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

#301

Post by bsanr2 » Tue, Nov 03, 2020, 2:06 PM UTC

jlokier wrote: post #170

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…

> Or do like Europe is finally starting: just tax revenue. That rapidly turns into a disaster of consolidations and monopolies. You don't want that. Think about the difference between big company $BIG selling you the consumer a million Widgets for 10^9 currency units, versus 26 small companies $a..$z each selling to the next in a long supply chain which results in a million Widgets. In revenue taxation, big company $…

Simply swing the antitrust hammer judiciously, in that case.

I'm suddenly hit with the image of a child whining that having to do homework AND chores is too hard, and their parent telling them to suck it up.

Besides, tax revenue doesn't just disappear into some govt hole, it gets redistributed as services and grants and the like. The loss in operating revenue is likely made up in increased business. Your low margin goods get fked but people are more willing to purchase the higher margin value-adds.

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

#302

Post by RhysU » Tue, Nov 03, 2020, 2:06 PM UTC

beefield wrote: post #123

jusssi wrote: post #111

Earlier quoted context omitted.

> Personally I don't think it is fair or likely healthy in the long term for the society to let vast majority of the income/wealth of wealthy and thus powerful people to go untaxed But this is already happening even with the current system that attempts to tax company profits, isn't it? My point is that taxing the person instead of the company would enable taxing the wealthy. There are already quite severe restrictio…

If we transform the taxation so that the income/profit of people and corporations is no more taxed, but the tax revenue is still somehow fairly collected, I am all in. It is just that typically when people propose stopping taxing corporate profits, they offer nothing to replace the tax. One of my pet ideas is to stop taxing income/profits of limited liability companies completely. Instead make the the companies issue…

> For private ones, the shares would be auctioned publicly.

No company could be held privately in perpetuity. Taking ownership away is very different from taxing ownership.

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

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Post by sokoloff » Tue, Nov 03, 2020, 2:07 PM UTC

afrojack123 wrote: post #107

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…

Most large companies have transitioned to giving shares (RSUs) rather than stock options (NQSOs in the case of large companies) for non-executives. Compliance risks/costs are lower and payouts to employees are more predictable (and therefore valued more highly by employees).

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

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Post by gohbgl » Tue, Nov 03, 2020, 2:11 PM UTC

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…

A while ago I listened to a podcast [1] where the guest Stephan Kinsella argued that the state justifies taxing and regulating corporations by granting them special rights like limited liability. The guest then continued to explain that this justification is flawed since the these supposed special rights are actually not special at all. The argument made a lot of sense but it only explains the justification and not the reason for corporate taxation. In my opinion the reason is obviously to increase the state's control over us.

[1] http://www.stephankinsella.com/paf-podcast/kol-026-freedomai...

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

#305

Post by Schiendelman » Tue, Nov 03, 2020, 2:12 PM UTC

tim333 wrote: post #213

Schiendelman wrote: post #145

Earlier quoted context omitted.

This makes a lot of sense. There’s no way for the money to get out of the corporation without being taxed, we have all these R&D deductions to make many companies able to pay nothing, why not be direct about it? On the other hand, is the status quo ok? Are we getting something out of companies having to do these specific activities to deduct?

>There’s no way for the money to get out of the corporation without being taxed Not totally true. Interest free loan to the owner or his mother in law. Company buys a house / car / jet owner can use. Company buys consultancy services from the owners other company based in the Bahamas etc

Those expenditures aren’t tax deductible; they aren’t r&d.

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

#306

Post by iso1631 » Tue, Nov 03, 2020, 2:16 PM UTC

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…

Its interesting as many people have a revenue tax on people -- it's called income tax. Your expenses (rent, food, commute, power) are generally not removable -- some expenses can be taken off before tax, but most can't.

Most people operate on low margins economically, saving 5% of your paycheck would be an outstanding achievement for many.

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

#307

Post by jagged-chisel » Tue, Nov 03, 2020, 2:25 PM UTC

stdbrouw wrote: post #299

jagged-chisel wrote: post #178

Earlier quoted context omitted.

You adjust the tax curve to address this situation. More revenue, even higher tax rate.

And now you've solved one problem and have created a bunch of others. Welcome to tax design!

Indeed. I believe that pretty much applies to any financial regulations.

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

#308

Post by lr4444lr » Tue, Nov 03, 2020, 2:25 PM 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…

Not that I defend it, but largely because non business entities don't have the concept of losses against which to deduct revenue, unless you actively trade equities. But I don't mean to just be pedantic about it: this really is the main reason. Summers' plea here strikes me as futile. He really thinks if the complex accounting were all laid out that it would lead to some mass awakening? I doubt it...

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

#309

Post by njs12345 » Tue, Nov 03, 2020, 2:29 PM UTC

pa7x1 wrote: post #199

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 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…

Land value taxes also seem like they would work very well, have some nice incentive effects and are hard to game: https://en.wikipedia.org/wiki/Land_value_tax

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

#310

Post by beefield » Tue, Nov 03, 2020, 2:32 PM UTC

RhysU wrote: post #302

beefield wrote: post #123

Earlier quoted context omitted.

If we transform the taxation so that the income/profit of people and corporations is no more taxed, but the tax revenue is still somehow fairly collected, I am all in. It is just that typically when people propose stopping taxing corporate profits, they offer nothing to replace the tax. One of my pet ideas is to stop taxing income/profits of limited liability companies completely. Instead make the the companies issue…

> For private ones, the shares would be auctioned publicly. No company could be held privately in perpetuity. Taking ownership away is very different from taxing ownership.

Fundamentally it is not any different. In the current model, either the company can afford to pay taxes by cash without issuing new stock, or then it does not and needs to issue new stock, thus diluting current ownership.

In my model, either company can afford to buy back the stock from the auction thus keeping the company completely private, or then it does not, thus diluting current ownership.

(I personally would expect a tax rate of around 1% p.a in my model. If your company can't buy back 1% pa of its stock without needing to pay any other tax, I am not sure it is a healthy company)

Last, strongly ideologically, in my opinion limited liability is so massive benefit given to the owners by the society that I am not sure there is any reason to even have perpetual private limited companies. Either you grow up to public scrutiny of a publicly traded company or you do not succeed and die trying.