Facebook Tax Bill Over Ireland Move Could Cost $5B • Hacker News Board

Re: Facebook Tax Bill Over Ireland Move Could Cost $5B

#91

Post by refurb » Sat, Jul 30, 2016, 6:59 PM UTC

uiri wrote: post #68

refurb wrote: post #36

Earlier quoted context omitted.

That's because they are deferring the taxes on the ex-US money. It's a 401k in the US. It's a tax deferment, not a tax break. If your effective rate went from 35% to 25% due to your 401k contribution, you still end up paying 35%, just not right now.

No, you don't end up paying 35%. Part of the advantages of a 401k come from distributing dollars being taxed at a high marginal rate to another year when they are taxed at a lower marginal rate.

It all depends. Sure, if you put almost nothing in a 401k, then when you pull it out, you'd be in a lower margin tax bracket (and living on very little money).

But if you put a lot in, the fact you HAVE to start taking money out at a certain again AND it all gets taxed before you die means you pretty much end up paying the taxes anyways (or more if rates have gone up).

Re: Facebook Tax Bill Over Ireland Move Could Cost $5B

#92

Post by mjmahone17 » Sat, Jul 30, 2016, 7:01 PM UTC

bluecalm wrote: post #89

edanm wrote: post #84

Earlier quoted context omitted.

"If you really want you can tax companies' revenue (not profits)." How would that work if a company isn't profitable? Sounds like taxing profit makes more sense, although I agree that it does give ambiguity. But then, it also allows the government to incentivize certain kinds of spending over others by allowing it to be counted (or not) towards the tax bill.

That's prime argument for taxing revenue actually. Imagine you have two companies doing the same thing. They have the same product, use the same amount of resources, infrastructure, pollute at the same rate etc. The only difference is that one operates under famous trademark from country X which it licenses for 100M/year and brings 0$ profits while the other one developed its own trademark which it owns therefore mak…

Tacking on: sales tax is essentially a tax on revenue, just such that it only applies to retailers and is transparent to the consumer at the point of sale.

Re: Facebook Tax Bill Over Ireland Move Could Cost $5B

#93

Post by sib » Sat, Jul 30, 2016, 7:02 PM UTC

koralatov wrote: post #82

bluecalm wrote: post #50

Earlier quoted context omitted.

The argument is that income tax for companies is a terrible idea and it's better to move taxation to different places. Places where you can be both more efficient and more fair at collecting. It's impossible to make income tax fair. The simplest example is selling rights to trademark or some licensing to friendly company located in tax heaven. You will never be able to assess fair value of a trademark and you will al…

Out of curiosity, what's a better idea than income tax for corporations? Assuming we do away with it, what's the more efficient and fairer way you'd propose?

Taxing the owners (as in a subchapter S corporation in the US). It's a pass-through. Then you don't have the incentive to do things like the double-Irish or similar unnatural acts.

Re: Facebook Tax Bill Over Ireland Move Could Cost $5B

#94

Post by koralatov » Sat, Jul 30, 2016, 7:02 PM UTC

edanm wrote: post #87

koralatov wrote: post #70

Earlier quoted context omitted.

I know for sure that if I underdeclare the value of my holdings or my income, I'll be punished when caught, and I don't consider that unfair. I might disagree with the amount I'm taxed, but I don't disagree that I should contribute something to society through paying tax. The difference as I see it is that companies usually operate as if they believe they shouldn't pay any tax. I realise that minimising tax burden is…

People think of these issues too much in terms of black and white. You should think of it as a negotiation. Many transactions, even on a smaller scale, are complex, and deciding on the "true value" is often impossible. So the tax authorities are negotiating with Facebook, and Facebook's report is simply its opening offer. You wouldn't consider a salesmen who overpriced his product to be doing something necessarily un…

Oh, I absolutely realise I'm oversimplifying it, but the point stands that, in most cases, it's in Facebook's interest to massively underreport value as part of that negotiation.

For example, say they invent a new way of compressing jpegs which saves them bandwidth and storage costs. Facebook could report that as costing them money: "Oh, that cost us $120,000 in programmer time to devise and implement".

It's entirely possible that this is true, but it's only half the picture: that new compression algorithm might have saved them twice that or more in bandwidth costs.

In this instance, it's 'efficient' for Facebook to report one part and then conveniently ignore the other. But the question remains is it honest? Surely the value of that technology is somewhere between the cost to create and the costs it's saved?

Re: Facebook Tax Bill Over Ireland Move Could Cost $5B

#95

Post by refurb » Sat, Jul 30, 2016, 7:02 PM UTC

Frondo wrote: post #56

refurb wrote: post #32

Earlier quoted context omitted.

There is so much inefficieny in gov't spending that your statement is meaningless. The biggest line items in the gov't budgets have nothing to do with the legal system or infrastructure.

Government, by definition, can be more efficient than any private entity because it never needs to produce a profit. Businesses need to be able to skim a little off for the owners. Government can provide services at cost, no mark up. If you're unhappy with the implementation of a specific program, like Medicare (which is, of course, more efficient than private health insurance in the US), let's talk about that. My pi…

But profit creates an incentive for efficiency. Sell the same thing for 1% lower than your competitor and that goes right into your pocket.

Our current gov't system provide very little incentive for efficient use of funds.

I'm not arguing that all of these programs need to just disappear. I'm arguing a "race to the bottom" in terms of efficiency is a good thing, not a bad thing for gov'ts.

Re: Facebook Tax Bill Over Ireland Move Could Cost $5B

#96

Post by sib » Sat, Jul 30, 2016, 7:03 PM UTC

unabst wrote: post #61

thisisbad wrote: post #15

Corporate income taxes should be eliminated. Instead of focusing on building a company and good products, companies have to dedicate resources to figure out how to escape the taxation. Taxation should be done when profit is distributed to shareholders (similar to Estonia). There is also unfair double taxation - paying taxes after company pays them.

Actually this is not as bad as most people assume. Companies should mostly re-invest, so should have no income. They should only have growth. Taxing profit is taxing the reward (a delusion of money produced after all operations), which is what's suppose to justify it. But taxing growth is taxing the company itself (taxing the operations). Taxing shares or dividends would be taxing rewards. Apple has generated a boatl…

"Amazon being able to escape sales tax early was bad" - they didn't escape it. In fact, they were following the law and acting exactly as traditional catalog retailers did; they charged sales tax to customers located in states in which Amazon has a physical presence. It only became a real political hot button issue when they started getting so big that they became a target.

Re: Facebook Tax Bill Over Ireland Move Could Cost $5B

#97

Post by refurb » Sat, Jul 30, 2016, 7:05 PM UTC

kuschku wrote: post #58

refurb wrote: post #41

Earlier quoted context omitted.

You'd end up with a country like Singapore, where the taxes are lower, but more wisely spent.

In Singapore it only works because of so little expenses. If Germany would, tomorrow, decide to not provide any services outside of the cities, we could save a lot more taxes, too – and reduce them even further. But there’s some running costs countries have, which you can’t go below. If you want public schools and universities for free that can rival US private elite unis, if you want first-class public transit every…

I would argue Singapore has a significant safety net, good schools and healthcare. Hell, most of the housing is gov't owned.

Re: Facebook Tax Bill Over Ireland Move Could Cost $5B

#98

Post by refurb » Sat, Jul 30, 2016, 7:07 PM UTC

kuschku wrote: post #64

refurb wrote: post #40

Earlier quoted context omitted.

will just gravitate from the high end to the low end, screwing over those at the high end Gov'ts are providing a service. Competition is a good thing. If one company was charging $1K for a computer and another charging $500k for the exact same thing, would you say consumers are screwing over the first company when they buy from the 2nd company?

So you propose we have no social services, schools, etc?

Where did you get that from? Am I suggesting companies don't produce any computers any more?

I'm suggesting having gov'ts compete on spending efficiency is a good thing.

If I get the same level of services from country A and B and country A's tax rate is 25% lower, then guess where I'm going?

Re: Facebook Tax Bill Over Ireland Move Could Cost $5B

#99

Post by koralatov » Sat, Jul 30, 2016, 7:09 PM UTC

sib wrote: post #93

koralatov wrote: post #82

Earlier quoted context omitted.

Out of curiosity, what's a better idea than income tax for corporations? Assuming we do away with it, what's the more efficient and fairer way you'd propose?

Taxing the owners (as in a subchapter S corporation in the US). It's a pass-through. Then you don't have the incentive to do things like the double-Irish or similar unnatural acts.

That's one way of doing it, but means that if the majority of your stock is held by foreign nationals residing abroad, the U.S. gets much less income, even though the majority of the value is being generated in the U.S. using U.S. infrastructure and services.

Re: Facebook Tax Bill Over Ireland Move Could Cost $5B

#100

Post by maxerickson » Sat, Jul 30, 2016, 7:12 PM UTC

jsmith0295 wrote: post #79

karma_vaccum123 wrote: post #49

Earlier quoted context omitted.

Then most of the upper and middle class would incorporate, leaving the poor to pay income tax.

Even if you did this you would still need to pay yourself a salary or dividends, either of which would then be taxed as income. So there's some wiggle room to avoid paying tax on business expenses, and I'm sure that would be abused to an extent, but given that the tax system would likely still be progressive there's on reason the poor would be paying a larger share of the tax.

Under current law, if you live rent free in a house provided by a corporation that you owned, you anyway have to recognize an appropriate amount of personal income for that. Same with the use of a vehicle.

Compliance in such situations would probably be lower with no corporate tax, by incorporating isn't some magic process that makes income disappear.