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Comment by kjaftaedi | Hacker News Reader

Google has been funneling around 20 billion dollars yearly through Bermuda to evade taxes using the infamous 'irish double sandwich'.

Pressure from the US and EU is finally forcing Ireland to change their laws.

Google is in a situation when they have money that they need to figure out a plan for since they can't do as much tax evasion as they previously were permitted to.

https://www.caymancompass.com/2020/01/02/google-to-end-bermu...

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There are plenty of other ways than Ireland.

Much easier way with Americans would be to use their own territory, Puerto Rico.

Tax minimization is a form of tax avoidance rather than tax evasion (Not saying it’s good, rather just that google weren’t breaking any laws).

There's no such a tax avoidance rule that is allowed and tax evasion is not. Also avoid and evade are similar term.

Avoid > keep away from or stop oneself from doing

Evade > escape or avoid (someone or something), especially by guile or trickery.

This is the reason why many US tech companies got fined in Europe (Apple and Google are one of them)

P.S. can someone explain why I get down votes for something factual? This forum is ridiculous at times

sole definitions of avoid and evade are completely irrelevant, "tax avoidance" and "tax evasions" are well understood syntagms, former meaning utilizing any legal means in order to reduce the amount of taxes paid. simply put, tax avoidance is good accounting. tax evasion is illegal and is an action in which you're directly breaking a law.

what tech companies were doing in europe was utilizing every possible loophole in order to reduce the amount of taxes paid. of course, that angered sovereign nations which (rightly) felt cheated and they acted by applying pressures to ireland and others. some (france) even fined some of the companies, those fines were most likely in a grey area, but tech firms knew very well what they were doing, understood the motivations behind those fines and generally concluded that it's a bad idea angering a nation in whose market you're operating. realpolitik.

I posted link below as reply to another comment. They were evading taxes and was charged in Italy and France and even on Ireland.

And no, it was not technically legal because many European countries do not distinguish between avoidance and evasion. There's no such a thing and is evasion (no matter how smartly you do that).

https://www.theverge.com/2019/12/31/21044662/google-end-tax-...

> Also avoid and evade are similar term. > P.S. can someone explain why I get down votes for something factual? This forum is ridiculous at times

"Tax avoidance" and "tax evasion" are technical terms in accounting with very specific definitions and entailments, and the difference isn't just in the English words. Most accounting textbooks and courses cover this.

https://en.wikipedia.org/wiki/Tax_avoidance

https://en.wikipedia.org/wiki/Tax_evasion

Even in Europe, this technical difference is recognized, but with one catch: the EU has enacted a counter-avoidance directive (ATAD, Jan 2019) - evasion is always illegal. This is not the case in most places around the world.

Infographic:

https://www.europarl.europa.eu/news/en/headlines/economy/201...

Fiscal vocabulary:

https://www.europarl.europa.eu/news/en/headlines/economy/201...

Finally, the HN guidelines provide good tips on how comment productively. (see the In Comments section) This helps us learn from each other's experiences.

https://news.ycombinator.com/newsguidelines.html

So if you focus on my first sentence maybe you can understand what do I mean.

> There's no such a tax avoidance rule that is allowed and tax evasion is not.

As I've said in many European countries both avoidance and evasion are illegal and my reply was about that since the OP implied that avoidance is a good thing while evasion is not. I let you read the other replies in this thread for the link that prove the charges to Google in Europe as I'm tired to post it.

P.S. Europe is not one country as is US and we don't have a federal state. Again, as I've stated many times, many European countries had this rules way before they were standardized at European level as testified by the fines that Google, Apple, Microsoft, Facebook had got in some European countries for tax avoidance.

Hope this clarifies and thanks for your link I gonna study that.

You're relying on the dictionary definitions for "avoidance" and "evasion" to make your argument, but "tax avoidance" and "tax evasion" are industry-accepted terms with clearly differentiated meanings to describe different behavior. Tax avoidance tells a truth that takes advantage of legal loopholes, and is therefore legal not to pay a higher amount of taxes. Tax evasion attempts to commit fraud on legal paperwork in order to not pay taxes which are legally required to be paid. They are not the same thing.

No tax evasion is ever permitted, by definition. (Tax owed and not paid.)

Finding ways to reduce tax liability (rational) is called tax avoidance. (Tax not owed, and obviously not paid.)

The idea that corporations can avoid paying taxes anywhere and this is just "good accounting" is stupid on the face of it, regardless of the terminology used.

The idea that governments can write arbitrarily complicated regulations and this is just "good government" or "moral duty to pay and pay" is stupid on the face of it, regardless of the terminology used.

The so-called loopholes were put there for a reason to benefit someone. If another corporation comes along to take advantage of them in a different way, well, that's just how laws work. Sauce for the goose is sauce for the gander.

And I suppose you voluntarily pay more tax than you need to?

"He" is not a for-profit corporation, but a human person. Corporations aren't people no matter how much dollars go into PR efforts to tell people otherwise. As such, them not paying their part to the society is damaging no matter how many personal appeals you do.

Please stop humanizing corporations to make them get away with not paying their part.

It seems like the point is that we’d be naive to expect a corporation, presumably governed by rational actors working to maximize profits, to pay more taxes than the minimum.

Regular citizens do not have the opportunity to successfully lobby for tax avoidance loopholes to be created and maintained for their benefit, so responding to a point about unequal advantages to corporations with a comment about rational accounting is unhelpful.

Is your position that corporations don't have an unjust advantage, or that the unjust advantage is okay and people shouldn't complain about it?

Neither -- I'm not comparing citizens and corporations. I'm simply saying that it's naive to expect a company to voluntarily pay more taxes than is required. They will not pay more taxes than required until the laws are changed.

Notice that I haven't made a claim that corporations should be treated as individuals, or that corporations do or don't have an unjust advantage, or that having an unjust advantage is okay.

I'm not humanising corporations, I hate it when they make matey communications and kick myself if I catch myself referring to a (singular) company as 'they'.

But the terms avoidance and evasion are the same for corporate taxation as they are for personal tax. The desire to not pay more than necessary is also the same, and that seems entirely rational.

If you want a company to pay more tax (and it's not presently breaking laws - not evading tax) then you should want legislation to change. 'Company X should donate to the my country's treasury' (pay more tax than it needs to, not avoid it) is not a compelling argument for my (fictional) company any more than it is for my personal liability.

There is a pretty clear difference, to me, between saying "this practice is obviously wrong, but technically legal--and we should work to change that," and lauding the company's actions as "good accounting," scolding people for confusing the act of successfully evading paying taxes with "tax evasion" as though this particular bit of legal jargon were shedding light on anything for non-accountants, and carrying water for companies that are not mere passive actors who benefit from a bizarre tax code with inexplicable but convenient loopholes, but rather actively lobby for tax laws to be changed to benefit them (something I, as an individual without billions of dollars to my name, could not effectively do even if I wanted to).

I don't think there's much that's 'obviously' right or wrong in economic policies or tax law, and certainly companies that would fare worse under your proposed changes are the wrong target for urges of change.

Or any legislation really, that's the point of case law, a particular circumstance wasn't anticipated, so there's some interpretation and umming and ahing, and thenceforth that example's able to be used to steer the next.

Online service companies (for example) operating over multiple physical territories, not really 'in' any more than the other, weren't anticipated, the broad strokes of the way they're taxed predates them. It makes sense to advocate for some fundamental change that reimagines how to effectively tax them (I wouldn't call it 'obviously' necessary, but it's a sensible argument worthy of debate) - but it's a waste of breath to expect such companies to volunteer extra tax not required of them.

The fact that for you "should online companies pay taxes?" is a subject worthy of debate indicates such a vast gulf between our positions that there's really nothing to discuss, I think. Certainly the idea that Google is not "in" any particular country seems pretty strange to me, but if that is indeed your position then clearly it should pay tax in all of those countries, not none.

Not 'should they pay taxes' (of course, those which are owed, not doing so is evasion and illegal) but 'how should they be taxed'.

Tax laws apply to them, but pretty much (IANA tax professional btw) aren't setup for online companies and haven't changed (in rough form) since they existed.

Profit based taxation doesn't work if you can just continually reinvest revenue and not declare a profit. (Not unique to online cos of course, but perhaps more prevalent? Maybe more linked to high R&D cos in general.)

Defining where a sale was conducted is messy if your headquarters, accounting dept., tech dept., servers, TLD, customer, self-identity, ... can all be in different jurisdictions.

Etc. ad nauseam. That's what's up for debate.

I think we'd be happy with the same outcome, I just don't think it's worth appealing to companies to ignore the bottom line and pay tax to a level that's higher than required (and so not defined) but that 'we' (you'll never please everyone, so pluck a number out of the air) will be happy with.

> Corporations aren't people no matter how much dollars go into PR efforts to tell people otherwise.

It's not PR efforts, it's literally the law.

Just to make it clear, the "stupid" thing here is the tax law, not the behavior of the corporations.

It would be "stupid" to expect corporations to pay more taxes than they are legally required to.

Isn't the stupid thing that the tax system is set up such that these things are possible(to pay less tax than you 'should')? As David Mitchell says[0], making how much tax you pay a sliding scale based on your morality or ethics(while still remaining on the right side of the law) is just a tax on morality and ethics - the people with the least of those things will end up richer than the people with more of it, which is 'fucking bonkers'

I got into a big argument over a Monopoly game once - three of us were playing, Player 1 was in the clear lead, I was in second place but at a large disadvantage, and Player 3 had the least assets but was not having fun and wanted to leave the game. The rules of monopoly say that a player quitting gets all their properties sent to the bank, which then auctions them off. If that happened, Player 1 would have easily beat me in a heads up manner. So I convinced Player 3 to not quit just yet, and to sell me all of his properties for $1. Player 1 was furious, saying it was against the rules, but there is no rule against selling your properties for next to nothing and then quitting immediately. Was I in the wrong for convincing Player 3 to sell me his properties before quitting?

BTW, I ended up winning the game.

[0] https://www.youtube.com/watch?v=m2q-Csk-ktc

FWIW, that's not against the rules, you can have custom 'contracts' like that; iirc it's even so allowed that there's a stipulation for when it may happen (the beginning of the instigator's turn, I think) in the rules.

I think (I think) the answer is that it's not really about morality or ethics, but about finding an equilibrium between desired taxation and profit optimisation. The latter finds ways to reduce tax burden, and if that results in an unacceptably low burden the former (should) responds with rule changes.

But that points to it being more political than ethical, that's perhaps quite a free-market capitalist take on it.

In France and many other EU country, tax avoidance is illegal.

So, if I decide (while living in France) to avoid paying so much tax by, say, making less money, I'm now a criminal?

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