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Comment by bdauvergne | Hacker News Reader

The problem is that law is a malleable mater and not all interpretation and use should be accepted, there is the spirit and the letter (don't know if it's an usual expression in english).

Dunno muchabout the US tax code but in the french tax code when there is a tax break there are practical conditions and an information intention / context by the legislative assembly in the law project. If french deputies create a tax break to incentivize research and you use it to get a tax break given investment in infrastructure not at all linked to any research, even if you match the practical conditions it's considered an abuse/diverting of the law and the french tax administration can completely cancel your tax break and you'll have to sue them in our administrative justice branch to change their decision.

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That sounds like a nightmare for the business owner, and a huge boon for the legal industry (aka lawyers). Uncertainty/ambiguity in law is poisonous for someone trying to operate in the law, and that goes for everyone from big corp to individuals just trying to function in society.

These are called "General Anti-Avoidance" rules. The UK calls theirs a "General Anti-Abuse" rule but it's the same idea, probably better branding. The consequence of not having them is that huge corporations just don't pay your taxes because hey, what do you mean you wanted us to pay taxes, if you provide any means by which I can avoid that surely I must be intended to avoid it, right ?

It's not a "nightmare" unless your goal is to avoid paying taxes or the rule was very incompetently drafted. If you want to spend $5M figuring out how to avoid paying $5M in taxes and then moan that it was expensive, remember to factor in the price of the minuscule violins other tax payers will be needing.

It's a nightmare because one prosecutor may think that building out infrastructure for a technology that really might not be worth the cost is a perfectly valid research expense and a different one may not. Similar to how one person might think that the social safety net is for someone who lost the ability to provide for themselves through no fault of their own, and another might think that the social safety net is for anyone who doesn't want to work. These things need to be written down clearly expressing the intent so that society can understand and make choices appropriately. Like, if the tax code said you can have a 401k account and put a reasonable amount in it per year, then some people might think they can dump $400,000 tax free per year into their 401k while another thinks $16,500 is a reasonable amount.

There is no "prosecutor" in a typical GAAR. The question isn't whether you're a crook, the question is whether your tax avoiding scheme works or it doesn't and if it doesn't then you have to pay the taxes you wanted to avoid.

Take the UK example since I live there, their GAAR uses a "Double Reasonableness" test. Jurors must be sure that no reasonable person could reasonably believe that whatever your avoidance scheme was has any purpose other than avoiding taxation.

Your examples are nowhere close to that line. Here's a (loose and simplified) description of a scheme which failed the test: To get a "Car Dealer" tax discount, have a third party company on your behalf repeatedly buy and sell the exact same car, multiple times per day.

Car dealers getting a tax discount as part of government policy makes sense. Maybe you're not that directly connected to the dealing but you provide the money or whatever, so you get the benefit, OK, I guess. But buying and selling the exact same car over and over again is clearly not a real car dealer is it? This is nonsense, you're doing it only to avoid taxation.

Which is why people write articles like this... to draw attention to these ambiguities and how much of a boon they are for businesses with lots of resources to navigate and exploit them.

I see the article as almost obsessively focused on the details and intricacies about how Meta is attempting to avoid taxes, what the timelines are, who's involved, etc. It seems written to be read like a thriller almost: to what lengths could this evil corporation go to further their schemes? There seems to be exactly 1 paragraph about when, why, and how the laws in question came to be:

> The tax break dates to the first year of the Reagan administration, when Japan...

It seems to me that there could be a lot more discussion and analysis on what led to the laws, who was involved, efforts since to amend them, etc.

For better or for worse, keeping someone's attention is a prerequisite to giving them information.

More generally, I'm not sure that an analysis of a particular set of laws, loopholes, amendments, etc is all that valuable for a general audience. The reality is there is an ~infinite number of these things. It's actually much more important to understand the intensity of effort and sophistication that goes into finding and exploiting them.

Law isn’t mathematics, it always requires interpretation. That’s why we have human judges instead of flowcharts and lookup tables.

In the EU it's typical to keep to the spirit of the law, not necessarily to the letter. It makes it less game-able. If the tax break is for research and you use it for research and not "well, technically it could be considered research if you squint hard enough", you'll be fine.

> a nightmare for the business owner, and a huge boon for the legal industry (aka lawyers)

Unequivocally my experience.

"spirit and the letter (of the law)" is a common phrase in English. For the next part IANAL.

It appears in the US that generally the letter of the law matters more in legal proceedings than the spirit of what was written. Though there is sometimes debate (especially around the constitution) as to what the words meant at the time the law was written which give a little legal freeway to the spirit. From what I have seen though these cases generally deal more with rights/civil liberties than laws which affect corporations/tax codes/processes/etc. There is greater freedom to interpret the spirit of the law in criminal cases (e.g. jury nullification).

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