Hacker News Reader

Comment by dmos62 | Hacker News Reader

I see what you're saying, but, to paraphrase the article, giving a billion dollar company an 8.6 million tax break when you're shutting down social programmes can be a tough pill to swallow.

On a parallel note, I'd like to underline just how good the tech giant has it. Since it can move anywhere, you have to give it excessive gifts for him to come to you. So the giant gets those rewards, simply because he's a giant.

View on HN

Why is it tough? The choice is not between those 8.6m and the discounted taxes, it is between that and _zero_. Revenue doesn’t come out of thin air.

That's not the choice either. How about no tax breaks for companies, we enforce existing corporate taxes on those companies, and we raise the marginal income tax rate on very high earning individuals?

At the state and local level, that just means companies will leave your state and go somewhere else. In a globalized world, the same thing is true for countries. There is a reason France has an effective 11% corporate tax rate: https://www.npr.org/2017/08/07/541797699/fact-check-does-the... (Chart 2).

If you want to pay for the safety net, do what Europe does and tax middle class people who can't just move to a lower-tax jurisdiction. E.g. in Germany, the 42% tax bracket (just shy of the top 45% bracket) kicks in at around $70,000, and there is a 20% VAT.

The fundamental problem is that capital is permitted to cross borders, but people are not. Not in the same way.

So, corporations can vote with their feet, but people cannot.

The U.S. and the Schengen Area each comprise regions of 300-400 million people where people are free to move internally. You would think that would create a similar pressure to reduce internal income taxes to attract residents, but it does not. People, unlike corporations, have roots in places and by and large don't want to move to chase lower tax rates.

Corporations don’t have to physically move when they move. They just file paperwork elsewhere.

That's not really true. You can't just decide to be an Irish company if you have no presence in Ireland. The wave of corporate inversions in the U.S. was accompanied by lots of companies moving their headquarters (and their top executives) to Switzerland, the U.K., etc.

Tim Cook doesn't need to live in Ireland to benefit from its tax code.

Income from capital gains is taxed at the rate of where the person lives. Tim Cook is a great example: it was reported that one of his recent bonuses was taxed at 50%.

Not that many people, even ones who make a lot of money, can take advantage of various tax avoidance measures. (That’s why e.g. getting rid of the preferential treatment of capital gains would raise less tax money than getting rid of the mortgage interest deduction.) CEOs mostly cannot, unless they run investment companies.

My point is that Apple can take advantage of Ireland for tax purposes but Tim Cook doesn’t need to live in Ireland. The corporation enjoys benefits not conferred to people. This is why there is consternation and conflict around Apple’s repatriation of capital.

https://www.theguardian.com/inequality/2017/nov/20/if-you-ta...

>Only about 2.4% of US-based millionaires change their state of residence in a given year. Interstate migration is actually more common among the US middle class, and almost twice as common among its poorest residents, who have an annual interstate migration rate of 4.5%.

Companies follow people, not the other way around.

>do what Europe does and tax middle class people who can't just move to a lower-tax jurisdiction

Well, that's why Europe is blanketed in riots right now.

Disenfranchised people enraged at the governing concept of "taxing middle class people who can't just move to a lower-tax jurisdiction"

Taxing the hell out of foreign goods would just mean the company now plays a two pronged game - manufacturing where the least regulation is present, and selling at the country with the highest price point who doesn't outright refuse to let you extract their nation's wealth.

It's a tricky problem but your answer to it is untenable unless you want people to riot more.

>Well, that's why Europe is blanketed in riots right now.

Can you provide a source for this claim? I know of the riots in France (a country well known for civil disobedience/riots), but haven't heard of the entire continent being "blanketed".

Then punish the corporations that abandon countries to avoid taxes.

Life and society is about the people. Corporations shouldn't be respected like people.

…and much higher social insurance taxes.

You are totally right.

45% tax bracket at $70K?

That's cute.

In my country (Portugal, which is also in the Eu), it kicks right in the 40.5k€ for 45%.

And we have a VAT of 23%.

https://www.economias.pt/escaloes-de-irs/

Neither do costs.. The concern is that adding a huge new "customer" to the community without adding any additional revenue can be a losing proposition. The roads, sewers, power lines, schools, hospitals etc. all see increased demand and in extreme situations, the municipality sees zero extra money to pay for it. So the existing "customers" in the community see degraded service to make way for an outside organization.

Tech giants can't go just anywhere. They need to locate their offices in cities which have large, highly educated, tech savvy workforces (or at least the infrastructure to relocate, satisfy and sustain those workforces).

This acts as a check on just how much of a tax break a municipality is able to give them, as public funds are needed to support that infrastructure. Austin, Seattle and Culver City seem to be striking the right balance.

>This acts as a check on just how much of a tax break a municipality is able to give them, as public funds are needed to support that infrastructure.

Well I suppose its Apple, so when they do cronyism, it must be okay. /s

I haven't heard of any tax breaks in Seattle here.

Reply on news.ycombinator.com