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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

#231

Post by srtjstjsj »

kortilla wrote: post #129
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? The same standards do apply, the loopholes just don’t really exist down at a normal individual income level. Calling it a “loophole” is a bit of a misnomer as well since it’s just the regular law. Bein…

Tax evasion is rarely enforced, because the IRS was defunded.

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

#232

Post by [deleted] »

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…

[deleted]

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

#233

Post by ryanmarsh »

MuffinFlavored wrote: post #12
ryanmarsh wrote: post #5

Earlier quoted context omitted.

LOL this is primarily why many self employed people eventually incorporate. Tax reduction. You should try it some time.

I can’t figure out what to deduct that is more than the $12.2k single filer deductible. I have $500k/yr I’d love to pay less taxes on at the moment due to a booming side business + healthy salary. Can’t find any deductions worth my time and the CPA filing fees.

I bet a CPA could.

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

#234

Post by pa7x1 »

srtjstjsj wrote: post #217
pa7x1 wrote: post #199

Earlier quoted context omitted.

This tax shenanigans happen because we have built an absurdly complex tax framework which can be gamed/abused with economies of scale. The solution is to streamline the tax framework as to make its implementation almost unavoidable. Long-story short, my bet is: - Sales tax (VAT) - Inflation - UBI Sales tax is far less gameable as it's linked to concrete economic activity. It also has the benefit of tracking the added…

Sales tax is extreme regressive, more than UBI can handle. Unless you are proposing a 50% sales tax and a progressive UBI?

Sales tax would be the only conventional tax in the scheme proposed. So it would need to be as high as needed to fit the public government spending. In some EU countries that would be above 50%, in the US may be roughly 40%. That may seem like a lot but averaged it would be the same than the average tax payer paid before, except more evenly distributed so likely median tax payer would be benefited.

UBI by itself is progressive, a simple flat UBI creates a progressive effective rate. You can tweak the numbers to obtain your desired target tax curve; increasing or decreasing UBI, having different VATs for different products. As John Von Neumann said, "with 3 parameters I can draw an elephant and with 4 I can make it wiggle its trunk". There is enough free parameters to make the taxation more or less progressive.

I'm not prescribing those details because I think there should be ample room for fine-tuning. What size government spending should have in an economy and how progressive should a tax system be are questions that different countries have answered differently and you find success and failure all across the spectrum. So I consider it a transversal issue.

My focus is on efficiency, resiliency to abuses/gameability and economic incentives.

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

#235

Post by srtjstjsj »

Zarath wrote: post #43
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 are upper middle class it is possible to pay zero taxes. Between tax loss harvesting, 401ks, opportunity zones, and LLC formation, a citizen can legally pay no taxes some years. It's a bit of a learning curve but none of the mechanics are particularly difficult.

"some years" is bearing quite a bit of load there.

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

#236

Post by matthewheath »

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…

Maybe, but there are several arguments against using it in this context:

- Collection can be reduced by deducting VAT on company purchases, meaning the company only pays the difference between the VAT charged to the customer and the VAT they've incurred on purchases.

- It's regressive. It primarily affects poorer consumers since it is effectively a tax on the end user rather than the company.

- Some countries aren't free to set their own rates. For example, in the EU the standard rate cannot be set below 15% without first changing EU law (and convincing a majority of Member States to agree to do that) so it's not very competitive.

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

#237

Post by LudwigNagasena »

robertlagrant wrote: post #203
LudwigNagasena wrote: post #169

Earlier quoted context omitted.

It is not a problem. Just give subsidies as a tax credit.

That's still a problem, if you think companies minimising their tax is a problem. The game shifts to creating the correct structure to qualify for tax credits.

Uhm, I am not sure what you are talking about. Frictions that arise from taking money and giving them back by design don’t arise if you don’t take anything because you provide a tax credit.

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

#238

Post by srtjstjsj »

DebtDeflation wrote: post #182
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 o…

That can be easily fixed by making loans taxable and payback creditable. Want a $100K loan? Get a $140K loan, pay $40K tax. Pay back the loan? Deduct from taxes.

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

#239

Post by srtjstjsj »

throw_m239339 wrote: post #186
sneak wrote: post #164

Earlier quoted context omitted.

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".

Can a corporation be sent to jail?

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

#240

Post by saalweachter »

cwhiz wrote: post #205

Just get rid of corporate taxes, and get rid of capital gains taxes. Treat all income the same. Kills the double taxation issue, and removes the incentives for corporations to avoid taxes.

Double taxation is a talking point, not a philosophical problem. It's like rebranding the inheritance tax as the death tax to make it sound unfair or absurd ("they tax dying in this country!!!").

Double taxation happens constantly in all sorts of contexts, for instance, most of us pay income tax, and then pay sales tax using those already-taxed dollars, and then the seller pays income tax on the money received less sales tax.

The reason we tax in so many ways is mostly some combination of "hysterical raisins" and politics (it can be politically easier at different times to raise revenues in different ways, and restructuring the tax code will create winners and losers so maintaining the patchwork status quo is easier), but it's not necessarily a bad thing to tax with a variety of methods. There is a certain amount of administrative overhead in having a corporate and personal income tax, a payroll tax, a sales tax, a property tax, etc etc etc, but doing so also makes it harder for someone to dodge taxes entirely -- restructuring to avoid personal income taxes can put you in line for corporate income taxes and vice versa, for instance. Holding lots of land subjects you to property taxes instead of corporate taxes on the companies you own stock in. Meanwhile all of these separate taxes create paper trails that can be used in the mutual enforcement of all taxes. If you run a business and your sales tax receipts, corporate taxes, and personal income taxes don't roughly line up, it signals that an audit may be called for. The tax system becomes a checksum for itself.

Now, this may all just be status quo rationalization, but my point is, "double taxation" is just a shibboleth and not itself a reason to radically reform the tax code.

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