31–40 of 431 posts
Please deflame the headline. Tax avoidance is not tax dodging.
What's the difference? Legality? If so, I'm not sure anybody really cares about whether it's legal (in an intellectual sense). People are much more interested in morality and whether a system is working well for society.
This should be stamped out and severely penalised. I'd even go as far as banning such company from operating in the country until they close entire tax avoidance network. If you wanted to create a local Uber clone, you just won't be able to compete because from the start you'll have to pay probably order of magnitude more tax than a big corporation. Then less competition means less innovation, consumers are worse off…
Individuals are subjected to "alternative minimum tax". Why not corporations?
Individuals can't pretend to be based in Ireland to not pay US taxes. US taxes global individual income, but not global corporate profits.
Always wondered why US citizens do not make a bigger deal out of this. If I understand correctly, if you are a US citizen, but live somewhere else in the world, IRS still expects to be paid tax from your individual income in that foreign country (possibly in addition to the tax you pay in your country of residence) right? I assume there are minimum income thresholds but still...
Are there even any other countries that do this?
I don't fully understand the part about Dutch shell companies, but it seems perfectly believable that Uber would have $6B in revenue and still operate at a loss (and owe no income taxes). Isn't that the big criticism of Uber's business model -- that they can't turn a profit at rates people are willing to pay while also compensating drivers?
This begs the question of what purpose the shell companies serve.
Earlier quoted context omitted.
If it's more fair to tax profits than revenues, we should be advocating for individuals to be treated in the more fair way, rather than advocating for corporations to be treated in the less fair way, don't you think? Besides, corporations generally have outside sources of funding other than income, while people generally don't. Thus corporations can run at a deficit, sometimes for a long time, while they figure out h…
Individuals are broadly taxed like companies in most western countries, it just turns out that most individuals don't actually incur many expenses in producing their income.
Individuals are subjected to "alternative minimum tax". Why not corporations?
Cause they're not people. Oh wait...
I don't fully understand the part about Dutch shell companies, but it seems perfectly believable that Uber would have $6B in revenue and still operate at a loss (and owe no income taxes). Isn't that the big criticism of Uber's business model -- that they can't turn a profit at rates people are willing to pay while also compensating drivers?
This begs the question of what purpose the shell companies serve.
All of these things are beneficial.
If you treat this like a game and try to win it, though, the 'building block' of legal personhood can be broken. The mechanics aren't perfect.
You can book profits to one entity, then losses to another by creating 'fake' intercompany transactions, despite the fact that your organization as a whole is net even. We have rules that attempt to deal with these problems in arms-length transactions - regulators get to check if the contract payment amounts make sense.
If you do this with IP, which is hard to value, tax offices have significant issues disputing the value of the inter-company contracts. You use this issue to toss losses between various national corporations to take advantage of problems with individual tax regimes. The double irish/dutch sandwich technique is a great example.
But eventually the chickens need to come home to roost, right? Well, not really. Tax haven jurisdictions basically allow you to park money which you've obtained via your tax avoidance system in an account nearly indefinitely. You'll generally need to pay for a resident or residents to sit on the board of your tax haven jurisdiction corporation board, which lets them scalp 50-250k a year from you, but if you're hoarding billions, it's irrelevant. IF you're a normal joe, however, the accounting, legal and director fees kill you. Oddly, if you look at the leadership structures in place in most tax havens, they look a lot like a bunch of banker expatriates from various financial hubs (hi London!) took over a country that has good weather and nothing else going for it.
The locals receive the windfall of money via directorships and other ancillary financial services, the rich get to hide their money, the companies get to defer tax payments for as long as they want. The only people who don't benefit are the people left holding the tax bag.
Oh wait, that's most of us.