Big tech companies have been at the cutting edge of corporate tax avoidance
vice.com
vice.com
[1] https://americansfortaxfairness.org/corporate-tax-chartbook-...
Just because Walmart, Exxon and others are bad doesn't mean SV isn't bad. It just means tech companies also get to be called out when they misbehave.
Not to mention that two of the companies in their subtitle (Amazon and Microsoft) are not Silicon Valley companies.
It's a wealth concentration issue.
There is zero obligation for any individual or company to pay any more tax than they owe.
These companies all pay the taxes they owe.
Perhaps government should not have so much power that people have an economic incentive to corrupt it?
As I see it, the founders did a good job with checks and balances relative to other countries, but if anything, they didn't go far enough.
There should have been a check on allowing anyone to favor any tax changes that they are not equally hurt by or that don't equally help everyone but themselves. One of the largest corrupting forces is that congresspeople and individuals can support taxes that others pay but not themselves. If you think something is worth being paid for, they you should also be among those that are paying for it. Anything less than that invites corruption.
Seems dubious. Wealth, left to its own devices, is not known for trending towards equality.
And disempowering the government, while removing incentive for corruption, also remove one of the only checks on capital.
It isn't dodge. It's "cleverly follow the tax laws that are allowed".
What are top 3 tax loopholes that could get closed? One on hand, it sounds like robbery for companies to not pay taxes. However, if they were forced to pay more taxes and therefore paid less to their employees/hired less... would us consumers really win?
Yes because it would reduce the economic power of corporations vs people.
The point of a tax system is only tangentially to provide goods and services. The main point is for it to stop the infinite accumulation of wealth at the hands of fewer and fewer people.
Capital tends to a gini coefficient of 1 when left to its own devices. Without the visible hand of government to stop that from happening the invisible hand of providence [0] reaches in and does it for us.
This isn't a given, and most companies would rather pay the taxes and see less profit, than sabotage their labor and fold even quicker. If it's a blanket policy, I imagine you'll see an initial market shock, and then things will go back to normal. And that's all the people in charge really care about. Pay won't change because it's a supply/demand issue, or so I'm told.
Instead we have kleptocracy.
Worst case - Politicians made rules. Companies bought ("Lobbied") politicians and changed those rules to make them as favorable as possible.
There seems to be something similar in both cases.
It's really, really important that our representatives have at least a modicum of knowledge, or else you get a rubber stamp machine instead of a republic.
When money is allowed to essentially buy elections, then a race-to-the-bottom is an obvious outcome.
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My point isn't to defend them, but to point out the dichotomy one can easily reach from reading your comment (Tea Parties are farmers that can barely read, similarly or less experienced legislators on the opposite end of the spectrum are not) is false.
[0] https://en.wikipedia.org/wiki/Tea_Party_Caucus#List_of_curre...
If the author wants to suggest a new law, then suggest a new law that would be a net improvement.
The tax bill paid by new grads for their rsus is usually their first experience with non-income tax flavored taxes, and I think we have an incentive to ask for cash in leiu of rsus for that exact reason. Of course, not going to complain too mich.
The employee gets most of the benefit of RSU’s. They’re taxed as cap gains, maxing out around 23% while cash is taxed at the marginal rate, closer to 50% all in with state and federal and a FAANG salary.
Then when the employee sells the stock, the diff from vesting price is naturally taxed as cap gains/losses.
Without discussing which provisions (and they are actual laws, not loopholes, because many/most are intentionally there) we should be eliminating this is all just a lot of handwringing.
One third of their companies are not based in Silicon Valley.
But sure, let's pretend worldwide subsidiaries of those companies should not turn a profit outside the US.
The modern concept of wealth doesn't work that way.
If you transfer money from someone not likely to spend it any time soon (tax shelter) to someone who is going to spend it right now (the government), it works almost exactly like inflation.
And often the money isn't held in cash anyway. So, moving it to the government requires divestment. That divestment has consequences that are complex, and it's far from clear that the government would spend it better in every case.
People are pretty good at coming up with good uses for an influx of money without crashing the entire system. That's the whole point of a market-based economy, right?
I'm not sure you'd have a 100% wash, but it feels like it would be close enough that you could re-jigger rates to capture any short-falls (or drop them if you bring in too much).
It seems like it would:
- Eliminate the need for corporate tax firms / accountants - Reduce the incentives for industrial lobbying - Encourage hiring - Enable Businesses to save for "rainy days"
:-)
You could do this by increasing the tax rate on capital gains (dividends are already income if I remember US taxes right).
Let’s not forget income tax was introduced originally as a temporary solution to raise funds for World War I. Long term, it’s only increased since then. At what point do we say enough is enough, no more tax increases?
We’re currently living in the most peaceful era of human history, so maybe American hegemony isn’t terrible? There’s certainly been far less regional conflicts than ever before, I’d be hard pressed to find a decent reason how the world’s preeminent superpower wouldn’t play into that dynamic despite it’s missteps and overreaches which are very easy to point at.
And income tax rates, especially for the extremely wealthy have been consistently declining since their highs post WWII which also coincided with one of America’s most egalitarian and balanced periods socioeconomically.
Of course, now we have extremely low income tax rates for the wealthiest among us and near banana republic levels of wealth inequality with staggering statistics like the fact that 400 families own as much wealth in America as the bottom 150 million of it’s citizens.
If we look at current trends in the Democratic party, which tends to represent more individuals than the Republican party despite the latter’s outsized share of privilege thanks to the Senate, gerrymandering, and the electoral college, we’re seeing large sentiments of exactly the opposite “at what point do we say enough is enough, no more tax cuts?”.
Even if you disagree with their necessity, that kind of language is needlessly inflammatory. I mean, I know this is The Internet and all, but come on.
Not true.
Top marginal tax rates have mostly dropped over time. They peaked at 94% during WWII, then dropped into the 70% range for a while. Two more drops in the 1980s, first to 50%, then 28%. Since then, the top rate has bounced back to 38% or so (depending on how to calculate it).
Furthermore, federal tax receipts have hovered around 17% of GDP, regardless of marginal rates, over that entire period.
I feel there are two real issues here that the article (which is mostly just click bait) doesn't get into.
1. Are any of the companies violating current tax code? (i.e if they actually owe more taxes then the IRS should intervene)
2. How are they achieving these low tax rates? And when/should we fix the possible loopholes.
It's really stupid to get mad at companies following the letter of the law. We should be made at the politicians who refuse to close the holes. And who knows, if it results in companies just spending/reinvesting more money to still avoid taxes than at least it's more in line with the intent of the tax code.
The key to fixing this is to realize that VAT and corporate income tax are basically the same thing, except that instead of corporate income tax being paid to the jurisdiction where "profit" accrues (easy for a corporation to move around), it's paid to the jurisdiction of final sale (good luck moving all your customers).
For one thing, you’re arguing simultaneously that the government is spending more money than it’s generating while also arguing that people should pay less taxes which seems extremely odd in back to back sentences.
For another you just toss in this implicit idea that government spending is wasted money.
That may be something you believe but it doesn’t appear to be the belief of most Americans or Europeans who enjoy things like public utilities, roads, education, defense, research, etc.
And finally, the point is, again, very orthogonal to the discussion at hand. It might be tangentially related but it’s an entirely different discussion.
This article is talking about how these mega corporations are using tax evasion strategies to avoid paying their fair share in the existing framework.
And your discussion is about reworking the entire framework, and feels slightly evangelical, and flippant.
What is “fair,” if not what’s legally required of them? Is anyone suggesting that these companies are breaking the law or violating the tax code?
Btw, I would love it if the government could figure out how to spend money on “public utilities, roads, education.” And yet, our infrastructure is in an embarrassing state of disrepair, and our public education system is a laughingstock. Despite trillions of dollars that would be more than sufficient to fund these projects, nothing gets done. So why should I support giving them even more money? If the government could demonstrate an ability to allocate capital efficiently, then I could see the argument. But as is, they do a terribly wasteful job of investing it in projects that would actually benefit the public. Before raising taxes, maybe they should try rearranging the budget to prioritize projects that benefit everyone.
But it's also not hard to imagine equivalent scenarios of corporate welfare / graft. At some point, how different is it to give a corporation a bespoke $10B tax break, vs. wasting an identical amount in markup on a crony no-bid contract? Choosing the former over the latter is not necessarily any better.
It's entirely reasonable to default to skepticism with regard to government spending; but that's different than the Norquistian view that taxation and government spending is a a-priori evil or net-negative on outcomes.