This is legal. Any issues should be taken up with the political and tax system that allows it.
If you blame the company for doing this then I expect that you also make 0 deductions on your personal taxes and pay as much as possible.
If you blame the company for doing this then I expect that you also make 0 deductions on your personal taxes and pay as much as possible.
Just because something's legal doesn't mean it's ethical.
I am open to the idea that Google is still paying an appropriate amount in taxes! Just not by that particular argument.
It's fine if you have personal ethics that are different, but that doesn't automatically apply to everyone.
Of course ethics are subjective. But voicing those ethics is how we arrive at a set of societal values in the first place! It's crazy to suggest that anyone complying with the law should be immune from criticism.
>> It's crazy to suggest that anyone complying with the law should be immune from criticism.
Never suggested this. My point was to focus on the root cause if you want to create change, regardless of why.
Law is the attempt at legalizing ethical principles. Quite often the laws fall short of the actual ethical consensus of the society due to the fact that the members of the society ultimately have little direct control over what laws get made and how those laws are enforced, for example:
federal judges are appointed, not elected.
most people aren't able to parse legalese enough to fully grasp the implications of a law they support.
laws often get passed by Congress people by virtue of some group with financial interests using their money to influence decisions, etc.
That's grossly imprecise. Laws do reflect some of ethical issues that exist in a society but these two are intersecting sets.
If you're a deontologist, sure.
Very few people are pure deontologists. There are all sorts of cases of cases where people would say the ethical thing to do is to not follow a law.
And this doesn't even have to be because the law is "bad" per se; it can just happen that you're in a situation the law's framers did not consider or could not imagine.
But quite apart from that, there is a wide swath of things that are _legal_ to do but that one should probably still not do. And that's fine. We don't want to criminalize all behavior we disagree with, even if an overwhelming majority disagrees with it. This idea lies at the center of US First Amendment jurisprudence, for example.
If an overwhelming majority disagrees then it becomes law because the government represents the people. Failure to do so means there's a problem with the political system, which is what I said in my original comment.
Law is a tool to enforce societal norms — but it's not the only one, nor is it necessarily the best one.
That depends. This is why we have things like constitutions and constitutional courts, to prevent certain things from becoming law even if an overwhelming majority thinks they should.
Of course if you're talking something like 99% majority, I agree. But even a 70% majority, which would generally be considered overwhekming, may not be enough today, in the US, to enact a constitutional amendment. You seem to consider this a bug. I consider this a feature.
But past that, there are things that overwhelming majorities disagree with _doing_ but still don't think should be criminalized. Again, First Amendment jurisprudence is full of examples.
To give a concrete example: is it ethically better for the government that spends as much as it does on military infrastructure to have more money, or the company that builds a search engine and a video-sharing service?
Like pretty much any debate about ethics I would say.
When I do my deduction, you don't see me trying to make it look like going to the restaurant with my kids is a business expense. It would be possible to argue that it is actually a business expense, it would be legal to, but we can both agree that it's abusing the law and it wasn't actually a business expense.
This is the same, their office in Bermuda (if they even have a physical location there) aren't actually making $23B in 2017, that money was made in others countries, using peoples from theses others countries, using infrastructures from theses others countries, thus theses taxes have to be paid for this reason.
This is what I consider unethical.
I've seen a company exec cheat on his wife with a paid hooker on a holiday to Hawaii make it a business expense (both paying the hooker and the holiday itself) and treating the hooker bad enough the company got sued for sexual harassment (because they paid the hooker, that means ... you can fill in, and no it doesn't matter if they "knew" they were doing it or not), AND not getting fired for it. And while this is a tax offense, the idea of him getting sued by the IRS for this is sadly almost absurd. They might do it if they catch him in a lot bigger problems as well, but not likely.
Purely coincidentally, currently in the newspaper, 72 year old millionnaire getting sued for running a company building luxury hotels, collecting unemployment, and charging a government-funded not-for-profit ~1 million euros for consultation services while not registering the income in his personal income statement for taxes. Ironically, this is happened 9 years ago and 7 months, so if the government made even a small error in this case it will be forgiven (which is a near guarantee).
Just because you consider something cheating doesn't mean everybody does, or even that it's a common view, or that it's a crime.
In your example, while you can certainly argue that, I’d say there’s a not-so-negligible non-zero chance the IRS won’t see it that way and any potential risk/penalties don’t make the upside worth it.
Ethics are subjective and personal. Society agrees on most principles and these are what become our laws, but not everything (like cutting in line) is at a scale that matters.
In this case, society has agreed on tax laws that this is the right amount. You are completely free to suggest something else and get the support to change it. Tax laws change all the time and loophole has already been closed so it seems like everything is working as it should here.
Not at all. Society can, and does, agree on all sorts of stuff without it becoming law. This is generally a very good thing, because criminalizing behavior, even behavior everyone agrees is not great, has significant costs. Sometimes those costs are larger than the costs of the behavior itself.
[0] https://en.wikipedia.org/wiki/Double_Irish_arrangement#Multi...
A company dumps toxic chemicals into the air/water, and it results in horrible deaths and destruction to the environment which makes everyone's lives worse.
However, they've managed to do this in a completely legal way. Maybe they moved the dumping to a region without strong regulation. Maybe they found some legal loophole. Maybe they funded a politician's campaign who then carved out a legal loophole for them.
Would you still not blame the company or call their actions unethical in this case?
I personally would blame the company. I would consider their decisions unethical. I would also want to fix the laws so that I could legally hold them accountable, but I wouldn't absolve the company of responsibility until those laws were fixed.
How is tax avoidance all that different? Sure, it's not directly harming anyone. However, the lack of funding for the government means fewer social services and those services often are used to help people avoid horrible deaths (such as homeless freezing on the streets, veterans receiving medical care, or safety improvements to roads) and to improve the environment we live in (national parks, clean water initiatives, etc.).
However this resulted in killing off all the marine life and fishes. So what do the fishermen do? Take up piracy!
Google could not pay taxes by giving their employees raises or bonuses, invest in infrastructure, donate it to charity, etc.Instead they stash it in the Caribbean.
I wouldn't care but their executives actively push a political agenda not inline with their actions which makes them rampaging hypocrites and thus open for criticism
I never argued it was illegal, I'm saying it's not ethical
It's not arbitrary. If the primary purpose of an entity or transaction is to avoid tax, then its employment is likely to constitute illegal tax avoidance or evasion (the terms have distinct legal meanings but those are not very interesting here). Purpose is determined primarily by contemporaneous documentation.
Is there some interpretation involved? Yes, because just about any legal decision involves some interpretation and these matters tend to be exceedingly complex. By their nature, they usually involve some sort of subterfuge or concealment. But it's not arbitrary. There are laws and precedents that attempt to define exactly where the line is.
Here are some references that might help clarify further.
http://taxexecutive.org/tax-avoidance-vs-tax-evasion/ https://www.lowtax.net/blogs/The-Basics-of-Tax-Evasion-Tax-A...
The government is the people and the laws tend to reflect what they feel is acceptable because otherwise it would already be made illegal. Corporations are also these very same people and so they'll follow the same standards. I believe your issue has nothing to do with corporations but more about different cultures and values, and perhaps the efficiency of a government that can keep pace with the population.
Where is the difference that would allow us to condemn the companies for maximizing profits by use labor laws but not condemn them for maximizing profits using tax laws?
>Also nothing is that simple.
Yet the previous statement seemed to have been made quite simply, an idea that if you take advantage of any law in your favor, you cannot condemn someone who takes advantage of any other law in their favor.
Money isn't people.
It is not, however, a company's responsibility to build highways, or to figure out how to finance the building of said highways, or to set up and fund public education, or to hire and pay police, is the point. When it becomes a company's responsibility to do so, we march gleefully into one of several dystopian cyberpunk science fictions (pick your favorite) ;)
For example, Google takes advantage of government contracts and grants, paid for by taxes. They also take advantage of the highway, city, water, power, education, housing, copyright and trademark laws, unemployment insurance, and legal (that is, the court system) infrastructure largely built and paid for (directly, by grants, or subsidies) using taxes.
You choose how to spend your time and if you spend it earning an income then you're taxed to pay for the other things that let society function so that you can do so. How much you earn in a given time is irrelevant.
Exactly; OP makes a simple, matter-of-fact statement, and then proceeds to say "nothing is that simple" when they get challenged? Seems like a double standard to me.
The difference beyond people vs money is that a company with shareholders is not obligated to use child labor but is obligated to reduce tax expenditures. It's not simple because what do you consider more ethical? Tax minimization or hiring children to increase profits?
Not doing so would definitely be against the interests of the company.
This is legal. I can't fault them ethically for taking advantage.
What are we doing here, other than sharing opinions and arguments?
And it shouldn't have been.
As a blanket statement, not it should not. As a counterexample, consider that the whole purpose of the US First Amendment as regards speech is that it should not be illegal to speak, even if others don't like your speech (including because they think it's unethical).
As another counterexample, the war on drugs and alcohol prohibition are examples, in the US, of people trying to make unethical things illegal. The latter is widely accepted as a failure. I'm pretty sure that eventually the former will be too.
In general, trying to equate "I disapprove of X" and "X should be illegal" is a really dangerous tendency that comes and goes. It seem to be on the rise recently, unfortunately, at least in the US...
You can still defend somebody's right to speak (from an ethical pov) if you don't like what they say. These things don't have to be easy.
I don't see what you're getting at. Laws are to govern things people should or shouldn't do - ethics are opinions on what people should or should not do.
Am I missing something?
In RFC terms, laws are MUST and MUST NOT.
Ethics are SHOULD and SHOULD NOT.
There's a difference between those, even in RFCs. There is a similar difference in laws+ethics.
My point is that it is not a given that ethically dubious actions should be illegal. Furthermore, what is ethically wrong to some may not be so for others.
That's all. My only point is, "its legal" is not a pass from being socially judged by us plebs.
"Cheating on your spouse is not ethical but it is legal, would you argue for it to become illegal?"
It was and is in fact illegal for many years precisely because people found it not ethical enough. In english common law, it was even a felony. It is changing (and has changed in a lot of states) precisely because people are more okay with it than they were.
In practice, the legality of things is generally decided by the societal consensus around "ethical dubiousness".
It is definitely illegal in various jurisdictions, and even criminal in many. It's also generally viewed to be no longer federally constitutional since the late 60's due to various supreme court decisions. As a result, most states have struck the laws down over time or repealed them (wikipedia has a map somewhere of this), so you generally only see it as a plea bargaining anymore. IE people will plead to adultery instead of a greater crime.
(Yes, it's as weird as it sounds)
Not everywhere.
If you are in the U.S. military it's illegal and punishable under Article 134, with a maximum punishment of dishonorable discharge, forfeiture of all pay and allowances, and confinement for up to 1 year.
Depending on the state, again in the U.S., it can also be a crime. In Virginia it's a Class 4 misdemeanor according to Virginia Code § 18.2-365/ It's also grounds for divorce.
It's true you cannot replace legal with ethical, but the above should tell you the reason why:
Your definition of what is ethical has not reached enough consensus to be legal/illegal.
It's fine to say others should have your moral values and have arguments why. But expecting them to and scoffing at them for not doing so is silly - this is literally the stuff that makes legality not black and white.
Really it's about legality vs social aberrance. Which is not the same as ethics.
If you have a problem with these legal loopholes, go after your congressman.
The Netherlands is an economy about the size of California, the reason Google only makes 13.6 million here is that they make the subsidiary pay a lot of royalties to a Bermuda Google entity, who probably bought these rights internally from the Google Corp for a price that was way too low. They can price these royalties anything they want, so it will always be an amount that leaves a maginal profit.
> This is legal.
Of course they say that, but it depends on many things, such as the fairness of their internal pricing. If those prices are not fair, the arrangement may not be legal.
Isn't that what people are doing when they point out the problems with it?
The money in question here, for example, is paid by foreign citizens in non-US countries. How much of that money is owed to the US government, and why? How much owed to the nations from which those citizens hail, and why?
> some of the world's biggest companies which have absolutely failed at anything resembling civic duty.
I find it interesting that you see it as "championing corporate tax avoidance" instead of pointing out the failure of government to correctly control taxes. Perhaps we can debate how the money is actually spent on civic issues as that is probably more productive than who spends it.
Paying taxes is not the failure of duty that I describe in a completely different story about San Francisco's problems, and paying more voluntarily is not the solution to it.
So please describe where exactly is the inconsistency that you claim is clear?
That has yet to be determined. Tax law does recognize acts whose sole or primary purpose is to avoid taxes (i.e. not as a side effect of other business purposes) as evasion, and evasion is illegal. Just because such cases are very hard to prosecute successfully, and are rarely prosecuted at all for that or other reasons, doesn't make an illegal act legal.
> I expect that you also make 0 deduction
That's an incredibly shallow argument. Those who identify a problem don't have to be martyrs. In particular, those who identify inequity are under no obligation to increase it at their own expense before it can be addressed. I'll be glad to give up my exemptions when the tax code is fixed for everybody, not while others are still benefiting from its flaws.
Policy and decisions and personal benefit should be separate. We should respect those who will argue for a policy change out of principle, even when that means giving something up, and not demand that they give up more. The people we really shouldn't trust are those who never argue for a policy that doesn't benefit them. That's called corruption.
If we can't have non-corrupted politicians. Who should we blame then? Maybe the people that get most benefits from that fact. Like the top management level of those corps.
1 : https://www.reuters.com/article/us-germany-politics-glyphosa...
It entirely allowed to both hate the tax system AND hate the corporate cronyism that created it.
Also your "if you blame the company..." scenario is, at best, a weak comparison. It would be akin to living and working in New Jersey, a highly taxed state, and instead shifting your assets to be taxed as if you live in Florida where there is no personal income tax.
I mean campaign finance reform is a topic people on both sides at least pay lip service to (or at least bemoan how the other side gets funded).
Campaign financing is something that I agree with, if I can afford to help this candidate reach more voters, why not? There is nothing wrong in that. There is another, different discussion about what this money should be spent on, eg this candidate is great vs these other candidate is bad, but I don't see nothing wrong with giving money for a candidate campaign.
Lobbying is different, in most countries in the world this is called bribing, hence a factor in corruption.
Because that's what we are talking about there. 100 million gross and 3.5 million taxes is a drop in the sea compared to 22B gross.
In this case saying its 'legal' misses all the processes, politics, lobbying, accounting firms drafting laws, ideology, tax havens, that are all in play to leave little 'loopholes' like this for selective enrichment.
Google and other corporate interests who benefit from these 'loopholes' saying 'this is legal' is understandable, but why should an individual say this?
How about employees allowed to sell their services to a third parties incorporated in low tax regions competing for their membership, which in turn then license it to employers, leading to reduced tax in their home countries? Why is this not a thing? If everyone did that the whole tax base would dissipate and destroy our current system, hence its now allowed, why is the exact same thing ok for corporations?
Uh, no. It's called bankruptcy.
One view is that bankruptcy laws in the US created a powerful bankruptcy bar whose special interest in enriching themselves through consumer-friendly bankruptcy laws became more powerful and focused than the special interest of banks.
https://legacy.voteview.com/pdf/Berglof_Rosenthal_Bankruptcy...
Yeah not the same thing.
The same thing would be for us to open a shell company in Bermuda, ask our job to pay us through there and use that bank account to pay for our local purchase.
The deductions we get are for a reason, as long as the reason apply, it's perfectly ethical to use theses deductions. Once you don't actually respect that reason, no it's not ethical to use theses deductions.
I knew some independent workers that went to restaurant and put that as a business expense to get a deduction. It was clearly not an actual business expense, we could argue that it was (well how could you have a business without eating?), but it was certainly not related to any business being done. The deduction would still pass, it would still be "legal", but it wouldn't be ethical at all.
This is the biggest personal dilemma I face. Does it make sense to pay double for services from companies that aren't the big 5? Does it make sense to divest my retirement holdings from companies and indexes that have investments in the big 5? Will this just add new companies that will behave just as poorly? Am I better off trying to lobby my elected officials for change? I really have no good answer for this complex issue despite the fact that it bugs me and I think about it frequently.
The (far) bigger point is that it's royally fucked up.
And that of course corporations are not even (remotely) comparable to individuals. When you and I are able to radically reduce our tax liabilities by shifting our assets to Bermuda (or anywhere else), then perhaps we can have a discussion based on appeals to individual responsibility.
But of course we can't. And that's why the state of affairs is royally fucked up.
Society has already decided that "because I can" is not a universally acceptable reason or defense.
Either they abandon higher morals or decided to be in the same moral mud as Marck Z and facebook