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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

#181

Post by hackeraccount »

gnicholas wrote: post #32
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…

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…

This is why I've always been skeptical of high _income_ tax rates. First tax avoidance is at base a fixed cost. It's the price of a really tax lawyer (or at the extreme a couple of US Senators). If that fixed price is less then your tax bill only idiot pays the tax bill.

The second reason is that I don't believe people view money fractionally - I think they look at it absolutely. For me am million dollars is a lot of money. For Bill Gates though a million dollars is ... a lot of money. It doesn't matter that he's a billionaire he's still not going to throw around a million dollars the same way I'd throw around the same fraction of my wealth that a million is to him. He still recognizes the absolute value of that money and he can still see it's potential to make things happen in the world just as I can see what a hundred dollars (or whatever my fractional equivalent is) can do in the world.

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

#182

Post by DebtDeflation »

whiddershins wrote: post #116

I don’t fully understand why corporations are taxed in the first place. All the money the corporation takes in ultimately gets spent on operating expenses, or is profit that is then distributed to shareholders who then owe taxes on that income. If it’s annoying and counter intuitive that corporations are in some legal senses considered people, it is even more confusing that they pay taxes. This sets up a crazy situat…

>I don’t fully understand why corporations are taxed in the first place.

Because as economically inefficient as a corporate income tax is, without it you would create an enormous incentive for individuals to incorporate, filter all their income through the corporation, have the corporation pay all their expenses as business expenses, purchase their assets for them as business assets, and compensate them in the form of loans which never get paid back. Yes, you could write the law in such a way as to prohibit this and spend a fortune on enforcement, but ultimately it would fail against such incentives.

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

#183

Post by gomox »

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 live in Argentina and we have a revenue tax. It's a shit show and basically any marketplace / fintech business that operates on low margins is either economically unviable or needs some flaky loophole to operate.

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

#184

Post by jokoon »

"Good people do not need laws to tell them to act responsibly, while bad people will find a way around the laws." - Plato

"Life is nothing but a competition to be the criminal rather than the victim." - Bertrand Russell

Honestly those are the only nuggets of wisdom I can think about when I look at all the tax havens. The movie The Laundromat was also quite instructive.

The end of the cold war moved the ideological cursor "organized economy versus libertarian economy".

Governments are struggling hard to save their model so they can function properly. I really have a hard time seeing how this won't create problems, this is globalization at work. Not sure if states/borders will disappear.

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

#185

Post by dastx »

gnicholas wrote: post #32
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…

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…

When is the right time to consult a tax lawyer for an average person that is paid quite a bit above average?

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

#186

Post by throw_m239339 »

sneak wrote: post #164
etripe wrote: post #153

Earlier quoted context omitted.

They are taxed because they are beneficiaries of society's investment in infrastructure and people. They benefit directly from a healthy, educated population, enforcement of construction codes, the operation of the legal system, roads and waterways, etc. Companies aren't entirely benign, either, so part of those taxes goes to environmental impact assessment and handling they don't pay for, such as pollution, health h…

A corporation is an abstraction that does not exist, so it cannot benefit from those things you listed. The human shareholders and human staff benefit (and profit) from those things, and there are already mechanisms in place to tax those human beings, either as shareholders or as staff with ordinary income.

Corporations can be criminally charged. They are not abstractions, they are associations of people. You need to rethink your arbitrary definition of "abstraction".

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

#188

Post by IG_Semmelweiss »

gnicholas wrote: post #79
wiz21c wrote: post #64

Earlier quoted context omitted.

Maybe it's a little too much to ask, but are why are you "not saying any of this is right or good". Part of my brain wishes that law would actually mean justice but somehow, if I trust only what I know, I cleary cannot judge, as you do, if finance engineering is good or bad. I'd like to know what prevents you to choose if it's good or right (as person who have worked inside the business) thx

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…

Lobbying is actually not hard to stop at all. It msy be under our current structure, but its not hard to stop

Here are 3 rules that would stop lobbying overnight.

1- Make house of reps sole body to set tax law at federal lvl 2- tie reps in house to very specific, low pop counts. For ex, 1 rep district = 25,000. This would mean house would become gigantic. 3- randomize election outcomes. Swap winner of city treasurer with senate winner. Swap rep seat with state assemblyman. Every seat should have a high random chance of being swapped. If winner does not like position. We should even do this with presidency.

This solves federal level lobbying by taking (1) power into a (2) decentralized body and also (3) inserting downside for lobbyist.

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

#189

Post by croon »

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 $…

Or you just tax the end result (per country).

Ie, you buy through 1000 transactions, and you sell through 1500 transactions for a net total of +€5k within the country.

Tax that €5k, not the individual transactions.

Unless I'm missing something.

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

#190

Post by vishnugupta »

gnicholas wrote: post #32
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…

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…

> that saved our clients hundreds of millions of dollars.

Could you elaborate, from your experience, what happened to these $$$? Do they sit in banks without being used or do they get get invested and recirculated in the economy?

Also, given that just about every function of the US govt has been privatised, what would the US govt spend this money on? Spend it on defence (and channel the money back to private defense entities)? Pay off trade deficit? I'm not aware of US budget break down on expenditure side so any pointer would be great.

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