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

larrysummers.com

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

#171

Post by iguy »

apexalpha wrote: post #160
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.

Or do like Europe is finally starting: just tax revenue. They can suppress their 'profit' whichever way they want, they can't suppress their revenue in a given country. The digital services tax is imposed at a rate of 3% on the gross revenues derived from digital activities of which French “users” are deemed to play a major role in value creation. The law not only affects digital companies but, more generally, digita…

I know this isn't exactly parallel to the digital service tax, but for the larger debate: The huge obvious revenue tax is VAT. On (almost) anything sold in France they get 20%, and it's very hard to dodge. It does not depend on where you claim your headquarters to be.

All these arguments about which country gets to collect a few percent tax, of a few percent profit, are dwarfed by this much larger slice. Which every country is free to adjust as they wish.

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

#172

Post by buran77 »

gizzlon wrote: post #84
gnicholas wrote: post #32

Earlier quoted context omitted.

This is a case of economies of scale. A fairly wealthy person could save maybe $50,000 per year with the advice of the smartest tax lawyers and accountants in the world. But it would cost them $500,000 per year to pay for the structure to be created/updated. When I worked as a tax lawyer, we created structures and defended cases that saved our clients hundreds of millions of dollars. At this scale, paying for our ser…

> At this scale, paying for our services was a no-brainer. What? I don't think so. If money is the only thing they care about, sure. But is it? Should it be? And if breaking the spirit of the law is fine, shouldn't breaking the letter of the law be fine as well? As long as the risk is low enough..

> if breaking the spirit of the law is fine, shouldn't breaking the letter of the law be fine as well?

There's no law against breaking the spirit of the law. Breaking the spirit of the law will only get you tried in the court of public opinion. Breaking the letter will also go to a court of justice.

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

#173

Post by NineStarPoint »

gizzlon wrote: post #84
gnicholas wrote: post #32

Earlier quoted context omitted.

This is a case of economies of scale. A fairly wealthy person could save maybe $50,000 per year with the advice of the smartest tax lawyers and accountants in the world. But it would cost them $500,000 per year to pay for the structure to be created/updated. When I worked as a tax lawyer, we created structures and defended cases that saved our clients hundreds of millions of dollars. At this scale, paying for our ser…

> At this scale, paying for our services was a no-brainer. What? I don't think so. If money is the only thing they care about, sure. But is it? Should it be? And if breaking the spirit of the law is fine, shouldn't breaking the letter of the law be fine as well? As long as the risk is low enough..

The thing about capitalism is that companies that don’t do everything in their power to increase profit are at a disadvantage against those who do. Profit is the ability to invest more in R&D, attract more investors, scale faster, advertise more. Unless your consumers care enough to only support you if you pay taxes, or you can get substantially more productive employees by paying taxes, or some other advantage in the marketplace by paying taxes, paying taxes when your competition does not is an albatross around your neck. And if your morality creates enough albatrosses around your neck your company will either fold or be eternally small as your competitors without such restrictions have higher efficiency. So it’s a no-brainer in that any company that gets to the scale where spending millions on lawyers is appropriate is already of this mindset.

This is why laws need to be crafted to not give companies the benefit of the doubt when it comes to acting in the best interest of society. Less because it is impossible for a company to be moral in a vacuum, but because if being immoral is allowed and advantageous inevitably the immoral company will out compete the moral one. (Of course it can be hard to agree on what moral is. Some say that taxes are immoral after all.)

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

#174

Post by BlueTemplar »

thysultan wrote: post #141

Create a "church of the people" non-profit org, where anyone that "believes" can join and give it charity, and the church in its infinite benevolence gives credit cards to the needy(the donors) that they can use as they like or as the gods allows(how much you donated + interest). To avoid taxes you mealy have to find a way to appear poor. In the above scenario both the "church" org and the donors are poor if the chur…

Sadly, "Our Lady of Perpetual Exemption" was shut down...

https://www.youtube.com/watch?v=JcPeBAYYuhc

https://en.wikipedia.org/wiki/Our_Lady_of_Perpetual_Exemptio...

(Too many people contributed their seeds…)

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

#175

Post by Firadeoclus »

dwighttk wrote: post #152
credit_guy wrote: post #137

Earlier quoted context omitted.

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?

It is more efficient to let people keep money than it is to take it from them and give it back. Even if the laws that allow the former would (/might) be simpler.

I don't think we can take that as a given. Moving money has its overheads, of course, but so does every added complexity in law.

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

#176

Post by [deleted] »

iguy wrote: post #171
apexalpha wrote: post #160

Earlier quoted context omitted.

Or do like Europe is finally starting: just tax revenue. They can suppress their 'profit' whichever way they want, they can't suppress their revenue in a given country. The digital services tax is imposed at a rate of 3% on the gross revenues derived from digital activities of which French “users” are deemed to play a major role in value creation. The law not only affects digital companies but, more generally, digita…

I know this isn't exactly parallel to the digital service tax, but for the larger debate: The huge obvious revenue tax is VAT. On (almost) anything sold in France they get 20%, and it's very hard to dodge. It does not depend on where you claim your headquarters to be. All these arguments about which country gets to collect a few percent tax, of a few percent profit, are dwarfed by this much larger slice. Which every…

[deleted]

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

#177

Post by refurb »

chii wrote: post #75
refurb wrote: post #66

Earlier quoted context omitted.

Right, but if the company didn't create the job, the income tax collected would be zero. I'm not saying the income tax collected is purely coming from the company, but take Amazon for example - their economic activity creates jobs which pay salaries that are taxed.

> their economic activity creates jobs yes, but the employee would've gotten another job else where, so it's _not_ the company that's creating the taxation benefit! They therefore, should not be given the benefit of attributing that taxation (for PR purposes)! The company did make some investment which led to the job - but they did said investment for their own benefit, not to create more jobs for which taxation can…

They would have gotten a job elsewhere? But that’s not always the case. Sometimes there is no other job.

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

#178

Post by jagged-chisel »

jlokier wrote: post #170
apexalpha wrote: post #160

Earlier quoted context omitted.

Or do like Europe is finally starting: just tax revenue. They can suppress their 'profit' whichever way they want, they can't suppress their revenue in a given country. The digital services tax is imposed at a rate of 3% on the gross revenues derived from digital activities of which French “users” are deemed to play a major role in value creation. The law not only affects digital companies but, more generally, digita…

> Or do like Europe is finally starting: just tax revenue. That rapidly turns into a disaster of consolidations and monopolies. You don't want that. Think about the difference between big company $BIG selling you the consumer a million Widgets for 10^9 currency units, versus 26 small companies $a..$z each selling to the next in a long supply chain which results in a million Widgets. In revenue taxation, big company $…

You adjust the tax curve to address this situation. More revenue, even higher tax rate.

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

#179

Post by iguy »

mhaymo wrote: post #147
harry8 wrote: post #114

Vague idea: The government can compulsorily acquire the domestic domiciled assets of any company for 50? 100? times that company's declared taxable income with some appropriate average over the previous 5 years. You earn nothing taxable here? Great for your tax bill but now you can worry about the capital loss and loss of control of trademarks & patents domestically. Better to declare the profit and pay the tax like…

There are legitimate reasons for a valuable company to make little to no profits. Namely re-investment in growth. Your proposal would make it impossible for businesses to spend todays profits on growth for tomorrow, and would thereby dramatically slow economic growth.

Yes. The whole idea of describing the tax on profits as an involving "declared taxable income" is misleading.

Few workers work without a salary, but plenty of companies run without profit... because they are re-investing and growing, or because they are slowly shrinking and dying. Lots of tax can still be collected (on money going out as salaries, and through VAT on money coming in) and their existence can still be useful (making stuff we need, and employing people) even if the books exactly balance at the end of the year.

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

#180

Post by fierarul »

gnicholas wrote: post #57
fierarul wrote: post #46

This will not end until people will all "incorporate" and apply the same tax tricks as major corporations. In other words we need the revolution of the "personal corporation". The startup that offers this will be the next Apple. Or, will be shut down when the law is changed. Either way, it's a win for society. Stripe Atlas is a step in the right direction, but it does only the low hanging fruit. Accounting, handling…

Unfortunately, sophisticated tax advice simply does not scale down to the level that would make it applicable to most companies/people. This type of advice is heavily fact-specific, and if you create a complicated legal structure, you can't take your eye off the ball for a minute. Otherwise you can end up blowing the whole thing up, or worse. I would note that the world you describe (where people have tax tricks just…

I have to say I like your replies on this topic here and elsewhere. Almost sounds like these tax avoiding entities are software and there's a big maintenance cost as laws change all the time. I've always thought that a big part of law should be "programable" and I think we are slowly getting there.

Next up, imagine a machine learning trained entity just roaming the international law landscape, just trying to survive.

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