WeWork Gets Tax Rebate Meant for Its Small-Business Tenants
bloomberg.com
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The scale of the number of the hereditaments (taxable units) is remarkable and overloads local tax authorities. We're talking thousands, with regular tenant changes. Even in central London, there are only a handful of municipal staff to deal with all businesses.
What you end up with is equivalent to a denial-of-service attack against rates authority staff. They're overwhelmed.
That's the real risk to communities. If tax relief claims are industrialised, it puts endless pressure on the services those taxes were supposed to pay for. These are local taxes, so that's libraries, community centres, road maintenance, etc.
WeWork may not be a tech company when it comes to what they're selling, but it is when it comes to how they deal with tax.
I can understand how the existing system may have issues with this - but the total presence of WeWork definitely doesn't qualify for a rebate... and if the filing rate of the company seems absurd then the government should reject all the filings by that company and fine the company trying to abuse the system.
Unlike computer logic where weird edge cases can be exploited due to the speed and complexity of the system... when it comes to taxes this stuff is going in front of human beings and the government can always bring a hammer down.
And if the government lacks the power to do so, that needs to be changed.
This tax, which appears to be an effort to provide some relief to the victims of real estate owners that are gouging small business, is actually just benefiting those owners.
I think just about all legal systems have catch-all regulations that allow for fines for abuse.
Moreover, law isn't actually mechanical rules like computer science - people who skirt the law systematically often find themselves facing serious legal problems and intention is a big consideration in some (but not all) regulations. "Obstruction of justice", "contempt of court" and so-forth are broad statutes that let courts lean on those abusing the system. etc.
The actual problem, I'd note, is that courts and cities are much more hesitant to go after large, monied interests as compared small interests. A local crank doing what Uber, Airbnb or others do could go to jail, these companies just count their money.
https://www.ksl.com/article/32424611/vernal-bank-built-by-br...
> This massive shipment was noteworthy not only for its size, but also because it destroyed one of the Uintah Railway Company's trucks. The truck's brakes failed and it started coasting backwards after breaking a drive chain while struggling uphill, loaded with several thousand bricks. The truck then turned over and caught fire. The driver was not injured, but most of the bricks were lost.
I imagine USPS pricing didn't account for that incident!
That is a very American sentiment, most governments doesn't consist of ~50% lawyers.
For example in Sweden the government is full of union members from the working class, they have very different view of what role the government should have with respect to company abuse. The result is that basically all laws are worded in such a way that if any ambiguity exists it will disfavor private companies.
We don't want government departments to be setting fees based on worst case upper bounds of processes with poor Big O performance. Nobody wants to fund through fees or taxes, say, a DMV who are perfectly set up to reissue every single driver's license every day. There's a very reasonable assumption that driver's licenses are lost/stolen at a fairly consistent rate and to size the department and processes to perform "well enough" at that replacement rate. If a startup found a way to monetise revoked driver's licences, and started offering to buy them off people for $50 resulting in thousands of extra license replacement requests - the DMV would be perfectly entitled to change their rules and say "you only get one inexpensive license replacement every 3 years. Additional replacement license will now cost $1500 each". (Not a _super great example, because there's presumably laws against selling your driver's license, but ignoring that - I think this argument stands...)
I cannot believe these kinds of policies are even being entertained. The government should decidedly not be able to 'bring a hammer down' based on their feeling about a company. That's totalitarianism.
In a civilized society with limited government, the most important thing about a government is that it follows the law and that the law is applied equally. By all means, the government should follow its procedures for changing the regulations to achieve the desired policy. But under no circumstance should it arbitrarily go after companies it deems to be 'immoral'. Moreover, if the company has followed law at the time, then there is nothing the government should be able to do to retroactively make what was legal, illegal.
These basics of civilization are encoded in our constitution as prohibitions on both bills of attainder as well as ex post facto laws.
Your proposal to pursue lawlessness reminds me of this dialogue from the play 'A man for all seasons', about St Thomas More, English lawyer, philosopher, and martyr. In the dialogue, Thomas More, who is the current prosecutor, is being asked by his son-in-law and daughters to arrest someone for speech which More and the son-in-law find repugnant. Moreover, the speech in question is what is going to lead to More's own execution, which More could have prevented by arresting him illegally. More rebukes all of them:
More: Why, what has he done?
Margaret More: He's bad!
More: There is no law against that.
Will Roper: There is! God's law!
More: Then God can arrest him.
Alice: While you talk, he's gone!
More: And go he should, if he was the Devil himself, until he broke the law!
Roper: So now you'd give the Devil benefit of law!
More: Yes. What would you do? Cut a great road through the law to get after the Devil?
Roper: I'd cut down every law in England to do that!
More: Oh? And when the last law was down, and the Devil turned 'round on you, where would you hide, Roper, the laws all being flat? This country's planted thick with laws from coast to coast– man's laws, not God's– and if you cut them down—and you're just the man to do it—do you really think you could stand upright in the winds that would blow then? Yes, I'd give the Devil benefit of law for my own safety's sake.
A judge will (sometimes) look at a nov el abuse of the details of a law as its written, and make a determination based on the clear intent of the lawmakers even if it's not specifically covered by the written embodiment of thew law.
Anyone who thinks that's bad idea needs to get out more. (I'm not saying it always works out "best", but not having the ability for someone to say "Hang on, that's not the _intent_ of this tax rebate. You can no longer abuse it this way." is critically important, for a species that cannot write bug-free code in the super-restricted space of computer languages, never mind in the vastly more complex and error-prone space of human languages for laws and legal contracts.
On the other side it provides pressure on tax authorities to finally digitize their processes and automate what's possible. Ideally, an application review should not be more than 10 or 15 minutes - clerk opens digital file, reviews attached floor plannings and previous tax filings/business plans (or the system automatically has the flag "this is a small business" attached), clicks on either approve or deny button, system automatically sends paperwork to the applicant.
The only way that forces authorities to modernize their processes is when the demand grows large enough that the ROI calculation proves it.
"clerk opens digital file, reviews attached floor plannings and previous tax filings/business plans (or the system automatically has the flag "this is a small business" attached), clicks on either approve or deny button, system automatically sends paperwork to the applicant."
Sounds almost exactly like the sort of comment that will emerge from a PHB when it is suggested that a proper business requirement spec and functional spec is needed.
I imagine the number of edge cases involved in"reviews attached floor plannings and previous tax filings/business plans" could be rather terrifying.
I'd love to see a standard schema for rates data, but that's unlikely.
The thread is here: https://news.ycombinator.com/item?id=20786810.
Basically, free humans from pointless stuff that can readily be automated and use their valuable time to do stuff where human knowledge is required.
Not sure what this is supposed to mean. Companies finding ways to pay less taxes isn't a privilege of the Tech industry
This is presumably part of the point of deliberately underfunding tax agencies.
We have here in Australia a perfect example of why this is an awful idea.
Our social security department equivalent is issuing "robo-debts" to people who've previously received various forms of social security payments, based of flawed algorithms using data of insufficient resolution to actually determine what somebody owed (or did not owe). They were matching tax office records of annual income, and foolishly assuming that figure could be accurately just divided by 26 to get an accurate fortnightly figure - then claiming people who'd been paid social security which would have been incorrect based on that flawed average owed the money back. And forcing the recipient to proved that debt was incorrect. Even when the recipients had provided fortnightly earnings reports already. And with the obvious-to-just-about-anyone reality that people on welfare do not in general have regular and secure salaries over the timeframe of years. If you are out of work for 3 months and claiming welfare, then stop claiming it when you get a job again - it's insane to send you a debt notice for the 3 months worth of welfare you claimed and were perfectly entitled to, just because the other 9 month of the year you were gainfully employed.
But here we are.
https://www.theguardian.com/australia-news/2017/apr/06/centr... https://www.abc.net.au/news/2019-08-27/centrelink-seizes-tax...
To me, this is exactly what I expect to happen when government "scales or becomes more efficient like any business". You get MBAs running projects like this, you get consultants bidding on the work, you get underpaid and over burdened developers writing code with poorly written requirements just deciding "I don't have a list of fortnightly income figures. Fuck it, I'll just divide this yearly figure by 26 and close this ticket."
This is the awful reality of the sort of perverse incentives that result from trying to run welafare or taxation "like any business". We (as society) need to be better than this.
I've never thought about it that way before- interesting.
Here's the game:
1) There are taxes levied on business users of commercial office property in the UK.
2) Independent small businesses may apply for tax relief if they rent a space that has a rateable value of less than £15,000. (1)
3) The intention of this relief was to provide small business users with a fighting chance to be able to afford office space.
4) The "total rateable" value" of a massive open coworking space is obviously higher than £15,000 but if you're a business renting 2 desks maybe you should qualify for the small business relief?
5) Coworking landlords figured out that they could qualify for the tax breaks THEMSELVES if they cut their own properties into dozens (or hundreds) of small plots or pieces called hereditaments.
6) Then in effect you have these hundreds of hereditaments claiming the small business tax and collecting rent from a small business.
WeWork is a slightly worse abuser of the game played by virtually all coworking operators in the UK.
The "coworking" lobby has published a study outlining their view (1).
At the core Her Majesty's Revenue and Customs set up a system that didn't count on the inevitable "enterprise" player paying tax attorneys to abuse them, and the two sides should probably sit down and sort out something reasonable.
But instead they're suing eachother to oblivion and employing armies of attorneys :).
(1) https://www.gov.uk/apply-for-business-rate-relief/small-busi...
(2) https://lep.london/sites/default/files/The%20affordability%2...
Any company attempting to declare stewardship of multiple hereditaments should have the book thrown at them. Anyone using subsidiary companies to distribute their hereditaments should also have the book thrown at them... I'll just assume the UK got into this weird tax system because real-estate investors tend to have an out spoken amount of power in politics and tend to create some of the most absurd tax loop holes... especially since there is a specific coworking lobby.
Which, to be honest, is falling down on the job. Britain has been around long enough.
Frankly just remove tax breaks completely and make the whole system simpler and cheaper.
I reject mercantilistic views of economy. They belong in the 1600s where they died.
I'm pretty comfortable abandoning the view. It wasn't built on a strong basis.
Honestly, income inequality is a red herring of left politics and public schooling. If the most prosperous societies have high income inequality, then the question must be asked: does it matter?
Unless you want to design a utopia. That goes swimmingly every time, I promise.
Edit: If income inequality is a consequence of freedom, it's a very, very tiny price to pay. Don't optimize for the economy. Optimize for freedom. Empirically, that's how you create prosperity.
I think this is in contrast to highly automated industries (tentatively). I think the train of thought is that lower labor costs results in a higher concentration of wealth as less wealth is distributed since there are lower labor costs.
However, I would posit that the more direct measure is profit percentages. Hypothetically, if labor costs go down, and profit margins stay the same (ie if the savings are passed on to consumers), then I would imagine there would be an increase in consumption.
Where the money gets back to workers may change (as increased consumption would mean increased demand for the materials McDonalds uses, which likely have higher labor costs). High profit percentages, however, typically benefit those that own some of the company.
This is entirely conjecture, I am not well versed in economics. If there is some flaw in this (and I'm sure there are several), I would love to be corrected for my own education!
I know this isn't the same as distinguishing between cost of labor and cost of non labor things like keyboards and shovels. But the cost of those things benefits the average person that build them, or built their components, and so on.
Even the profit taken by the rich ends up benefitting the average person because, well, where does all that loan money come from?
Not sure what your point is beyond a humanities professor ignorantly preaching saying "profit bad"
>Not sure what your point is beyond a humanities professor ignorantly preaching saying "profit bad"
Not sure why you felt the need to throw that in. Your argument (what little there is) is essentially trickle down economics, which is BS.
If you have a thousand wealths and I have one wealth, that's worse than if I have a million wealths and you have a quintillion wealths.
No, not trickle down economics. It's history. The standard of living of the impoverished is dramatically higher than the rich of yore, and continually rising. And the reason is unequivocally capitalism.
Your view of the wealth gap is just not relevant because economics is not a zero sum game. The pie is not a fixed size. The promise of capitalism is that we get to grow the size of the pie. This isn't speculation or opinion. It's one of the few things we know for certain in economics.
Yes, the wealthy are getting wealthier faster than the poor are getting wealthier. But the one thing people who think that's a bad thing cannot explain is why that's a bad thing. It's not obvious that it's even possible to dramatically enrich everyone like capitalism very definitely did in the past without disproportionately enriching the few. That just may be a consequence of the only process of collective enrichment that appears to have ever existed on the planet.
That is to say, there exist people who would be happier if everyone was equally a medieval peasant, rather than today's status quo.
Given that scarce goods exist and will always exist, you can't even say this viewpoint is irrational. When the range of status is minimized, it makes status mobility easier. Human happiness is also adaptive to a sort of baseline norm; it's not clear that increasing prosperity in Western countries actually makes people happier past a certain point.
Edit: it kinda goes like this
"I'm not happy because i don't make enough money"
"Here's some money"
"I'm not happy because i don't make enough money"
"Here's some money"
"I'm not happy because i don't make enough money"
"Ummm.... Maybe you should find a better metric for meaning in your life, because we're getting nowhere."
Beyond a certain point, which appears to be "bill collectors aren't knocking down your door", more money does nothing for your mental health. Look up Jordan Peterson to find the non-controversial reasons why.
Edit 2: the great tragedy of the leftist economic designer seems to be that subsidizing the poor seems to have no effect. If you do that, the labor costs of goods rises to meet it. So all you did is eat into already-narrow profit margins to, at best, raise prices for everybody including the middle class, or at worse, kill local small businesses.
The real darkly funny part about this whole thing is that, in America, controlling for factors like disability, poor individuals don't stay poor very long. You work hard, you're not poor for much longer. If you don't work hard, you're poor forever.
Edit 3: I often hear a politician say a thing that's false, that people "can't get ahead". It might be true that they can't get ahead as fast as they would like. But so what? We can't fix that problem. Literally, it's not possible. How fast you get ahead is a function of how hard you work. That's how capitalism works.
Status seeking is something you see in all animals, not just humans, and we shouldn't deny the effects of it on happiness. Trying to make social policy without considering it is ignoring a valuable piece of information.
I make no comment on the effectiveness of the US' current social safety net and income redistribution policies. Just that there is a principled argument for having them.
It comes from the central bank. The rich don't loan out their money for a negative interest rate.
it's really not, and it certainly isn't when you speak in terms of revenue instead of profit.
The real point I want to make is in order to simplify the tax structure, you rob the politicians of their main economic design power. No more tax incentives for solar, high efficiency windows, developing in high crime areas, and the like. I'm willing to pay that price, but are you? (The royal you, i.e. us).
The final point, the real crux of the matter, is that politicians cannot predict all the consequences of the tax breaks they create. If tax breaks exist, people should try to get them, otherwise the whole incentive structure doesn't operate. Then some people who were not intended to get the break find edge cases in the legal language to exploit. If the politicians can't predict all the edge cases of the incentives they design (which they can't) then we end up with things that seem outrageous until you read the law and go "oh, that's the loophole. Shitty, but seems legal.". This is why the federal code is so complicated. People making the tax code more complicated over time to try to specifically target the incentives. Just like a legacy codebase, in fact. Except that it's subjective when you evaluate it.
Edit: typos
It also creates an incentive structure that can have toxic implications for the company and products, since the government is effectively a customer, but the product being purchased is subsidy qualification -- potentially at the expense of the laborers or customers. Imagine if your product manager had to take the politicians' product whims into account when prioritizing your backlog.
Edit: my political commentary: this is the fundamental problem that converted me to conservatism from center-leftism. I believe it's not possible to create an equitable structure and a level playing field while the government meddles in the economy.
I'm trying to understand your change of beliefs, so honest question: is government setting and enforcing safety standards (which otherwise companies would reliably fail at), and pricing in externalities (e.g. pollution) considered by you "government meddling in the economy" and interfering with an equitable market structure?
Of course politics has zero room for nuance, so we shouldn't hope that the tax code will become simpler in the foreseeable future.
I suspect if we didn't hear from our politicians for 2 years, everyone across the country would like the outcome.
But in the days of Twitter, you can't take a breather.
Devoid is an overly strong word. There has never been zero nuance, and there isn't zero nuance today.
Has it?
(And no, it absolutely hasn't revolutionized anything, but when you're a tech company everyone feels obligated to give you more credit for some reason)
Did it though?
WeWork still isn't in any of the cities near me, and there's been plenty of co-working, "rent-a-desk/cube/table/office", shared workspace places around for a long while.
WeWork's pricing is ludicrous to boot.
The main difference I can see is WeWork has gotten VC money to grow larger than just a single building - which is how most of the other co-working places operate.
Renting commercial space and brining it up to spec to be usable is a lot of work and overhead that a small or startup business very much should probably be allocating elsewhere (building out conference rooms, wiring for power and networking, placing WiFi, entry security, decoration, etc. etc. etc.) It all ends up being extremely time consuming and taking twice as long as best estimates generally disrupting everything, not to mention the years long leases, enormous deposits, contract negotiations and other upfront costs. It is at least somewhat revolutionary to have turn-key office space become prevalent.
[1] The Cyber-Insecurity of WeWork – Shared Offices and Cracking WiFi with Weak WPA2 Passwords
https://www.digitaloperatives.com/2018/10/10/the-cyber-insec...
[2] The CBINSIGHTS research report (WeWork strategy teardown)...
"WeWork’s $47 Billion Dream: The Lavishly Funded Startup That Could Disrupt Commercial Real Estate"
https://www.cbinsights.com/research/report/wework-strategy-t...
Sorry, but the password complaint is just ridiculous. What's exactly the point of a strong password if it's still shared with a million (or whatever) WeWork members across the globe, and could easily be figured out by simply asking just about anyone (of course, noone actually remembers it, as you only enter it once), or by taking advantage of one of the many ways to get a sample of the offering?
They list https://www.xkcd.com/936/, which is indeed a great one, but what WeWork should reply to them is this, https://xkcd.com/538/, which is the truth.
I am not aware of any issues using a VPN at WeWork; it works great; I'm sure lots of businesses use it, too. It especially works great because there are no stupid captive or landing pages like you get at so many other places, and the password just works, too.
What exact alternative do you suggest? Having user-assigned password authentication through 802.1x, so that the company can track exactly how much WiFi each member uses, and at which hours? Thanks, but no thanks.
OTOH, installing their proprietary software for presentation/display access is an entirely different matter, and that one is, indeed, a complete dealbreaker for me, security-wise; I don't understand why anyone would want to do that; just as I don't understand why you'd rather them secure the WiFi for you, instead of doing your own VPN as you see fit.
If WeWork were filling with S1 never having actually rented out space in practice - then they'd be like Theranos.
> Here’s how the tax arrangements work: WeWork divides each of its properties into dozens or even hundreds of individual areas. Each of those spaces, known as hereditaments, is then separately assessed for tax purposes.
> That allows the company to claim back the taxes on any area that is empty or small enough to be eligible for relief if they are occupied by a small company with no other offices.
I feel like pretty much any company could qualify under these conditions, if you declared your office building a desk access pool and declared income on each segment as an individual employee. It seems super weird that WeWork should be able to consider contiguous office space as separate isolated offices.