Nobody is against closing the loop hole. We all know what the loop hole is.
Politicians should just do it.
Instead, they (Dems mostly) parade around publicly shaming companies who reduces tax in a legal way.
To me it's not all bluster. But I agree here in the loopholes are hard to close with entrenchment. The paid for definitely rests on way more sound math than republican 'job growth -> gdp' magic.
There is quite a lot but just a few things I quickly googled:
- calculate 21% tax on country-by-country basis, eliminate tax-free 10% foreign point of return - make it harder to invert by acquiring/merging foreign companies to offshore profit - eliminate tax benefits for “Foreign Derived Intangible Income” (e.g. shift IP abroad i think apple does this?). I think this one also moves those incentives stateside which would be good
https://www.cnbc.com/2021/03/31/biden-infrastructure-plan-to...
https://www.whitehouse.gov/briefing-room/statements-releases...
And they really don't like huge corporations paying taxes.
One interesting thing too is the timeline of super majority - while there was 60 for a bit - wasn't as long as implied or as simple given the geriatrics being out of commission.
If we ever get a super majority again - or get rid of filibuster - I personally want to see DC statehood as #1 priority, maybe PR and Guam too.
https://scontent.fapa1-1.fna.fbcdn.net/v/t31.18172-8/324260_...
Read the whole article, they did.
> Instead, they (Dems mostly) parade around publicly shaming companies who reduces tax in a legal way.
I'm not aware if google specifically has done this, but the associated problem here is that typically massive companies pay lobbyists to get the government to create (and keep) these loopholes.
So what happens once elected is essentially that interest groups (ideally multiple), amongst other companies, industry associations, unions, pension funds, government representatives, ... see the elected representatives, quite literally teach them, in a biased way, even write legislation for them (this means hiring a team of sometimes hundreds of lawyers and putting them at their disposal), and the general idea is because multiple interest groups participate you get a somewhat reasonable negotiated outcome.
You don't want oil industry legislation to be written by Greenpeace. You also don't want it written by ExxonMobil. So what to do? Lock whoever they send to represent them in a room, have someone to check for guns at the door, and have them fight it out.
Of course, none of these interest groups are playing fair. That can (and generally does) lead to very biased laws. However, when it comes to contentious issues, the interest groups that win are actually popular citizen-based interest groups (e.g. in climate change legislation it's clearly not one-sided, at least attempting a compromise between multiple parties, when it comes to police power, clearly someone's providing counterweights to police requests, and so on)
So the general idea of democracy is: we have many idiots, not just one, to hopefully get at least "average" intelligence and decision making, then we have them listen to anybody who wants attention and then collectively take a decision. They make too many mistakes or stop listening? We replace them. Does it give ideal outcomes? No. Is it a million times better than forcing one interest group's opinion 100%? Yes. Does a mountain of money really help in making yourself heard better? Yes.
It's better than an idiot who knows nothing about anything taking control of everything, which is what most alternative systems boil down to.
If you plan to introduce a change in your code, if you have automated tests, they will tell you what exactly might break if you go through.
If you plan to introduce a new law, lobby groups will cry depending on how hard they are hit. You can then change your law (or go through with it).
You can prosecute someone for maliciously exploiting your computing system, even though technically "they're just using the rules you wrote", because there will never not be such rules that allow for exploitation.
The law is hardly perfect as it is. Will never be. Just because there are more holes. It's not the reason to not close the most obvious/impactful one.
The way a general anti-avoidance rule works is it says you can't do things that are just to avoid paying tax.
The tricky part, obviously, is figuring out how a jury can decide if it was really just to avoid paying tax.
The UK's approach is a Double Reasonableness test. The jurors are asked to consider not merely what they, personally might think would be reasonable, but anything any conceivable reasonable person might think is reasonable. So maybe you can't personally imagine why anybody would want multiple sports cars, but you can imagine somebody else who might think it's reasonable to buy them, so the person who avoided tax by purchasing sixty sports cars passes the Double Reasonableness test.
On the other hand, you may be unable to conceive of any person who could think that it was reasonable to open over 4000 bank accounts and then deposit £99999 into each account, if not for the fact that it avoided a tax on larger deposits and so that fails the Double Reasonableness test.
[These examples are hypotheticals, feel free to go dig up actual schemes which have passed or failed the test]
This provides appropriate latitude. And even if your strategy fails the Double Reasonableness test, you don't go to jail or anything, you just don't avoid taxes, you owe taxes exactly as if your behaviour didn't result in a favourable tax outcome. Which, if you really didn't do it just to avoid taxes as you've claimed, should surely be fine...
The other trick which was introduced at the same time imposes a duty on tax avoidance lawyers. If you help people plan to avoid taxes, that's cool but you have to explain how your scheme works to the taxman. You likely charge for your help, that's legal, and you keep that money even if the scheme doesn't actually work (that's legal and it's just smart business) but your duty ensures that the taxman already knows about the scheme before it's used, and can decide if they want government to legislate to close it next year, if they want to go to court to claim it doesn't work (because of GAAR), or if they just let it carry on.
I really think if you need complicated (and entirely subjective!) thought experiments like this to apply the law, your law is far too complex and unfair and should probably be scrapped.
About this law, what it really creates is an insane amount of insecurity. When other people get to decide whether what you do is reasonable or not, the only question that matters is who gets to make the decision.
And you should not have to waste precious time explanting anything to a bureocrat. Maybe Faang companies get to have that luxury
On an added note, in these times of looming climate crisis, a carbon tax or something associated with companies using/polluting "free" resources (air/water/petroleum products) seems like a good idea
Why is HN always full of people advocating that companies should be above the law?
You harm someone in self-defence and a judge of jury decides whether what you did was reasonable. We just have a stack of case law that says 'in the past, X was found reasonable".
On the other hand, when Boeing killed hundreds of people, no one was even charged. If any individual commits the acts corporates do regularly, they'd be in jail in no time.
I've seen folks claim that HN has a significant population of investors and founders. There's probably a fair share of people who aspire to belong to that group, too. It's probably a concentration of the greater pattern of Americans seeing themselves as temporarily embarrassed billionaires.
May be I am not reading it correctly. It is perfectly legal and within the law so no one is advocating they are above the law.
That said, I'd rather have the government disappear and be replaced by companies providing insurance, protection and lawmaking - than these companies to start paying taxes.
Dems are at least doing something besides electing a billionaire who dropped the corporate tax to the lowest it's been since the 1930's.
Would your rather they deceive than saying nothing?
Then, Dems will actually tax salaried employees who earn more 400k a year.
Now this doesn't impact average American, sure. But they could have been upfront about taxing salaried employees.
Another example is exactly this news. They are shaming yelling at the companies for not paying more tax.
Yet they don't codify the tax law to get companies to pay more tax.
Based on their yelling, they could have just added "no double Irish practice" into the tax law. No? There are many similar laws that handle extreme complex situation like "no money laundering", "no market manipulation". It's not perfect, but we still manage to handle them.
At best, Dems are misleading the public. My guess is that they can't close that loophole without negative impact on other areas. But Dems never explain this at all. They try hard to say companies are evil. Yet they are the ones with power who do nothing.
This is like you starting a new job, and nobody codifies your responsibility, and you are constantly yelled at for not fulfilling your obligation.
Sure, Dems is the lesser of the two evils when comparing to Republicans. But let's not act like they are not deceptive here.
Please do enlighten the rest of us here, on how to reduce our taxes down to single-digit percentages, or millions/billions in absolute.
Do we want to close the loophole or extend the loophole to everyone?
I'm confused now.
I almost always spend the best of my ability to reduce tax.
If this loop hole applied to me, I would have done it as well.
Not sure why it is disingenuous.
Why can't we either close it or extend it to everybody? Dems led governments for years during Obama's era. What's with the yelling and no action?
Nobody? Including those who benefit from it, you mean?
I haven't seen much of people supporting the "let's not close the loophole" movement.
I'm sure my 0.5 year old baby is neither for nor against this loophole. I asked but I didn't get the answer.
Come on, man.
If you don't pay taxes, then it wouldn't really be fair for you to be sending your kids to public schools, driving on roads to get around, or calling the fire department when your house is burning down, since you haven't contributed anything to their upkeep.
The structure and implementation of corporate taxes in the USA strikes me as needlessly complicated and corrupt, and I think corporate influence over the tax code is deeply unethical in many ways. At the same time, I wouldn't tell any individual or company that they're ethically obligated to forgo tax relief that's legally available to them. These two things are not in contradiction.
It is problematic in that corporations have a lot more resources to bring to bear than the average person does.
I don't find it unethical though. People have a right to express their concerns to the government and advocate for their interests, even if those people group themselves together into a legal entity such as a corporation.
It would be more unethical to single out certain groups of people and say "everyone else is allowed to talk to the government and advocate for their interests, but you are not".
Edit to add:
It's the government's job to listen to everybody's concerns and balance the interests of different groups against each other. If we're unhappy with the job they're doing, we should elect a different government that will do a better job, not just silence groups we don't like. They are not passive elements in this who are just helplessly acted on by outside forces.
In practice, this is exactly the problem with revolving-door politics and regulatory capture.
> we should elect a different government that will do a better job
Agreed, and I would add that one of the most important functions of journalism like the OP is to inform the voters about these situations.
Is all lobbying unethical?
- Correctional officers unions lobbying for harsh drug laws to ensure a steady supply of prison inmates.
- AccuWeather lobbying congress to prohibit NOAA and NWS from providing weather data to the public, so that AccuWeather can charge money for it.
- Intuit lobbying to prevent states and the IRS from providing free tax filing facilities.
When the question becomes, "what do we do about it", I'm well out of my depth, but I think the fight is worth having, and the practical effect of corporate lobbying is certainly a worthy subject for journalism like the OP.
Mutatis mutandis for, eg, roads so that employees can get to work, etc.
“Double taxation” refers to taxation post distribution not prior (source: I was a corporate tax accountant).
Finally, “evasion” is illegal. “Avoidance” is a legal tax strategy.
The point that the parent is making is that there's a legal obligation to pay taxes, but it's not an ethical one - the government says what you owe, and you pay that. It's muddied by companies lobbying to set the laws, but I would have to agree paying taxes the laws say you owe is not an ethical question.
What's the government doing by just collecting its citizens hard earned money? It should also invest in companies and other ventures and make its own money. It also has natural resources (oil, natural gas, etc.) at its disposal. Only if those are not enough can it ask its citizens to pitch in.
Or don’t you use roads, police, education, services, etc..,
On the other hand, by paying our taxes, we Americans maintain thousands of nuclear weapons, and the largest and most elaborate military on the planet. So ... not all of what we pay for is "good".
What's ethical about playing in a poker tournament and paying the entry fee? Just curious.
If you are getting rich in this country, taxes are paying for what enabled you to get rich in the first place: the human capital.
How are taxes _not_ a thicket of ethical issues?
However, I think a really ambiguous question is whether we should actually care about _corporate_ taxes over questions like treating capital gains income on the same footing as wage income. One expects that when corporations don't pay taxes, their shareholders eventually reap those savings as capital gains income ... so isn't it eventually taxed?
I'm assuming here that only large multinationals engage in this sort of scheme; if there were a whole economy among rich individuals who always push their transactions through Bermudan-Irish shell companies, then perhaps it might never get taxed at any rate?
Am I unethical to choose standard deduction because it reduces my tax more than choosing itemized deduction? No? Yes? Maybe?
But it doesn't seem to help much.
For example, many Dems shout "tax billionaires" for years. This rallies a lot of people. "Yeah!!! Let's tax them more" we all chant.
Then, when Dems is elected, they are raising tax on salaried employees who earn more than 400k a year. (Not sure if they has gone through with it yet)
I didn't know I was categorised as a billionnaire.
Politics isn't about precise language. They just mean wealthy people. I thought they were pretty up-front about that.
It's of course easier to charge more taxes for moderately wealthy employees who don't have a clever tax setup and may need to.
Really rich people with clever tax setups will just move out and you'll get no more revenue.
Billionaires don't pay income tax, that's why Dems are raising the corporate tax rate too. They're also looking at increasing estate tax and capital gains tax, and those almost exclusively effect the ultra rich
Some people more likely have an obscene amount of envy to those who are more successful.
I grew up broke and understand how fortunate I am. I'm completely fine with paying a few percent more marginal tax rate. I have thousands of disposable income a month like most of us here. I doubt I would even notice.
Why would you ever think 400k is obscene or crazy amount of money? Companies that those developers work for, earn 10 times as much per developer. I wish every developer could be payed as much or more if possible. Do you find it shameful when other people find value in what developers do and are ready to pay them a lot of money for that value? I'm sure your company will gladly pay you less if you feel overpaid.
If you can call up a senator and say "You had better increase standard deduction to $X for married couples in Montana with three kids and a small business, or I'll have to rethink my campaign contribution," and you happen to be married in Montana with three kids and a small business, I'd say it's clearly unethical.
I think companies like Google fall in the latter category.
Laws are derived by the people and encode their ethical permissibility within them.
Otherwise, why is it worth discussing?
Specifically, collecting a reasonable amount of taxes is key to the function of governments as they're set up.
It would be unethical to sell somebody a car that secretly has no motor, but ethics isn't the only reason cars need motors.
If taxes were about financing the government there would just be one tax called the-cost-of-government-tax and that's it. There would be no need to tax everything you do, and at different rates and on some days but not others, but when the moon is full on tuesday you pay double except if you lived on 72nd street during 2008...
Taxes are about control, about influence, and about corruption. The loopholes are there becasue someone put them there, they are not hidden. The tax-code is so complex because someone made it that complex, someone doesn't want it to be easy.
No they didn’t. Most governments are mostly funded by taxes.
(The rest of your post doesn’t support this thesis, but instead the thesis that funding government. operations isn’t the exclusive purpose of taxes, which I don’t think anyone would dispute, and which is orthogonal to whether governments are mainly funded by taxes.)
Last year, the US collected $3.42 trillion in taxes, but spent $6.55 trillion for a record deficit of $3.13 trillion. This year is projected to break that record.
https://www.thebalance.com/fy-2020-federal-budget-summary-of...
Since you mentioned the debt ceiling, that’s another concept that doesn’t make any sense (except as yet another thing more politics can be piled on to). It’s like first the congress votes on the size of the budget, and then separately on the size of the door that it has to fit through.
No, most countries finance themselves primarily by taxes; they typically also use debt financing, especially (in relative terms) countercyclically in economic downturns.
> Last year, the US collected $3.42 trillion in taxes, but spent $6.55 trillion for a record deficit of $3.13 trillion.
So, even the best single example you could come up with is...financed primarily by taxes, even in the one year you tried to pull as a counterexample?
I pay taxes because the alternative is fines and eventually jail. That's theft, that's coercion.
The less taxes you pay the more power to you - and I'd appreciate if you shared how.
And I tend to agree. Would be great if we could just rely on companies to pay as much tax as they can to 'contribute', but why leave it to the honor system? Close the loopholes and codify it. It's the only sustainable, efficient way.
I'm sure you don't intentionally over pay your tax either.
If you want more tax, just codify it.
Retroactive taxes should apply here, what was written in the law was wrong with the actual intent of the lawmaker, we shouldnt encourage this stupid cat and mouse games, just pay your taxes.
A trash company makes money but collecting trash, a car company makes money by providing cars to people, a law firm makes money by providing legal representation to people.
You're acting like society and its infrastructure is a teat which different companies milk and other people out of their own generosity fill up, so its only fair that they give something back to the society, when this is now how it works.
This infrastructure isn't created so that the CEOs can get rich, it is created so that they can run companies which provide value to the people (and not so that they can pay taxes which, as claimed, is the only utility a company has).
The only way a corporation can protect its property from the whims of the majority is with the help of lobbyist. In fact, US is one of the few countries where the corporations are allowed to formally influence the politicians (and just see how much people who just want to take it all from them in the name of 'fair share' hate this).
In other countries, this system is informal, so in Mexico, the corporations simply have to influence the politicians in an opaque way.
There's at least one major party in the US that wouldn't see it as particularly ethical for companies to pay more than what the law requires. One Presidential candidate for that party, when challenged on using every loophole allowed to him, quipped he does it "because I'm smart."
Then he was elected President, and his administration oversaw the spending of tax dollars Congress authorized it.
My point is: if you want them to not use loophole, then codify it.
This is like your company doesn't write what your job's responsibility is.