than an income tax one as income tax is paid on dividends (and dividends come out of profit after tax)

Only first 2k of dividends is tax free, then its 7.5% within the basic earnings band, and 32.5% in the higher band.

This is from funds that have already had 19% corporation tax applied to them.

Of course anything paid as dividends doesn't attract either employees or employers National Insurance so there's a saving there, and adding a spouse or partner as a director allows the income and dividends to be split so reducing tax.

Merging National Insurance into Income Tax is one way to start addressing the issue also simplifies administration work (for companies and government) but you'd get the political issue of tax increases on pensioners savings.

Fundamentally we need to start treating earned (salary) and un-earned (interest, dividends) income the same from a tax point of view

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

#133

Post by jusssi » Tue, Nov 03, 2020, 9:51 AM UTC

gnicholas wrote: post #72

jusssi wrote: post #61

Earlier quoted context omitted.

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.

This could work, but it would have to be reconciled with the existing basis step-up at death, which is a key part of our intergenerational personal tax system. If you only taxed people when there is a dividend or salary payment, a savvy CEO of a private company could follow the tax advice of "borrow, buy, die". Instead of taking a huge salary, the CEO would borrow money to pay for everything, using the shares of the…

> Instead of taking a huge salary, the CEO would borrow money to pay for everything, using the shares of the company as collateral.

This would mean that they essentially pay a "wealth tax" (interest on all their borrowed net worth, with probably a decent premium for the risk) to the bank.

> Then when the CEO dies, the loans are repaid out of the estate.

And at this point, income is raised out of the company and would become taxable. At least where I live, the estate of a natural person pays taxes for their income like a living natural person.

> the tax treatment of natural persons at death means that folks could greatly reduce the amount of income realized during their lifetime

But they'd still pay the taxes eventually. I don't see this as a huge issue. If the society can't wait to get their the taxes (IMHO a nation state should plan for timeframes longer than a single lifetime), they can use the same trick to get a loan from the bank with the future tax income as collateral.

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

#134

Post by mschuster91 » Tue, Nov 03, 2020, 10:00 AM UTC

chewz wrote: post #130

harry8 wrote: post #109

Earlier quoted context omitted.

>this is why it makes sense that companies can walk a fine line on taxes, save tons of money, and you and I cannot. Nope, these are the reasons that cause the situation. This outcome does /not/ make sense nobody sane without a huge vested interest would design a system to achieve less tax paid when you earn more. It's entirely contrary to the intent and spirit of the tax code. This is not sensible. How to fix it? Tha…

> How to fix it? Make a tax code as simple as possible. So simple there is no room for interpretation.

The problem with (too much) simplification is that it removes political steering capability. For example, governments may want to promote having children (by reducing the tax load for people having children), or incentivize small businesses like shops, or domestic R&D spending...

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

#135

Post by bwilli123 » Tue, Nov 03, 2020, 10:08 AM UTC

I would argue that given all the privileges that Society gives to Limited Liability Companies, that there should be one basic demand in return (regardless of profitability, or lack of it) That is, that all company communications be released to the public after a 10 year delay. Governments worldwide manage to do this after 10, 25 or 50 years. I don't see why corporations would rate the same privilege. Transparency is the best defence against corruption.

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

#136

Post by robertlagrant » Tue, Nov 03, 2020, 10:12 AM UTC

29athrowaway wrote: post #86

The wealthy tax the rest of us. Think about it. Tax avoidance, subsidies, bailouts, stimuli, etc. Want to tax the rich? No. They tax you.

That's not taxing us, that's just them (or businesses they, or non-rich people, run) getting some tax relief. They will still be either paying more tax or employing more people or investing in more companies that employ people than I do, that's for sure.

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

#137

Post by credit_guy » Tue, Nov 03, 2020, 10:20 AM UTC

mschuster91 wrote: post #134

chewz wrote: post #130

Earlier quoted context omitted.

> How to fix it? Make a tax code as simple as possible. So simple there is no room for interpretation.

The problem with (too much) simplification is that it removes political steering capability. For example, governments may want to promote having children (by reducing the tax load for people having children), or incentivize small businesses like shops, or domestic R&D spending...

They could do that by direct subsidies. That would be transparent. Or should transparency be required only of the corporations, but governments could get a pass?

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

#138

Post by lordgrenville » Tue, Nov 03, 2020, 10:22 AM UTC

rapht wrote: post #117

lordgrenville wrote: post #102

Earlier quoted context omitted.

Earlier this year I read the book The Chickenshit Club on the advice of someone on here. It has a lot of interesting information but I didn't agree with the author's summary, basically: "prosecutors are cowardly and don't fight cases that don't look easily winnable. They should be braver and go for the highest-profile cases to make a statement". This seems wrong to me because a) litigating a complex, lengthy case and…

The flaw is simple: you'll end up with only having as criminal defence attorneys those people who didn't succeed at being civil case attorneys, as everyone will prefer to earn more money with mostly the same training. So you won't have any outstanding criminal defence attorneys, which is equivalent to undermining the rights of those of need to defend themselves in criminal cases. If you want to go this way, you have…

But prosecutor salaries are (more or less) fixed, so if you let defence attorneys earn the same as prosecutors I don't think this harms the right of the defendant. You have a right to a reasonably good lawyer, but not to be defended by the most brilliant legal mind on earth who could get anybody acquited. The randomisation suggestion sounds good too.

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

#139

Post by LatteLazy » Tue, Nov 03, 2020, 10:24 AM UTC

The behaviour is legal because it was made legal. We choose to do this. Pretending its some magic trick with complex steps is simply a nice excuse to avoid the difficult truth: it's legal and easy for publically traded companies to pay no corp tax and we like it that way.

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

#140

Post by integer42 » Tue, Nov 03, 2020, 10:27 AM UTC

mschuster91 wrote: post #134

chewz wrote: post #130

Earlier quoted context omitted.

> How to fix it? Make a tax code as simple as possible. So simple there is no room for interpretation.

The problem with (too much) simplification is that it removes political steering capability. For example, governments may want to promote having children (by reducing the tax load for people having children), or incentivize small businesses like shops, or domestic R&D spending...

This is another problem that would simultaneously be solved with simpler tax. Government pays for things by paying for things, and also effectively pays for things by giving tax breaks hidden in the 50,000 pages of tax code that now simultaneously how the government collects revenue and pays for things, and is completely incomprehensible to most people.

See ~26 minute into this interview for a more in depth proposal that makes a lot of sense. Separate collecting money and spending money. https://www.econtalk.org/john-cochrane-on-economic-growth-an...