Some voters are sick of companies like Amazon paying no corporate tax • Hacker News Board

Re: Some voters are sick of companies like Amazon paying no corporate tax

#121

Post by cascom » Tue, Apr 30, 2019, 1:11 PM UTC

will_brown wrote: post #112

cascom wrote: post #105

Earlier quoted context omitted.

Sorry that is not how it works - basic tenets of accounting (matching revenues and costs) those widgets would sit on the balance sheet and no loss would be recognized in year 1 and just profit in year 2

>those widgets would sit on the balance sheet and no loss would be recognized in year 1 and just profit in year 2 Unless of course the company manufacturing the widgets (A) sells them to a wholly owned subsidiary (B) for a loss...then A can take the deduction.

Who would then make an even bigger profit, for no tax savings

Re: Some voters are sick of companies like Amazon paying no corporate tax

#122

Post by sokoloff » Tue, Apr 30, 2019, 1:13 PM UTC

chii wrote: post #98

edwhitesell wrote: post #84

Earlier quoted context omitted.

At a high level of just considering taxable income that is true. However, the difference is there are a lot more things a corp can do to reduce taxable income than an individual can do. If you happen to be the owner of a corp you can also use those things to your individual benefit. If the argument is to say "income is income", then "expenses are expenses" should apply too. Edit: typo

> the difference is there are a lot more things a corp can do to reduce taxable income than an individual can do. this is exactly it. Rental costs are deducted as expenses for a corporation, but the same rental expense cannot be deducted from income. Arguably, the cost of staying alive for a person is an expense for making the income! To make it catagorized would be too complex though - i would propose that personal…

Though I agree with the annoyance of high marginal rates for one-time windfalls of income, I think it's more practically workable to only allow forward averaging in the form of "pay all the taxes now and fill out this new form XYZ to allow you to perform the alternative averaging process over the next 4 tax years".

Otherwise, you end up effectively amending N returns (possibly opening them back up for examination), needing to calculate what taxes would have been due under the then-extant tax brackets and laws, possibly needing to make inflation adjustments for figures that are decades removed from the tax years in question, realistically needing to pay interest on the taxes that you didn't pay in 1972 but are now claiming are part of your 1972 income because you sold a company in 2019, and everyone would have incentive to file a tax return showing earned income from age 1. (Maybe I arrange for my child to have a job posing for photographs and being paid $20 just to get their income tax filing clock started and being able to income average all the way back to that year instead of only to age 17, 19, or 21.) Forward-only averaging avoids (or substantially avoids) those issues.

Re: Some voters are sick of companies like Amazon paying no corporate tax

#123

Post by chewz » Tue, Apr 30, 2019, 1:14 PM UTC

specialist wrote: post #109

bedhead wrote: post #23

The intellectual dishonesty of this from allegedly smart people continues to astound me. Amazon has little-to-no taxes mainly because they have such low taxable income in the first place because they spend so much in R&D and other things. They’re actually creating jobs and new businesses rather than showing massive profits and paying a ton in taxes. I have no doubt they take advantage of perfectly legal tax code item…

Why is it better to tax employee personal income than corporate income?

Companies can easily move, people mostly don't.

It was the other way around until XIX century. People had been moving around Europe or emigrating to America in search of lower taxation while moving physical business (like local brewery) was next to impossible.

Re: Some voters are sick of companies like Amazon paying no corporate tax

#124

Post by sokoloff » Tue, Apr 30, 2019, 1:17 PM UTC

phkahler wrote: post #110

temp1831 wrote: post #70

Earlier quoted context omitted.

Let's say you run a gas station, which is a notoriously low margin business. You have $1,050,000 in revenue this year, and $1,000,000 in expenses, so you make $50,000. Let's say you run a small software company, which is a high margin business. You have $1,050,000 in revenue this year, and $500,000 in expenses, so you make $550,000. You should be taxed on the $50,000 and the $550,000, not on the $1,050,000. Otherwise…

If you tax revenue, the government can be funded with much lower tax rates. Businesses will always pass costs on to customers. To claim your benefit is really for everyone else seems a bit narcissistic.

Take another low-margin business: supermarkets. Do you want to raise supermarket (or other necessity) prices across the board by whatever the revenue-based corporate tax rate is? That would have a substantially regressive overall impact on consumers (in that the poor would bear a greater portion of that tax than their share of income).

Re: Some voters are sick of companies like Amazon paying no corporate tax

#125

Post by netcan » Tue, Apr 30, 2019, 1:18 PM UTC

300bps wrote: post #74

netcan wrote: post #49

Taxing profits (as opposed to revenue, value add, capital gains..) is the ultimate quixotic temptation for politicians. On paper, it is a fantastic tax. Google, Apple, FB, Amazon... all the new economy winners are very profit able, 20% - 30% margins & fast growth are expected (and priced into market caps). They're so profitable that money is just piling up, atm. They can't usefully invest it all. This means you can t…

We make laws. We have police, and tax authorities. Google finance said google made $40.42bn. The rate is 25%. Gives us $10.1bn. Your post is very insightful. The only thing I’d add is that when you have a $10 billion tax bill that you can afford to pay $5 billion to attorneys and accountants to avoid it. That’s the crux of the problem to me. No matter what scheme the government can come up with to tax it, the numbers…

when you have a $10 billion tax bill that you can afford to pay $5 billion to attorneys and accountants to avoid it.

I personally think this is overstated as a root cause. Giant corporations have the same lawyer budget to spend avoiding payroll taxes or GSTs/VATs, but it doesn't make that kind of difference. That's because salaries, sales and value adds are, in practical terms, objective truths. The law & accounting standards define them, locate them to a jurisdiction and that definition is defensible. A transaction either is or isn't a salary, or a sale.

Profit otoh, is subjective. Expenses can be expressed as investments, retained earnings can be expressed as growth. Most importantly, profit doesn't have an objective location.

Re: Some voters are sick of companies like Amazon paying no corporate tax

#126

Post by ensignavenger » Tue, Apr 30, 2019, 1:19 PM UTC

chii wrote: post #19

seunosewa wrote: post #5

The article is reluctant to mention the reason why they got those tax rebates, and focuses on the way people feel about it. This seems like bad journalism. According to CNBC, “Amazon's low tax bill mainly stemmed from the Republican tax cuts of 2017, carryforward losses from years when the company was not profitable, tax credits for massive investments in R&D and stock-based employee compensation.” https://www.cnbc.c…

> carryforward losses from years when the company was not profitable yes, this definitely should be talked about. Why can't people's income be carried forward like this as well? If i made a lot of money one year, why can't i claim away taxes from years that i didn't make income (such that my tax bracket is lower)?

While the article states it as "did not make a profit" what actually happened was they lost money, that loss was carried forward.You can do this too! If you have previous years where you had a loss, you can carry that loss forward just like Amazon does. There are rules around it, but it isn't that complicated.

Re: Some voters are sick of companies like Amazon paying no corporate tax

#127

Post by edwhitesell » Tue, Apr 30, 2019, 1:20 PM UTC

temp1831 wrote: post #97

edwhitesell wrote: post #84

Earlier quoted context omitted.

At a high level of just considering taxable income that is true. However, the difference is there are a lot more things a corp can do to reduce taxable income than an individual can do. If you happen to be the owner of a corp you can also use those things to your individual benefit. If the argument is to say "income is income", then "expenses are expenses" should apply too. Edit: typo

If you go to a high level of abstraction, you remove useful distinctions. That is not a productive line of thought. Not all income is the same, and not all expenses are the same. Excise taxes and any "nudge" tax laws make this obvious. It is true that there are some tax deductions that are abused. However, the effect of encouraging investment by businesses is much more important. >If you happen to be the owner of a c…

> If you go to a high level of abstraction, you remove useful distinctions.

That's my point and what I was extrapolating from your high-level comment. If you're going to give an example, it's good to talk about things the gas station and software company do to reduce that income to, or below, zero. Things that can provide direct, positive, net gain impact on ownership of the corp. However, those same things are not available to employees of the corp.

To me, the rules should be the same for _any_ taxable entity.

Re: Some voters are sick of companies like Amazon paying no corporate tax

#128

Post by ex_ex_nihilo » Tue, Apr 30, 2019, 1:29 PM UTC

sokoloff wrote: post #56

lugg wrote: post #37

Earlier quoted context omitted.

> take advantage of perfectly legal tax code items Nobody is saying otherwise. They are saying these legal loopholes are the problem that need changing.

Plenty of people are saying otherwise, either directly "These cross-national inter-company agreements are illegal and should be reversed" or indirectly "These companies are free-riding by improperly exploiting loopholes and should pay more." If the only issue were loopholes, the fixes are outside of Amazon/Google/other companies hands and in the hands of the legislatures of the various companies.

Exactly. There is such a thing as fiduciary duty. As a board member, if I find out my CEO is overpaying on taxes because he feels like it's the "right thing to do", his ass is getting canned. Our competition is not going to do that, and you get no brownie points for being a naive simp. This is a competition, not a drum circle.

Re: Some voters are sick of companies like Amazon paying no corporate tax

#129

Post by ex_ex_nihilo » Tue, Apr 30, 2019, 1:32 PM UTC

jyounker wrote: post #103

gigatexal wrote: post #30

This comes up all the time. The issue is not the companies. The issue is the loopholes that their highly paid tax accountants are taking advantage of. Change the law not attack the company for acting in the best interest of its shareholders.

And how did we end up with those loopholes?

Most people would hold that offering a bribe is not the unethical action, accepting the bribe is the unethical side. So if you're implying that the companies acted unethically by bribing politicians, I beg to differ. That is like blaming a lion for killing gazelles. Corporations are in competition with one another. It's a winner-take-all world, and they will always seek every edge they can get. If you want to hold someone accountable, vote the bastards out and elect someone with a spine.

Re: Some voters are sick of companies like Amazon paying no corporate tax

#130

Post by ex_ex_nihilo » Tue, Apr 30, 2019, 1:36 PM UTC

Fordec wrote: post #94

Maarten88 wrote: post #51

Earlier quoted context omitted.

In my country, my company has to pay 21% VAT. For a dollar in sales we have to add 21% in taxes. But we deduct the VAT paid, so if we had to buy stuff for 95 cents, we'd get back the VAT paid on that, resulting in having to pay taxes only on the difference, being 5 cents x 21%, approx 1 cent. Hence it being called "value added tax". I think this is a better tax than income taxes because it taxes consumption, not labo…

Except then it affects poor people more as consumption of things that people need makes up more of their income than the rich who have more disposable income, savings, capital and investments. Thus driving even more wealth inequality. But HN readers are more of the "Temporarily Embarrassed Millionaire" types...

So you don't apply VAT to inelastic commodities. We have in fact figured this shit out. Austrian or Keynesian are not the only two choices available to us, despite what some would try to lead you to believe.