51–60 of 68 posts
It's time there is an honest discussion internationally about the biggest shame of western capitalism, tax shelters. It's not just big tech, it's everywhere. What benefit does the world earn from this global sneaking around?
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I'm not sure you're right to single out corporations here. It seems like all the Real People I know who are aware of simple things they could do to pay less in taxes end up doing them as well.
Difference being that Real People can't spend 10 million setting up foreign subsidiaries in order to avoid taxation on a billion in income. Different math comes into play when you can fill an office building with lawyers for your tax policy.
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Off the top of my head: * Million dollar Vegas conferences? (Recent GSA scandal) * Guantanamo Bay * Unnecessary military bases all over the world Give me a day and access to the books for any branch of government and I would bet my life savings on being able to find hundreds of thousands of wasted dollars, if not millions.
The US federal budget is in Trillions. If you can find wastes that range in "hundreds of thousands of wasted dollars, if not millions", they are just a negligible drop in the bucket and it would serve purely to distract from the bigger expenditures. If you were to really spend time on such an exercise, it would be more useful to find the big items that can be reformed, not the minuscule ones that would take up a lot…
I've managed a big budget before. There are usually no more than a few items that account for most of the spending (in the US, these are probably defense, health, pensions and education), which you can usually cut 10% easily, and from that point on, the devil is in the details, both for the big items, and for the smaller level items.
And it always looks like there's nothing you can cut, and yet, there is always a lot you can cut, usually in the vicinity of 50%, if you have to, without endangering the viable status of the operation (although the stakeholders - employees / citizens / whatever - will find things are much less convenient than before).
Give me a proper OLAPpable database of government expenses (star scheme with properly categorized fact tables), and I'll show you where to cut. And no, it won't be popular or easy, but it's possible.
Right now, the US government spends ~60% more[0] than it collects in taxes (otherwise stated: taxes account for only ~70% of US government spending. For 2011, there's 2.4T in tax receipts, 1.3T in borrowing, 2012 is looking worse - http://www.usgovernmentspending.com/year_spending_2011USbn_1... ). Saying that you cannot reform down to 50% is equivalent to saying that the US cannot be run sustain-ably. I would guess that's not true -- it just cannot be sustained with the current entitlements and spending.
[0] Depending on how you look at it. This is using government's own numbers, which do not include e.g. backstops against otherwise bankrupt financial institutions like Freddie, Fannie. And it doesn't include IMHO proper treatment of social security. I estimate it actually spends 100% more than it collects.
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I'm not sure you're right to single out corporations here. It seems like all the Real People I know who are aware of simple things they could do to pay less in taxes end up doing them as well.
and, in addition to what jbooth wrote above - these corporations lobby for the laws to be changed in their favor. How many Real People do you know who have done that? And is setting up 4 related corporations in 3 different international jurisdiction a "simple" thing?
Likewise, when a person devotes some small fraction of their resources to tax avoidance and a corporation devotes the same fraction, the corporation's results are going to be much more impressive and complex than the persons. But I'm not sure that's a reason to condemn the one and not the other.
I disagree with the premise that legally avoiding tax is somehow unethical or wrong (or otherwise something to be shameful for). There's a strong counterargument that not voluntarily handing over money you don't need to is resisting the tyranny of government. The real problem here is twofold: 1. The tax system is too complicated and continues to get more complicated with special interest riders and so forth; and 2. L…
(1) The tax system is very simple if you're not trying to game the system to (EDIT: changed from "or") minimize your tax burden. Almost all of the complexity arises from the allowance for deductions and the related regulations necessary to prevent abuse of those deductions. (2). Worldwide, that is the standard tax practice. It is called "territorial taxation." Source-based taxation is the U.S. practice regarding fore…
Unfortunately, that complexity also applies to taxpayers who are not trying to game the system. And while they might only be, say, 5% of the population, they vastly outnumber the outlaws for which these regulations were made.
e.g., if you have control of any asset outside the US, you can spend weeks trying to satisfy the documentation and tax requirements, and still fail because they are ambiguously worded. And you are automatically assumed to be in the wrong and avoiding taxation, even if you overpaid. How is that for simple? That is regardless of any deduction you may or may not be able to take.
> However, getting rid of the Irish structure would require (a) a change in other countries' tax policies or (b) a tax code even more complicated than the one we have right now.
Neither is true. The tax code for persons already enforces that - no matter how many entities you have in the middle, if you are ultimately in control of a company or a bank account, you have to report it and pay taxes on the profits.
It just takes the addition of one clause "Company X pays US taxes on every cent it makes in itself or a company under its control (in proportion to said control, ultimately determined by agency). Violation of this is considered lying under oath w.r.t sarbanes oaxley reporting"
(or 10 in legalese, with this underlying meaning), and all of a sudden it becomes the company's issue to prove it is not in control if it doesn't want to pay taxes. Just like it is for your "real person" taxpayer.
I disagree with the premise that legally avoiding tax is somehow unethical or wrong (or otherwise something to be shameful for). There's a strong counterargument that not voluntarily handing over money you don't need to is resisting the tyranny of government. The real problem here is twofold: 1. The tax system is too complicated and continues to get more complicated with special interest riders and so forth; and 2. L…
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That's a pretty big stretch of what I was talking about going from taking a deduction to murdering people. Would you feel better if I said there is nothing unethical about following our current tax laws? As it is the rich pay far more in taxes than what they make relative to the total so I have no problems with them working to minimize their tax bill just as I do. They simply have more resources with which to minimiz…
Warren Buffett and his secretary would like a word with you. My income has FICA and Medicare taken out of about 90% of the total, those taxes are capped. If I made more, I'd be paying less as a % of income for entitlements. My income is taxed at the personal income rate as opposed to the silly-low capital gains rate. Our tax code taxes the poor almost nothing, and the rich at a smaller % of their incomes than the mid…
The rich do not get taxed at a smaller % of their incomes than the middle class. Tell your good friend Mr. Buffett he is welcome to send a big check to the treasury. They will accept it.
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and, in addition to what jbooth wrote above - these corporations lobby for the laws to be changed in their favor. How many Real People do you know who have done that? And is setting up 4 related corporations in 3 different international jurisdiction a "simple" thing?
Individuals rarely do lobbying on their own, but I often see groups of farmers, homeowners, small business owners, or whatever forming groups to lobby congress for their own benefit. They're solving a harder coordination problem to do so, but it doesn't seem that different. Likewise, when a person devotes some small fraction of their resources to tax avoidance and a corporation devotes the same fraction, the corporat…
And how successful are they, compared to corporations? The problem is that by lobbying clout making a difference, corporations are thousands of times more effective than the number of people they represent.
(And it's usually an accepted deduction for them, unlike most other groups)
> Likewise, when a person devotes some small fraction of their resources to tax avoidance and a corporation devotes the same fraction, the corporation's results are going to be much more impressive and complex than the persons. But I'm not sure that's a reason to condemn the one and not the other.
The answer you're going to get as a person if you do that (especially if you get creative with multinational tricks) is "I'm not sure I'll be able to defend that in court. And if I can't, you're going to jail". However, if you do it as a corporation, the worst you'd do is to pay back taxes (perhaps with some small penalty). Sarbanes Oxley theoretically makes the CEO personally liable, but I haven't heard of a case where one was prosecuted that wasn't downright fraud.
Do you know of any case in which a corporate executive faced personal liability for creative tax planning? I do know cases where persons creatively planning their own taxes faced such liability. And I think that makes it good enough reason to single out one and not the other.
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>What do you feel should be cut in government? Where do you feel that money is being misappropriated? I'm not for big government. So, I wouldn't go department by department and audit to find fraud, waste, and abuse. I used to get paid to do that for the defense department. It's a complete waste of time and ultimately a paper drill. But what I want is moot. What I don't understand is why many others sit idly by and ar…
I like the contractual accountability idea. However, I'd like to point out that term limits is making government less like a business. Imagine you told a CEO 'Well, you're here for 4, maybe 8 years, but no longer." Zuckerberg's term would be over in 2014, Jobs wouldn't have been able to return (or would have stopped in 2005 if you just want to count his return in 1997). That's not to say that term limits are a bad id…
I like the idea of term limits if only to help prevent corruption. But perhaps that solution is best left up to the contractual accountability. However, I do feel that complacency and the "good ole boys club" plays a negative role in the leadership, which limiting terms might help to prevent.
But not to stray too far away from my initial point, "like a business" merely means efficient. "Here's my money, please put it to good use" isn't something I think many people with the correct information feel is truly being honored. And why that isn't being discussed more is interesting to me.
It's not shaming them for their tax rates -- we should shame Congress for not raising taxes, if we all agree taxes should be higher on large corporations. It's shaming them for legal, but unethical behavior. There's a lot of behavior that falls into the area of "legal, but shitty." Large corporations gaming the system to avoid paying taxes falls into that. Don't kid yourself that we can ever totally eliminate this ki…
Is exploiting tax loopholes really unethical? Some would argue that the government is the biggest waste of money there is. I'm not saying that's my belief, but let's entertain that thought for a minute. If you believe that the government wastes most, say 95%, of its money on stupid things that should never receive a dollar from anyone (like the war in Iraq, to pick a random one), and you believe that you personally c…
Apple, Microsoft, and Google should pay their fair share. Unless I can claim all my income in Ireland, and store all my cash in Barbados, they shouldn't be able to do it either.