Since when is it illegal to follow the law? Sure, we all have different opinions on the legal gray areas and of whether certain or all laws are legitimate and to what extent - but come on, that quote is just ridiculous.
For example, as an Irish company, you can open a subsidiary in France to do business in France. That's a right.
But if you're doing business in France essentially, you can't make the French company a subsidiary of an Irish one that doesn't have any other activity, in the sole purpose of evading French taxes. That would be abusing the right (of opening subsidiaries). It may conform to the letter of the law but not to its spirit, and can be punished.
Of course, this is all a very grey area and up to the judge to evaluate (and my explanation perhaps lacks clarity); but it's real nonetheless!
> Just because you can do something "in general", you can't do it with the specific purpose of circumventing another legal obligation.
Most countries have laws that say you can't do something JUST for tax purposes. You can, however, structure things in a tax friendly way, if there's a commercial motive to do so.
Over 5k employees apparently.
There are certain things where you are allowed to write into the IRS and get a Private Letter Ruling. "Business Purpose" is not one of them.
The whole point of the EU single market is that you do not have to do that. You can set up shop in Ireland and sell to the French market until the cows come home. You only owe Irish taxes (modulo the recent completely crazy VAT changes).
Laws that say "forget the law, anything we think is unreasonable is illegal" are a growing problem in Europe. It makes the EU look like fools to the rest of the world when something as basic as the rule of law becomes flaky and unpredictable. France is not just causing itself problems with this kind of action, their greed will create a bad impression of the whole of the EU.
Edit: of course, the right for an Irish company to do business anywhere in Europe is also one that can be abused. Separate companies are not needed for rights to be abused and offices to be raided.
Not only workers hired in France wouldn't want an Irish contract, but you can only have "posted workers" for a temporary period.
Like password vs fingerprint
That's basically how all Anglo-Saxon (including the US) law, i.e. case law, looks like.
For the amount of love Hayek gets in these circles, I'm surprised there isn't more focus on Law, Legislation and Liberty
I mean that's basically the entire cause of the split in the Supreme Court between strict literalists and those who believe in a living constitution.
Obviously judges have to apply some degree of common sense because English is inherently vague, but the amount that they do it can still trigger political bun fights.
Take, for instance, the establishment in Heller of the right to bear arms as an individual right. Most conservatives believed that to be the case all along, and think it is clear from the wording. However liberal observers were more likely to notice that this interpretation had not appeared in 2 centuries of jurisprudence, and societies of professional historians had long reached the opposite conclusion about original intent.
For another, look at Citizens United which established that corporations had a right to free speech, and therefore could not be restricted from spending on political speech. Conservatives saw this as a straightforward issue of, "I have no actual freedom of speech if I cannot spend money to broadcast it." Liberals noted that this overturned several previous precedents, and the Constitution had never intended corporations to be considered people.
In these and other cases, conservatives don't recognize the creativity of interpretation because the result seems natural and right to them. Liberals do notice.
The same is true going the other way. But liberals do not object to noticing that they have been creative, so are less likely to fail to notice when they have been.
In the criminal context, we also have the rule of leniety, which holds that ambiguities in criminal laws are resolved in favor of the defendant.
It's unusual to encounter a situation where the law is clear but someone is punished based on vague case law interpretation of the law. I rarely see a situation where I think "the Court just botched interpreting this statute." Almost always, it's "Congress or the agency botched writing this statute or regulation." And in a civil system it's much harder for the courts to fix such problems.
We do have a problem with laws that are themselves unclear, but the Supreme Court has done some weed cleaning in that area. For example, Jeffrey Skilling got a reduced sentence because the Supreme Court found that the honest services fraud statute was unconstitutionally vague unless limited to strict "bribery and kickbacks" theory. In the area of fraud on the government, courts have held that defendants can only be punished for making incorrect statements to the government (for e.g. Medicaire claims) if the falsity of their statements is based on an unreasonable and not merely incorrect interpretation of the underlying regulations.
We also generally have a strong separation between civil suits and criminal suits. People lament that not enough people go to prison in the white collar world, but in my opinion it's a good thing we're not sending people to prison for misunderstanding Treasury or Fed regulations.
This is all nice in theory, but in practice, it's happened multiple times that the (Supreme Court's) interpretation of the same law has changed. Granted, this has happened over decades (or even generations), but this implies that (1) either the definition of what is "reasonable" has changed (I find this unlikely, or else the concept itself has little sense), or (2) there is more wiggle room when interpreting laws...
https://en.wikipedia.org/wiki/Schenck_v._United_States#Subse...
Not trying to start a flamewar here, but the common German/European perspective on the US legal system consists of corporations owning it (because of huge costs), consumers abusing it ("cat in microwave/washing machine/toaster", unreasonable compensations, class action lawsuits) and agencies outright ignoring it.
Edit: Remembered one more: Juries deciding whether murderers are guilty or not. Simply unthinkable over here. Ironically the horror of this scenario is fuelled by the US/Hollywood itself.
Edit 2: War on drugs / world's highest prison population / racial profiling / death sentence. The longer I think about it, the worse it gets. I think I made my point. The image is really, really bad.
How oddly specific....were you referencing this? https://www.youtube.com/watch?v=QMH8Tof69SE
I do agree the U.S has a problem with rather frivulious lawsuits over "not following the letter of the law" or "wasn't mentioned in the safety manual to not do this thing that should have been common sense".
It seems when people think "American legal system" things like this come to mind: http://i.imgur.com/D7aP2bT.png
If I remember correctly though, the silliness of the above is actually due to a law about packaging must contain allergen information for certain common allergies. This means even peanuts must contain the label in order to comply with the law. Rather than list exceptions and complicate the law, it applies broadly to everything.
IANAL, I may not be remembering this fact 100% correctly.
I find it absolutely hilarious whenever I see it - but simple laws with "silly consequences" are better than complex laws that are difficult to follow, let alone enforce. Not to mention having to come up with and define products that would fit into the exceptions list, and investigating whether or not the product actually - blah blah blah. Bunch of overhead.
Better use of tax payer money to say "if it contains one of these allergens, say so on the packaging" and be done with it. No questions asked and it doesn't complicate the law to avoid saying something silly like "peanuts may contain peanuts".
For sure, I was just trying to be forceful in my (same) opinion. It's a good example and good common sense.
Okay, I'm curious. What's this supposed to mean? That consumers are putting cats in those devices and getting away with it, or putting cats in those devices to void warranties or something?
The best I can come up with is that you are thinking of cat in the microwave, which is an urban legend. I'm not sure how that's affecting the view of the US legal system.
> by awarding punitive damages the court was trying (and succeeded) to send a message about what is and is not acceptable.
The jury decides whether the lawsuit is warranted and how much to award. The court can alter this to try to make a statement (and in the case I referenced, the court reduced damages in each judgement).
1: https://en.wikipedia.org/wiki/Liebeck_v._McDonald%27s_Restau...
"Liebeck sought to settle with McDonald's for $20,000 to cover her actual and anticipated expenses. Her past medical expenses were $10,500; her anticipated future medical expenses were approximately $2,500; and her daughter's loss of income was approximately $5,000 for a total of approximately $18,000. Instead, the company offered only $800. When McDonald's refused to raise its offer, Liebeck retained Texas attorney Reed Morgan. Morgan filed suit in New Mexico District Court accusing McDonald's of "gross negligence" for selling coffee that was "unreasonably dangerous" and "defectively manufactured". McDonald's refused Morgan's offer to settle for $90,000. Morgan offered to settle for $300,000, and a mediator suggested $225,000 just before trial, but McDonald's refused these final pre-trial attempts to settle."
Maybe I'm just being too European.
Every coffee you've ever had in your life was a lower temperature than what McDonald's was serving up. They were serving super-heated coffee that is hotter and thus more dangerous than what you would make at home. A typical temperature for coffee is 75C -- that's the temperature it'll come out as from your standard automatic drip coffee maker. McDonald's was serving it at 95C, which required serious post-brewing heating to achieve. They admitted that this was wrong and stopped doing it, and to really drive that point home, no one else serves coffee that dangerously hot. You could burn a layer off your tongue in one ill-conceived first sip. The only reason you think this isn't a big deal is because you haven't been exposed to it.
This is a pretty sketchy assertion. Instant coffee is generally made from water you just boiled yourself.
https://www.caoc.org/?pg=facts "McDonald’s operations manual required the franchisee to hold its coffee at 180 to 190 degrees Fahrenheit. Coffee at that temperature, if spilled, causes third-degree burns in three to seven seconds."
I also highly recommend watching this movie which was a very interesting look at the erosion of consumer rights driven by a coordinate corporate PR campaign/agenda: http://www.hotcoffeethemovie.com/Default.asp
I've spilled boiling water on myself occasionally. Given the freedom of movement you generally have in your kitchen that you don't have while buckled in to a car, I hope it doesn't surprise you that I wash it off in less than three seconds. It's hot!
I've also touched hot cookie sheets and the like, which obviously go well above 212 fahrenheit. That's common; what's not common is maintaining the contact for longer than your flinch reflex takes to kick in.
Ok, I'm not exactly sure what we're really disputing here. To clarify, I was just agreeing with the sentiment of GP's claim that "every cup of coffee you've ever had in your life was at a lower temperature than what McDonald's was serving up". You're right that as a literal statement it is probably not true.
The real point is whether McDonald's coffee was being served at an unreasonably hot temperature. Based on what I saw in the movie, and read on the Consumer Attorney's of California website, and based on my experience with current/post-lawsuit McDonald's coffee temperatures (which I still find exceedingly hot), I find it entirely believable that the coffee was served at an unreasonably hot temperature.
More context:
> Mrs. Liebeck’s injuries were far from frivolous. She was wearing sweatpants that absorbed the coffee and kept it against her skin. She suffered third-degree burns (the most serious kind) and required skin grafts on her inner thighs and elsewhere.
Liebeck’s case was far from an isolated event. McDonald’s had received more than 700 previous reports of injury from its coffee, including reports of third-degree burns, and had paid settlements in some cases.
Mrs. Liebeck offered to settle the case for $20,000 to cover her medical expenses and lost income. But McDonald’s never offered more than $800, so the case went to trial. The jury found Mrs. Liebeck to be partially at fault for her injuries, reducing the compensation for her injuries accordingly. But the jury’s punitive damages award made headlines — upset by McDonald’s unwillingness to correct a policy despite hundreds of people suffering injuries, they awarded Liebeck the equivalent of two days’ worth of revenue from coffee sales for the restaurant chain.
> Liebeck’s case was far from an isolated event. McDonald’s had received more than 700 previous reports of injury from its coffee, including reports of third-degree burns, and had paid settlements in some cases.
And as for the temperature of instant coffee, feel free to use a thermometer and verify it for yourself. It will not be 95C. The temperature is reduced from pouring it into a room temperature cup and also from stirring a room temperature substance into it. And that's still a worst-case scenario; McDonald's coffee, which is not instant, should be less hot than that, not more.
When I make coffee at home, I can immediately take a sip of it within a few seconds of pouring it into a mug, without burning my mouth. If I accidentally poured such a mug all over myself I would likely not sustain extensive third degree burns. Coffee at Starbucks is served at a similar temperature -- it is certainly not kept super-heated at a level that will scald you if touched.
The thing I don't understand is, why are you so anti-safety? Why do you have such an averse reaction to solving a very basic safety problem? Products that you buy should not be pointlessly and unnecessarily unsafe in unexpected ways.
> The thing I don't understand is, why are you so anti-safety? Why do you have such an averse reaction to solving a very basic safety problem?
You seem to have me confused with someone else. Check the username before you attribute a comment to me. I promise you that I'm only using the one account.
> When I make coffee at home, I can immediately take a sip of it within a few seconds of pouring it into a mug, without burning my mouth. If I accidentally poured such a mug all over myself I would likely not sustain extensive third degree burns.
I don't drink coffee. But when I make tea at home, I can almost immediately take a sip from a spoonful. I can't actually drink it from the mug because it is much too hot. If I poured it all over my lap and then sat in it until it cooled, I would be seriously injured, yes.
Combine that with uncapped and ridiculously high compensation claims plus class action lawsuits, which are not a thing over here, and you get a comical impression.
As I said, this may not be totally true, but even though the European Commission brings up stupid ideas once in a while ("Let's introduce quotas for netflix!"), I would say on the global scale the image of the EU legal system is quite okay.
> class action lawsuits, which are not a thing over here, and you get a comical impression.
Class actions have a very important place in the law, and they are a thing in parts of Europe[1], and are becoming more so, because they serve a very important need[2]. It gets abused, but so does everything in the legal system, that doesn't mean it's inherently a bad idea.
> As I said, this may not be totally true
In this case, I would hazard it's likely totally untrue. You'll likely go to jail for animal abuse, not sue the manufacturer.
1: https://en.wikipedia.org/wiki/Class_action#Class_actions_out...
2: http://www.npr.org/sections/money/2016/04/15/474406842/episo...
My view on it is a way for lawyers to make big money by recruiting clients not the other way around. It gives the impression, that it is all about the money, not about being right.
In Germany there is a thing called "Nebenklage" ("accessory prosecution"), which makes it possible for individuals to join the state attorney, once he started a lawsuit. This is how big scandals are handled and victims can get compensations without lawyers fishing for clients.
It started out as a way to hold companies responsible for small amounts of harm that are spread out to many individuals. Is it worth it for any one individual to sue a company for a $5 product that purposefully misleads consumers? Is it okay for a company to take advantage of consumers in this way purely because they are unlikely to be called upon to account for their misbehavior? That's the reasoning behind a class action lawsuits. Allow many people to join together to act as a counterbalance to companies flaunting their relative position of power. Regulation is the other way to deal with this, but regulation often lags abuse, and why regulate specifically what is already against the law and just needs an enforcement mechanism?
This was probably an exaggeration, but that's the image one gets.
> The lawyer gets free hands ... The lawyer's cut is $3 million in legal fees, paid by the company to avoid a larger settlement
AFAIK there has to be actual named defendants that represent the class, and they would decide on whether to accept a settlement. The lawyers can only advise, not decide. I'm by no means an expert though.
Edit: Clarified what I was responding to in second part by including more context.
>It started out as a way to hold companies responsible for small amounts of harm that are spread out to many individuals. Is it worth it for any one individual to sue a company for a $5 product that purposefully misleads consumers? Is it okay for a company to take advantage of consumers in this way purely because they are unlikely to be called upon to account for their misbehavior? That's the reasoning behind a class action lawsuits. Allow many people to join together to act as a counterbalance to companies flaunting their relative position of power. Regulation is the other way to deal with this, but regulation often lags abuse, and why regulate specifically what is already against the law and just needs an enforcement mechanism?
Thanks for clarifying, I learned something new. I think ideally you would have as little regulation as possible and inspectors + fines for highly critical stuff, so courts and consumers will not have to deal with this at all.
Clicking on the perma-link to the comment in question will generally allow replying. It's a soft limitation.
> I think ideally you would have as little regulation as possible and inspectors + fines for highly critical stuff, so courts and consumers will not have to deal with this at all.
I agree that that as little regulation as possible would be better, simply because regulation generally seems to also create perverse incentives, so when you can incentivize the behavior you want without it you are probably better off. Unfortunately, fine and inspectors are regulation. They make sense in some areas (such as food and building inspection), but I don't think it's feasible to expect that to work for every type of problem, for every type of industry, when we don't even know everywhere they would be useful now, much less the future. So, we have class-actions as a fail-safe.
When that finally starts to happen in the USA, you can count on me being in the streets protesting.
Edit: You may also want to consider the current practices in Germany regarding frivolous law suits against websites. We aren't the only country with this problem. So is every place.
Thus in prison for life because their 3rd minor crime tips them over 3 strikes?
I know there are problems with the application of three strikes, but it's not terribly unreasonable to say that we have little cause to believe that you will reform after, say, murdering or raping your third victim and therefore little reason to let you out of prison such that you can seek new ones. And it's your third felony that puts you over, it's not like they can bust you for jaywalking, though I'm sure there are exceptional cases, which could be corrected by presidential pardons if there was good cause to believe they've repented.
But I'm sure that's an unpopular opinion here, as I doubt many people here have ever had to worry about someone in prison for murdering their mother who also threatened grandma. Now, it's great if people reform, but committing your third felony is pretty good evidence that you aren't likely to.
http://www.drugtreatment.com/expose/marijuana-felony-amounts-by-state/
https://en.wikipedia.org/wiki/Timothy_L._TylerThe absurdly low dollar value for felony theft or property damage doesn't help.
Heck, there's places where 15 over is a misdemeanor and any sort of misdemeanor is a pretty big roadblock to upward mobility if you're starting from a low point.
Can you elaborate?
Unsurprisingly, this has created an industry of scummy law firms that specialise in finding infringing websites and sending them cease-and-desist letters with a bill for their legal fees attached.
And it's not like that in France either. You have to take into account that some HN users are real experts on U.S legal matters, whereas most European legal matters are discussed on here without much if any professional legal expertise.
Maybe not in Germany, but France has juries for murder case since 1810, actually, a jury is theoretically mandatory for any case where a sentence of more than 10 years in prison is possible. The accused cannot waive this "right" like in some cases in the US. (in practice, because juries take a lot of court time, are shaky and difficult to manage, prosecutors often will prosecute a serious crime like a less serious similar one to avoid having to go in front of a jury (e.g. instead of prosecuting something as rape, do it as if it was sexual assault). The prosecutor must have the agreement of the victim and the accused to do it).
Also, it's not only France. Austria, Greece, Italy, Belgium and others have that sort of jury.
Can you clarify? A jury trial is supposed to benefit the defendant.
I am not a lawyer and there are good articles discussing the system, I think lawsuits can often be highly complex and should be handled by professionals, not amateurs. I believe if you look guilty you are better of with professionals, who I imagine are more likely to judge you based on facts instead of sympathy.
Well, that might be unthinkable in Germany, but its clearly not in Europe as a whole, since we got that from a place in Europe that hasn't abandoned it in the time since their system migrated to North America.
The UK is clearly an outlier. They also drive on the wrong side of the road and have a strange relationship to the metric system :D
1) "US-style" English Common Law, applies in Great Britain (and former British Empire worldwide, like Australia, Canada, Kenia, ...). Biggest distinguishing features : right to a jury trial, precendents carry legal weight (judges have to follow earlier judgements when possible), opposing experts, ...
2) "French (Revolution) Law", sometimes named after Napoleon, applies essentially everywhere else. No right to jury trials (some courts have jury trials, most don't), precendents can be cited but carry no legal weight, experts are chosen by the court, ...
There are of course important legal differences outside of these high level differences.
Seems to me that it's pretty damned important to be sure that someone is guilty before you lock them up for life. But that just might be my american bias showing through.
The US uses Juries because as a check on government power. The whole point is jury nullification not factual accuracy.
Nullification is not the whole point (but not insignificant), and factual accuracy is important -- but accountability to the citizenry at large (represented by a jury drawn from the citizenry, rather than professional government officers whose accountability to the public is distant at best) for that factual accuracy is just as important.
A panel of 3 judges. Or properly randomly selected juries. The US system, with a mix of weirdly selected judges and bizarre jury selection seems to be sub-optimal.
In the case of murder trials (three professional judges, two lay judges), you need four votes, because three would be less than the required two thirds.
Of course it's different.
But they are certainly not "semi-professional".
This has been occurring in European law since time immemorial -- giving the judicial branch maximum discretion is viewed as democratizing.
It is hardly growing rather than being slowly exposed.
I think you have an unsophisticated view of legal systems. Law consists of more than just what is written into the text of legislation. It is a historical practice done by people working in courts and in law enforcement. It interacts with the people as they serve on juries. Law is a living thing bound in tradition and culture.
> Laws that say "forget the law, anything we think is unreasonable is illegal"
Don't look up Scotland's declaratory power if this bothers you. It strikes me as totally reasonable.
which is a big design fault that hampers the EU especially as nations facing debt problems will use it to shore their finances up which keeps up and coming countries from doing that, being up and coming.
E.g. Germany can only hold its current EU stronghold by outcompeting France with much lower labor costs.
As an example, banks are required to report all deposits of $20,000. It's a right to deposit $19,999 into a bank account, nothing wrong there. But to deposit $19,999 five times in a row, rather than than $100,000 all at once? That's structuring, and it's illegal.
I'm not aware of a general "law against circumventing laws" but there are certainly specific ones banning classes of behavior that exist to avoid other regulations.
I know that the specific case I mentioned has been fairly useful in fighting money laundering and large-scale drug-dealing, though. There's something to be said for making it hard to move large amounts of money through banks without being observed, but as always there's no good way to do that without interfering with legitimate commerce.
[1] http://reason.com/blog/2016/02/04/after-finally-returning-th...
I don't know what's on the form, but of you fill out once a week, there should be a way to be quick about it.
"It's illegal to break the transaction into pieces of size n-1 to circumvent the law against n sized pieces. And so it's illegal to break it into n-2 sized pieces to circumvent the circumvention of breaking into n sized pieces. And so it's illegal to ..."
As far as I know, the floor is defined by either "this would be too inconvenient even for money launderers" or "the false positive rate is too high to pursue this more strictly".
Sure, some will say that it creates too much of a gray area, but that's life. Sorry. I think there's a lot more "effective" ambiguity when everyone is trying to dodge the spirit of the law and exploit loopholes. It creates chaos that lobbyists, consultants, and others can exploit.
Focusing on enforcing the spirit of the law may lead to some abuses, but those abuses have to be weighed against the massive, systemic, abuses that occur when people violate the spirit of the law.
- Let's say one can do A, B, C and D. They all represent similar situations.
- For some reason, the government wants to block the above.
- They create a new law, blocking A, B and C. They forgot D.
Now, they might have wanted to block D as well. But how do you know? What if D gives you a significant advantage over competitors?
One thing I've noticed, hanging out with lawyers, is that governments often make a lot of half assed laws. Closing the "loopholes" isn't hard - it just takes time + requires proper work. Also, don't forget, some loopholes are there by design.
Honest intent may defend an action which would otherwise be illegal. Or you can skirt the edges with malintent and be found for it. Carrying a knife may be legal with demonstrable reason. Carrying a screwdriver may be illegal with malintent. And we trust the courts to spot the difference. And in general, they do.
America, however, has been raised on "a healthy distrust of government". They simply don't trust, or don't want to trust the courts to straddle such grey lines. They want nice solid black & white line so they can point to the law instead of the courts - and they want to see "the people" (juries) police the gray lines.
Personally, I think there's merits to both systems. But it's clear to see that both are very culturally ingrained. I think it's actually very difficult for either side to see the other clearly.
It seems that the prosecutors are using a small clause in the French Irish tax treaty saying that the taxation rules applying to a corporation officially incorporated in Ireland are different (implying much higher than the Irish 12.5%), if this corporation has a "stable establishment" in France. The prosecutor is arguing that this applies to Google, so that paying only the Irish 12.5% was illegal.
So no, they are not being accused of using legal methods to minimise their tax bills.
The main problem is actually a even more complicated. It rests on the understanding of the wording of the convention relating to the words "Fixed installation of affairs used only for purposes of advertising (...)" (those are exempted from the "stable establishment" exemption).Google argues that their advertising business makes them exempt to it. Meanwhile French prosecutors argue this clause is intended for companies advertising their own products (imagine Tesla having an agency in France advertising the Tesla cars because they intend to open a point of sale in France, but not selling them yet), not the actual sale of advertisement space like Google do.
And frankly when reading the elements of the convention the Prosecutors have made public... they seem to have a pretty solid ground.
PS : Yay at last, being a tech fan with french legal background is useful !
In fact, until I started my own company (UK) - I didn't 'submit' taxes. It was calculated (and taken) automatically based on my salary and otherwise declared income.
Self employed people (i.e. entrepreneurs) who make decent money will have a tax lawyer, because inevitably, you'll bump into an unfriendly tax collector somewhere down the road.
In some higher tax countries, a lot of things are technically allowed, because that way they can tax "the little man" a lot and not tax higher earners as much (i.e. doctors, notaries, high earning entrepreneurs, etc).
For self-employed people there are many more rules and regulations: How to write off which kind of cost and purchase, filing VAT if required, etc. so that's already cost efficient if you hire someone qualified.
Vox made a video about how companies like Intuit lobby to keep them complicated, to keep the money from TurboTax rolling in:
http://player.ooyala.com/iframe.html#pbid=88e901a4b29c47ba95...
This is very different for Americans with different income levels. If you earned less than $100,000 and "[y]ou had only wages, salaries, tips, taxable scholarship or fellowship grants, unemployment compensation, or Alaska Permanent Fund dividends, and your taxable interest was not over $1,500", you can use Federal form 1040EZ, which is one side of one page and asks only about 10 questions, none of which call for the tax filer to make choices.
https://www.irs.gov/pub/irs-pdf/f1040ez.pdf
With rare exceptions (mostly related to immigration or expatriation, self-employment or owning a business, or suffering calamities), complicated calculations and the risk of audit apply to itemized deductions, which is when filers declare that some of their income should not be taxes because they did something, spent money on something, or suffered a problem that the government recognizes as reducing tax liability. Examples of this include business expenses, paying some foreign or local taxes, paying interest on a home loan (probably the most common!), some medical or educational expenses, or making donations to a qualified charity.
Itemized deductions have a big role in economic decisions in the U.S. and are pretty well-known in culture, but most people don't use them at all, and usually only the most well-off people use them consistently. This is not necessarily just because the well-off people are more aware of the benefits of itemization or have more access to professional tax advice, but also because poorer people may often not be able to benefit from itemization at all, by not having spent enough money on relevant kinds of stuff.
https://www.fas.org/sgp/crs/misc/R43012.pdf
A simple summary is that only about 1/3 of all American tax filers claim itemized deductions, and higher-income people use them dramatically more often than lower-income people (mostly because they're more likely to own their own homes or incur unreimbursed business expenses, but also for various other reasons).
The risk of a personal income tax audit is primarily that the government will decide to challenge a filer's entitlement to claim particular deductions, and then demand to see evidence of their legitimacy (which might be receipts or paperwork showing that certain expenses were actually incurred and appear to be related to the purpose claimed on the tax return). For example, if you said that you gave $15,000 to charity or that you spent $10,000 on travel for your consulting business, the IRS might ask for documentation during an audit to prove that these things really happened.
While I don't mean to minimize the pain or intrusiveness of a tax audit and HN readers may be at real risk of experiencing one, I think most Americans' tax position is relatively simple for them to determine and gives no reason for an audit, because it's based only on information like W2 wage statements that other parties have already reported to the IRS!
(Though I was surprised to see that the IRS says the average paperwork burden for form 1040EZ is 5 hours, which is about 5 times as long as I would have guessed and seems to count against my account of the situation. I'm also oversimplifying because people who support a spouse or children will have to file a different, more complicated form in order to get tax benefits from that, which is true of lots of Americans who don't own a home. At the same time, they won't necessarily have to do many extra calculations or provide much extra documentation related to the people they're supporting.)
A lot of individuals do hire tax accountants who help them prepare their tax filings (and can advise them about their eligibility for certain tax benefits and statuses, including how to characterize certain income and expenses). Tax accountants are generally not lawyers, but have expertise about the tax system. However, I think this is only common for people who are wealthy, self-employed, own a house, own a business, or have some complication like having income in or living partly in multiple countries. I don't think it's very common for people who rent their homes and have only employment income from working for others.
Tack on a processing fee for manual deductions that scales with the potential cost of an audit.
There are many cases where you would still do corrections, such as if you're owning a rental property and did some renovations there. Most of officially regulated things such as capital gains are usually automatically reported by your bank/stock holding service, though.
This is in quite a stark contrast to places where there's a lobby to change the laws yearly to make sure citizens have to use professional services for declaring their taxes.
Will you start writing more unit tests? Will your tests get more elaborate?
My abstraction is bad because it doesn't cover another issue: public policy through taxation. We encourage things we consider "good" using taxes and we discourage things we consider "bad" using taxes as well. A lot of people support tax "relief" for things like mortgage loans, education loans, dependents and so on. If we want to simplify the tax code, these deductions must go away.
Google advertisers sign contracts with a company in Ireland because Ireland decided to effectively not apply corporation taxes (i.e. use a low rate and allow a variety of schemes that reduce the real rate even further). They did this fully knowingly ... the policy has been popular with voters ... because they wanted to attract international investment and employers to a place that otherwise wouldn't have much to offer, and as a strategy it worked amazingly well. Even during the financial crisis Ireland did not back down on that.
This upset other countries in the EU but none moreso than France which has notoriously high taxes and a notoriously stagnant economy, combined with a population that routinely mounts protests against any attempt at reform.
France is very powerful in the EU and thus instead of trying to make itself competitive has spent the last few years coming up with a variety of political solutions to their competitiveness problem:
• Pressuring low tax jurisdictions to charge more tax
• Getting the VAT rules for online businesses altered so now instead of paying VAT where the sale takes place, you have to pay to the country of the buyer ... woebetide you if you don't speak Hungarian or Croatian. You're gonna have to find someone who does and get them to file a tax return for you.
• Now, apparently, simply harassing rich companies in an attempt to extract more money directly.
Google hires very competent accountants, I seriously doubt they have actually made mistakes or lied on their tax returns. Instead France is going to exploit the existence of a Paris office to try and present Google with a giant bill. This would strongly incentivise Google to simply leave France entirely, I don't think the Paris office is very large compared to the others it has in Europe.
I really don't see a problem.
http://www.irishexaminer.com/viewpoints/analysis/irelands-au...
I can still say that almost everyone I know here works for a multinational. So while they seem to artificially expand GDP (a huge amount of our GDP isn't actually domestic, and doesn't benefit us the same way domestic product would) - for us little folk on the ground, they still mean a lot, lot more jobs than we'd have otherwise.
How we actually domesticate this investment so it's not at risk of just flitting off to the next cheap destination, I have no idea. But I think that's the real long-term risk & challenge, not the stupid amounts of imaginary money people had pinned on the property bubble.
The whole paragraph starting with "accused of" is not about "legally being accused of breaking the law" but about the fact, that this (seemingly) legal tax structuring is under increased scrutiny. One part of that is testing if that's actually really legal because scholars can hold different opinions and it's never been tested in court, another part is changing the laws to make this actually illegal and close loopholes. This has been going on for a while in europe and it's not a problem, France or otherwise. The fact that Google did pay up in a similar UK case indicates to me that matters are not obviously and 100% legal.
(I may have misremembered??)
I took this to mean Google was among the companies accused of using "legal methods". Am I misreading?
* Taxes are paid wherever you do business. If you're a EU-based company doing business in the US guess what you don't pay VAT. But you'll certainly pay US taxes on that transaction.
* Those accountants are going to have to show that taxes were paid somewhere. Whether it be in France, Ireland, or the UK. They've been closing loopholes like the double-Irish sandwich and I'm fairly sure the accountants knew this day was going to come. Unlike Ireland and the UK, France, Germany, and Italy have been very aggressive about going after big companies as a public spectacle. Even if they don't find anything. It keeps smaller companies that may be doing the same inline.
This is a consequence of amazon and apple (and probably others) all "shipping" their digital goods from Luxembourg or Ireland and paying basically no tax at all - the Luxembourg government is accused of actually helping companies to exploit that loophole. This worked for Luxembourg or Ireland because they leverage that a little tax on many sales translates to still fairly high earnings per capita if you just have a small enough population. Basically both countries were siphoning off taxes from the higher population countries (france, germany, poland, GB, ...) in the EU. This used to be legal, but was clearly a loophole - and one that unfairly was only available to larger companies. So that one was closed - rightfully so - by stating that the sale for digital-only goods takes place in the country of the buyer. (as it's always been for services rendered to companies btw, look up reverse charge).
Things are now a bit harder for everybody that sells digital goods to Hungary obviously, but there's no need to speak Hungarian or pay somebody that does. Any company will have some sort of tax accountant and cross border tax affairs are their bread and butter. Small-scale businesses can register their foreign tax at their home tax/revenue service. It's certainly a nuisance, but please blame the ones that are responsible: The larger corporations that try and exploit every possible angle to save money.
It's also not only about cultural reasons: It's the size of the population that matters. Luxembourg has about 500k inhabitants. If they collect all sales digital good in the european union and charge a mere percent of vat on it, they'll increase their tax base significantly. In contrast, if Germany does so it has a more than two orders of magnitude less gain on that. That's why it pays of for Luxembourg, even if they damage the rest of the EU in the process. It's like Washington DC collecting all sales tax for digital goods in the US. Basically some small countries are freeloading at cost for the whole community. (See also the British Tax Havens, or Canal Islands)
They apparently want companies selling to their citizens to pay taxes there, so that the people can choose the way of life - including tax laws - instead of companies dictating them.
Seems like democracy to me; non-EU companies are free to not do business there if they don't want to pay such taxes.
For example, if a little kid asks his dad if he can go to the movies, and dad replies "go ask mom, do what she says" and the kid then asks mom and mom says "whatever dad said" it doesn't mean that you are necessarily finding a loophole. Either party is essentially deferring and the benefit is caught in between. Works out well for the kid but at the end of the day, the parents probably should have had better communication and figured out what to do.
This almost feels like blackmail. Pay up, or we'll keep harassing you, raiding your offices etc.
The notion of intent is a very important protection in law ... for the accused. For lawmakers, not so much.
This isn't true in the English legal system, which seems worthwhile to note given its wide reaching influence. When dealing with statue law (because obviously common law cannot be applied as written!), judges have three options as to how to interpret the law: the literal rule, where the law is interpreted literally as written; the mischief rule, where something that would have been judged illegal under common law can be judged to have been intended to be illegal under the statue law even though it is not literally; and finally the golden rule, which essentially allows the judge to avoid an absurd result. (It's relatively similar under Scots law, and I cannot comment as to elsewhere.)