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

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

#101

Post by lotsofpulp » Tue, Nov 03, 2020, 8:53 AM UTC

berdario wrote: post #93

jusssi wrote: post #61

Earlier quoted context omitted.

An alternative to attempting to tax companies, is to tax people. There is no company that would just exist to forever eat money away from the public. Eventually they intend to pay the profits to a real person (either in money, or other benefits). Taxing that dividend or salary transaction might be simple enough to just work. And you have a real person to put to jail when the taxes were avoided.

Maybe? Ingvar Kamprad net worth was "only" 3 billion $ That's about 25 billion $ lower than if he had unfettered access to all of IKEA's worth. https://www.forbes.com/profile/ingvar-kamprad/ If you like how the company you built spends money more than how the state spends money, you're going to want your company to capture more money/worth without relinquishing it to the public. Another rationale could also be when y…

> Also, this works well with the ethos of some companies (like Amazon, allegedly) which reinvest a lot of their profits to cut margins/develop new products... And overall just tighten their hold on the market

Should a businesses goal not be to tighten their hold on the market? I’m pretty sure if I don’t, someone else will.

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

#102

Post by lordgrenville » Tue, Nov 03, 2020, 8:59 AM UTC

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…

Earlier this year I read the book The Chickenshit Club on the advice of someone on here. It has a lot of interesting information but I didn't agree with the author's summary, basically: "prosecutors are cowardly and don't fight cases that don't look easily winnable. They should be braver and go for the highest-profile cases to make a statement". This seems wrong to me because a) litigating a complex, lengthy case and losing is a huge waste of public funds (it isn't a deterrent if the defendants know they can hire expensive lawyers and get off) and b) it can often be counterproductive, since it leads judges to set precedents which make their work harder in future.

One regulatory ideas I thought of was a salary cap on criminal defence attorneys (lawyers can make as much money as they want in civil law, but letting the wealthy hire a different league of lawyers in criminal cases is a huge distortion of justice). This is all more about actual crimes than violating the spirit of the law, but maybe the same could apply to tax law. (I feel like there must be a flaw with this, would be happy to hear what it is.)

(Wrote more about the book here: https://www.goodreads.com/review/show/3507224023)

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

#103

Post by sdoering » Tue, Nov 03, 2020, 8:59 AM UTC

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…

Thanks. What I love about the comments you make is twofold:

- You clearly differentiate between opinion, observation and fact. - You don't try to find an easy answer.

Thanks. Comments like these make me come back and read on HN.

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

#104

Post by lordnacho » Tue, Nov 03, 2020, 9:00 AM UTC

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…

I'd go further than this and make a positive case.

If we want the free market to work, business models need to be clear. We want people to see a successful business and say "hey, I can do that better". Part of that is transparent accounts, and part of that is transparent ownership.

Would also help againt some of the more egregious frauds we've seen in recent years. Some of them would have gotten caught if they'd just had more eyes on them, and you get more eyes if things are transparent.

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

#105

Post by lotsofpulp » Tue, Nov 03, 2020, 9:02 AM UTC

berdario wrote: post #98

triceratops wrote: post #60

Earlier quoted context omitted.

Here's one case study: https://www.gocurrycracker.com/never-pay-taxes-again/

"Once income and spending exceed this level, taxes must be paid. Unless… Unless that income comes from qualified dividends or long-term capital gains. In this case, a married couple can have $24,400 a year in income AND $78,750 in investment income, TAX-FREE" If you can get 78k$ yearly investment income from index funds, you already have a net worth of several million $, and you're thus already among the people that…

But according to that link, all you have to do is choose leisure over labor*

*and have $5M+ in assets

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

#106

Post by arethuza » Tue, Nov 03, 2020, 9:06 AM UTC

DanBC wrote: post #94

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…

> Why isn't the same standard applied to rich companies? Prosecuting you is cheap and easy. Prosecuting a multinational billion dollar company is expensive and difficult. One of the reasons it's difficult is that they're not (usually) outright evading tax. They're avoiding tax. The law is what's written, but also how that's interpreted by the courts. Sometimes the courts have not yet decided how to interpret a bit of…

That's because there is so much effort highlighting benefit fraud - even though that is estimated to be about £2.3 billion a year.

Edit: Just for the record I'm against benefit fraud and tax evasion.

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

#107

Post by afrojack123 » Tue, Nov 03, 2020, 9:09 AM UTC

I see so many posts that have the wrong idea. So many of our politicians and lobbyists are former lawyers. Even the accountants are in on it. The laws are written to be purposely complicated so mega corporations keep smaller entrepreneurs down and lawyers/accountants big fees for knowing the rules inside out(they wrote them).

Why do you think large companies give stock options as compensation instead of straight cash. It is to avoid taxes.

The average American has one source of income a W2. A simple tax filing. Next time you do your tax filing, look at the questions TurboTax or FreeTaxUSA asks you and then look at the offical government tax doc(this is what gets filled out with your answers).

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

#108

Post by AdrianB1 » Tue, Nov 03, 2020, 9:09 AM UTC

vkou wrote: post #39

RhodoYolo wrote: post #24

Earlier quoted context omitted.

Why does US tax money coming back into the country and at what rate? Wouldn't you want to encourage money to be made elsewhere and brought back to the states for investment? or am i fundamentally misunderstanding economics?

US citizens are taxed on global income regardless of whether they live in the US, or whether any of their money will ever enter the US. It's only right for US corporations to be taxed the same way. Most of these insane financial contortions are done because they aren't taxed on foreign, non-repatriated earnings - creating an incentive to convert domestic earnings into 'foreign' ones, that get repatriated the next tim…

Is it right? I know a lady that has dual-citizenship because a parent is US citizen and one Australian; she had to move in US after living 25 years exclusively in Australia because she had to pay taxes in both countries, in Australia as a resident citizen and in US because she was a citizen. The only other option was to give up to US citizenship, like others do. Is it right?

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

#109

Post by harry8 » Tue, Nov 03, 2020, 9:10 AM UTC

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 it makes sense that companies can walk a fine line on taxes, save tons of money, and you and I cannot.

Nope, these are the reasons that cause the situation. This outcome does /not/ make sense nobody sane without a huge vested interest would design a system to achieve less tax paid when you earn more. It's entirely contrary to the intent and spirit of the tax code. This is not sensible. How to fix it? That's harder. Start with its a problem and morally and ethically wrong. It's really the only place to start from. I would say keep in mind two wrongs is not an improvement and unchecked government power is far worse than tax cheats but that does not change where this discussion should start.

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

#110

Post by Spearchucker » Tue, Nov 03, 2020, 9:11 AM UTC

TheOtherHobbes wrote: post #91

Cthulhu_ wrote: post #70

Earlier quoted context omitted.

> 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? I know of one "gotcha" that works in my country at least: work for low / no wage but instead have loads of assets like stocks; dividend taxes are much lower than income taxes. I could be wrong. I'm jus…

Really rich people do this with a complex network of shell organisations that's as opaque as possible. It's not just that a corporation owns their house, it's that another corporation owns that corporation, and a holding company in the Cayman Islands with a nominee director who lives in a postbox owns everything, except the IP rights which are in Panama - this year. And personal spending goes through a credit card se…

Somewhat oversimplified, you don't need a herd of corporations to do this - simply sell your house to a trust fund of which you or someone you trust is the primary beneficiary. In Jersey, Luxembourg or the like. You pay a lawyer who already does this for many funds to administer yours.

You then either rent the house from the trust for a minimal amount, or the trust lets you stay there rent-free as a guest. This is also how many of the wealthy get around inheritance tax. When you cash in your chips your will appoints your offspring/significant other as the primary beneficiary and the wheel keeps turning.

As with all things in life knowing the thing is often the hard part. Most of us don't know what questions to ask.