I agree it's unfair, but I can't fault anyone for trying to legally minimize their tax burden. Tax law should just be simple enough that anyone can do it themselves.
However, the direct and indirect pressure large companies exert on governments to promote/create these loopholes is absurd. I recently went to a latin american country which is promoting foreign investment. Guess what tools they are using to promote such FDI? Correct, tax credits, tax agreements with tax heavens, zero withholding taxes on dividends, etc. I won't go into more detail, but I've seen obscene (but legal) tax structures were little-to-no corporate taxes nor capital gains taxes have been paid in +billion euro transactions.
IMHO, this is unfair to everyday citizens. Citizens end up taking the burden of supporting the govt budget, at the expense of higher tax rates.
Unfortunately in the EU, there is very little interest from countries like The Netherlands, Ireland, and Luxembourg in implementing a common fiscal policy, with no loopholes, as this would considerably damage their "competitive" economies.
The real problem comes when these deals disadvantage local businesses competing with the big foreign conglomerates. But often these deals are really only necessary because the government has set up ridiculously high trade barriers, so the only way to get investment is with ludicrously generous deals. Brazil seems to be a classic example of this. The entire economic system is tangled mess of massive market distortions.
You're mixing up terms here. Tax avoidance is minimizing your tax bill within the law. Tax evasion is what you do when you pay less tax than your legal obligation.
This is not the end all solution but it at least makes everything far, far simpler.
Most corporate tax avoidance strategies take advantage of laws intended to prevent different countries from taxing the same dollar of profit, and those rules will still exist in any reasonable tax structure.
It might be rational to hire a big team of tax lawyers to find loopholes. It might be rational to launch PR campaigns to misinform the public about your tax affairs. It might also be rational to hire private investigators to dig up dirt on politicians and blackmail them. Or bribe them, or otherwise corrupt them.
UK tax law is complicated partly because the large accountancy firms have become deeply entwined with the policy making process [1]. This is used as a way to introduce and then milk advantage from the complexity. This goes way beyond just playing the tax game by the rules.
I do think the government has a responsibility for allowing these abuses to occur. That doesn't make the abuses OK though.
[1] https://www.theguardian.com/business/2013/apr/26/accountancy...
Maybe we can blame people for behaving unethically instead of believing this shlock?
You would quite literally see revolt / insurrection in the western world, especially America and other former anglo colonies, at the idea of a One World Tax Authority, which would rightfully be seen as a part of one world government, the so-called New World Order that conservatives have maintain DEFCON1 fear of for decades.
Even if it did exist, if if you had a global tax authority with the weight of a global government to enforce it... that doesn't necessarily solve the problem.
There are plenty of tax havens in American states despite a national legislature that could squash them.
On big reason Americans were unrepresented in the Panama Papers leak is that Americans used on-shored havens. They had far less need of an offshore haven when current corporate tax rules allow you to incorporate and tax dodge in Delaware or another friendly state without leaving the country.
If the US can't or won't control domestic tax havens, I'm not so sure a global government would have better luck.
Plus, one world tax authority means one single target for corruption. The Googles of the world, with literal billions to spend, they'd hyper-focus on corrupting that authority to their desires.
Saying we can tax them globally is like saying we can tax them domestically. We fail on the latter, so i can't imagine we'd succeed on the former.
And while i do agree that blame alone is of little use, blame is often the precursor to action. You have to decide who is at fault and or what to focus fixes on, via blame, before you can actually fix them imo. When i see blame discussions like the above, i just assume (perhaps foolishly) that it's the discussion prior to the fixing stage.
Not that the above discussion will fix anything, of course.. but if we can't decide on what is to blame, how can we decide what is to be fixed?
spot on. this.
But that is the political class, and they are the ones driving the train for companies to pay more tax. Which doesn't make any sense if all that is truly required is for them to fix their own laws and unethical behaviours. Right?
I think what you're missing is the fact that the Tax Office is pursuing Google for an apparently grounded belief that they were, in fact, acting illegally. (That is, making false representations as to the true functional roles of its local subsidiaries, so as to make its locally-generated revenue appear much smaller than it actually is, per a recent El País article).
Not simply for being "clever" and minimizing their tax burden within established guidelines.
Google and Facebook grew their profits by advertisements, traditional media (that did not innovate anything) lost all this revenue.
So they(traditional media) are terribly biassed against Google and make everything they can to harm the company. They destroyed Google News for example.
Rational != Ethical
A business can't tell their landlord that they owe no rent because they are "unprofitable" ? Why then do we accept this excuse from the businesses who benefit the most from our public systems.
The reason politics is full of vapid stupidity is that powerful entities want it that way. If the population wasn't distracted by guns, abortion, and gay sex they might actually be paying attention to issues that matter.
First, the legislature often decides that raising or lowering specific taxes is a good way to encourage some behavior or other (i.e. mortgage tax deductions or extra taxes on cigarettes). Most of these are actually pretty justifiable individually, but eventually you end up with too many exceptions and special cases for any nonspecialist to keep them all in their head.
Second, there's a huge body of caselaw and regulatory rulings that crop up around the actual tax code. Dozens of courts somewhat haphazardly decide that this weird edge case counts as income, but that weird case doesn't. Again, almost all of these are pretty reasonable taken in isolation, but you end up with a swiss cheese of arbitrary and contradictory rules.
Finally, wealthy entities will inevitably try to game the system. They will try to find a few well-intentioned but poorly thought out edge cases and alter their finances to try and intentionally fit a huge percentage of their income into them. By the time this happens, it's often very difficult to fix without hurting the innocent bystanders that the edge cases were put in place for in the first place.
Wealthy individuals and companies do lobby for favorable tax provisions, and politicians do sometimes pass laws specifically to benefit those entities. But the reality isn't that simple. International tax law is an emergent phenomenon, and it's really only going to bend to systemic incentive changes.
We do? Why? Because, by one interpretation, they pay lip service to it by saying "Don't be evil"/"Do the right thing"? I take those as marketing (both to the public and to their employees).
Even if we take their mottos as honest statements of intent, how do you know that their definitions of "evil" and "right" match yours? Or that their definitions won't shift to fit the situation?
If they are amoral entity, I'm sure they won't care for Spanish government doing unethical but not illegal things to them as well.
Why would that be true? It would be inconsistent for them not to fight for their own self-interest. Also: Governments must be held to higher standards than corporations.
I expect the Spanish government to act (nominally) in the best interests of its citizens. I expect Google to act in its own best interests.
It's fine to take a modern, legalistic, maximize-shareholder-value-or-gtfo approach and eschew the ethics and spirit of law perspective altogether. However, generally it would be irrational for corporation to expect a favourable outcome in a survivalist game on a legal field against the host government. That's why most corporations at least do lip service to ethics, community values, social responsibility and so on. Which leads us to square one.
I can definitely fault them for trying to minimize their tax burden. Taxes shouldn't be seen as a burden, they should be seen as an opportunity. A way to contribute to the society that created that opportunity to pay taxes in the first place, since every dollar paid in taxes represents several earned on top of society's foundation.
What a load of garbage. Taxes are theft at the end of a gun and we have little choice in how they are used. It's downright ignorant to believe that most taxes are used for the betterment of society rather than to line the pockets of select constituencies. Your conflation of "society" with "government" is fictitious.
And really, it's human's that guarantee the state's rights, not the other way around. The state is an abstract concept that exists only because humans gave it that right at some point.
That's a big reason why democracies became popular (see for example the french revolution, or the boston tea party). A democracy is a system in which the residents of a country (directly or indirectly) decide on matters of government, like which taxes should be collected and how they should be spent.
Justice like secret FISA courts and no-due-process restrictions on travel?
Human rights like free speech? Good job Merkle, Ergodan is proud. Due process? Haha. Protection from unreasonable searches and seizures? "Civil asset forfeiture" would like a word.
Quality of life? You mean the thing I get from novel technology, but that is constantly hindered by IP law and overregulation?
> as a society we have chosen to collect through taxes
Huh, I don't remember being privy to that decision... In fact, as best I can tell, most people are compelled to pay taxes by the threat of violence!
>A way to contribute to the society
And a way to contribute to droning of US citizens, and the funding of Israeli weapons programs, and corporate subsidies, and a way to pay for massive surveillance apparatus... Great!
You're right; society created many of the opportunities we have today. The government isn't society.
I lived for 6 months in Damascus. It was an incredible city with lots of History. It breaks your heart to remember people younger than you that you know are dead now. The country is devastated and everything stops working.
You go to Servia, normal people could barely survive, long after the war. A few guys made themselves rich at the expense of normal people.
You go to Congo(old Zaire) and experience so much pain over the war there.
In Congo it is about Cobalt and coltan, diamonds, gold. In Syria it is about strategic position, natural gas. In Libia it is about energy resources.
A couple of powerful countries decide to plunder weak countries and war is the way they do it. If their leaders are not ok about plundering their own country you just give millions(or billions) of dollars in weapons to the opposition.
Once a war is started, it is like a drug, both sides needs weapons just for survival and they will do anything for getting them, basically selling their country for almost nothing.
A huge business at the expense of entire families dying and loosing everything they have, women being raped and the state collapsing, infrastructures destroyed.
If legal, corporations are just doing what is allowed. I hate them for it, but ultimately, i hate that it is allowed. If the law was put into place via illegal bribing/etc, then yes, both parties are to blame. But if it's all above board, then it's entirely on the Government imo.
Take America for example. Lobbying is an utterly disgusting practice in my eyes, yet i can't blame the groups doing the lobbying. I would too if i had the resources. I blame the government for enabling lobbying, and not shutting it down as it stands now.
Corporations have invaded Government, but ultimately the Government is what needs to be fixed to not allow corporations to get away with this.
edit: And of course, you could just continue with the blame train, saying people are to blame, etcetc. I'd agree with you there too. We all need to do something, to fix this damn Government(s).
Again, the key focus of the Spanish investigation is not into whether Google rationally took advantage of "loopholes" -- but whether they made false representations as to their business structure and the activities of their local subsidiaries.
See today's El País article for an explanation of the authorities' reasons behind the raid.
Your business does not deserve my money, my support, or my respect if you are not proud to pay your fair share for the common resources that are the foundations of its success.
So if a company, instead of staying well within the boundary decides to skirt it (and I'm sure that they take into account the probability of being caught on the wrong side in their minimization process), it is only fair that they get a visit from the tax man.