Mark Cuban: If Your Company Is Moving For Tax Reasons, I'm Selling Your Stock | Hacker News Reader

Mark Cuban: If Your Company Is Moving For Tax Reasons, I'm Selling Your Stock

ca.finance.yahoo.com

178 pointsbane202 comments

Perhaps we should drop the corporate tax rate to zero. It's simply too easy for a global company to avoid them. In the end, small and mid-sized businesses are the ones that get soaked.

It currently makes up about 10% of federal revenue. http://www.cbpp.org/cms/?fa=view&id=3822

I think that's the eventual outcome, as there will likely always be some place with a low enough rate to compel businesses to setup shells.

Yeah. Then, raise taxes for those who can afford it to make that up. I like it. It'll never happen but I like it.

If we just moved to be inline with the rest of the world that would be an improvement.

That could pretty quickly sour relations with a lot of other countries, if we were cutting our own tax unilaterally. Anything like this would preferably be coordinated with other countries.

http://en.wikipedia.org/wiki/File:Effective_Corporate_Tax_Ra...

http://en.wikipedia.org/wiki/Corporate_tax_in_the_United_Sta...

http://en.wikipedia.org/wiki/Tax_rates_of_Europe

What hasn't soured relations between the United States and other countries in the last 15 years?

Changing our tax rates seems downright benign.

We could probably just stop trying to tax people in those other countries and they'd be happy enough to forget about the corporate tax thing, speaking of stupid US tax policies.

How do we replace that 10%? According to your link, that would be about $280 billion per year.

Presumably by taxing dividends (and possibly capital gains, depending on who you ask) as normal income, and eliminating other quirks of the tax code that overwhelmingly benefit the wealthy.

Which is soon followed by the inevitable "but I was already taxed on this money!" wealthy investor complaint.

That does not follow. Complaints about double taxation on dividend income are based on the existence of corporate taxes.

Cut spending. Does anyone really think that 10% of what the federal government does can't be eliminated entirely?

Roughly 100% of people agree with you, just not on which 10%, which is why that plan is prima facie untenable.

Across the board cuts for any programs with budgets above a certain percentage of the entire Federal budget. Basically a progressive budget cut to avoid small programs getting hit too hard.

The idea would be to shift the tax burden from corporate profits to dividends and capital gains.

I like your thinking, but there's a sliding scale (15%-35%), just like personal income tax, so that smaller businesses don't get hosed.

Theoretically it would also be easy to game payroll and income taxes this way. You could essentially file articles of organization for a corporation with you as the sole shareholder, and have your employer pay your corporation your wages, instead of you directly.

When it comes time to take money out, you pay a fat dividend with 15% dividend tax rate, instead of 35% income tax rate. There are of course some exceptions to this and it isn't possible in some states, but it would be possible.

> When it comes time to take money out, you pay a fat dividend with 15% dividend tax rate, instead of 35% income tax rate.

If we were to eliminate the corporate tax we'd need to simultaneously eliminate the preferred tax status of qualified dividends and long term capital gains. We'd also need to crack down on wage substitutes (aka fringe benefits).

Still think it'd be a worthwhile tradeoff.

The dividend tax rate is mainly there so as to avoid double taxation, so it would make sense to remove it.

So, I create a corporate entity that provides my housing, transportation, other major needs. All my income is paid to this entity, which pays no taxes. I, as a biological person, get some basic stipend to cover daily costs, and live comfortably with all my necessities being paid by the corporate entity. How does the state collect any taxes at that point?

EDIT: thinking a bit more, I guess sales taxes could still be collected. Could a government function almost entirely off sales taxes?

Even now as far as the IRS is concerned you will personally pay tax on all of those services that were given to you. The IRS doesn't just tax cash transfers.

I believe that the housing, transportation, and other major needs would be taxed just like the income they replace. (Or should be, in any case.)

This IRS page says that benefits are taxed like income: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employ...

My mother is self-employed, and there are strict rules about deducting business expenses (like home office square footage) but not personal expenses (like the rest of the house's square footage).

Ah, very interesting. Thanks for the info!

What you just described is illegal. A corporation must act as an independent entity, not just be a shell around a single individual.

What about two individuals, or 40?

I don't believe that to be true. I'm a 1-man Corp. Corporations only there for liability limitations...

And, in general, you can't limit your liability if you are a 1-man corp. Courts can "pierce the corporate veil" if it turns out the corporation is acting entirely on the behalf of the invdividual.

Generally that happens when the company is not acting like a conpany. A simple example being when you don't have and/or document yearly meetings and such. LLCs are commonly used to shelter individuals from things like rental properties.

Your edit refers to something like the "Fair Tax", http://en.wikipedia.org/wiki/FairTax. It's been a while since I've read about it. From what I recall, some people are against it because they think it will disproportionately burden low income people.

Fair Tax is the worst of all worlds.

On its face, a sales tax is highly regressive, so it disproportionately harms poor and middle class citizens.

So the Fair Tax answer is for the government to refund to everyone a stipend for the basic costs of living. This creates a collection of personal data the same size as the IRS (they need to know where to send the check), AND a government entitlement program larger than Medicare and Social Security put together.

Why not a progressive sales tax based on the pricing of the individual item?

As for the data collection, for most people the government already has all that info anyway.

The stipend would open the door for the possibility of the guaranteed basic income some people have been going on about lately. People would already be accustomed to the government sending them a monthly check for essentially being alive.

If prices were taxed progressively (which AIUI they are in some cases, e.g. expensive imported cars), you might see large items split into many small parts sold separately, with an on-site assembly service that costs less than the saved taxes.

Then you simply tax the service. But on the other hand, higher taxes don't always result in higher revenues.

In fact, you might see an uptick in revenues. If people see they might save money with that method then more people might be likely to buy the item they, otherwise, may not have.

It all depends on how the taxes are structured.

Of course, we then slide into complicated tax code like we have now.

Most fair tax proposals come with a flat rebate, so if you're spending, say, under 20k you are exempt.

I'm not a fan of the fair tax but a more sophisticated understanding of it might be warranted.

While there are a number of federal sales tax proposals, there's only one Fair Tax proposal (they've even trademarked the name). While my short comment obviously does not encompass every detail, the basics are:

1) A flat federal sales tax. 2) A "prebate" to offset the regressiveness, which is a check sent by the federal government to every U.S. household every month.

http://www.fairtax.org/

I can't find the link, unfortunately, but the Congressional Budget Office released an analysis a few years ago comparing the FairTax with a flat tax and I believe another proposal (possibly a VAT system) and found that, while the FairTax would greatly benefit the poor (via the flat "prebate" checks) and the rich (because of the elimination of capital gains taxes and the fact that they spend a smaller proportion of their income), it would increase the burden on the middle class substantially. That kind of killed it for me.

Edit: Found it. It wasn't the CBO, it was a Bush-appointed advisory panel. See the "Chapter Eight - Nine" pdf, page 20:

http://govinfo.library.unt.edu/taxreformpanel/final-report/i...

There are already laws stopping corporations from doing that. Otherwise corporations could just pay you in kind and write it all off as expenses.

Then you start to look a lot like the large companies in Asia. I have a family friend who has been a General Manager at Birla Industries in India for 25 years.

His housing is paid for, his drivers are all company employees, and he is given a generous "expense account" for all of his regular needs. I believe his salary has only been used for vacations (where he couldn't do any business) or for his son's tuitions at U.S. universities.

That's kinda the fucking idea.

If you have contract income you assign it to a corp and then pay yourself a wage so you can live and keep the rest in the corp to invest / pay dividends. (No you can't deduct everything, but the more frugally you live the less tax you pay)

The thing is most people don't like to live in the most frugal way possible and therefore end up paying some taxes on the things they like.

So not only are corporations super humans that have limited liability and now religious views, you don't want those extremely wealthy "people" to pay taxes, either?

I'm open to a "first world tax rate" for corporations, but dropping it to zero would do more harm than good.

As long as the US has existed, there has been corporate personhood. The Supreme Court has argued it in terms of corporations being essentially groups of people acting together for a common cause, and noted that working together should not invalidate the rights to free speech, religious practice, entering contracts, etc. Chief Justice Marshall said it this way in 1830: "The great object of an incorporation is to bestow the character and properties of individuality on a collective and changing body of men."

Key cases (you can find them all at http://supreme.justia.com/ ): Dartmouth College v. Woodward, 17 U.S. 518 (1819) Providence Bank v. Billings, 29 U.S. 514 (1830) Santa Clara County v Southern Pacific Railroad Company, 118 U.S. 394 (1886) United States v. United Auto Workers, 352 U.S. 567 (1957)

Funny you didn't quote Marshall's much more famous saying about corporations in Dartmouth College v. Woodward:

"A corporation is an artificial being, invisible, intangible, and existing only in contemplation of law. Being the mere creature of law, it possesses only those properties which the charter of its creation confers upon it."

Taxes are a great argument against corporate personhood. People pay taxes on income, corporations pay taxes on profit. This is why so many corporations pay no taxes at all. If they want to be people they should pay income tax like the rest of us.

For most people, business expenses are paid by the employer and profit==income, but for some (the self-employed in particular) their business expenses come out of pocket and are deductible. Individuals actually end up paying taxes on profit, we're just used to wording it as income.

Anything a corporation spends money on is an expense and is deducted from profit. Most things people spend money on (housing, food, car...) are generally not deductible. If people were taxed like corporations we would only be taxed on the increase in our savings accounts. Median american savings is $0 so most people would not pay any taxes if they were taxed like corporations.

anything business-related a corporation spends money on is an expense. Anything business-related an individual spends money on is an expense.

Anything not-business-related a corporation spends money on is considered to be a misuse of funds (or fraud).

People are already taxed in similar ways to corporations.

When a company spends money to continue its existence, such as rent, it is deducted from its taxable profit. When a person spends money to continue their existence, such as rent, it is not deducted from their taxable income. If people were taxed as corporations the median American would pay no taxes.

This is probably the best course of action. The teeth-gnashing over whether corporations should pay taxes should take a back-seat to whether it's practical to require them to. We have to acknowledge the race to the bottom that comes along with living in a globalized world. We don't have the leverage needed to tax these companies, and it's better if they stay here and don't pay taxes than if they move somewhere else and don't pay taxes.

I agree with you, but I really don't like the term "race to the bottom" - it's is just a fear-mongering term for competition and the inconvenience and sometimes embarrassment that comes with the realization that something you thought you were good at can actually be done cheaper and better.

"The bottom" is the best service/price tradeoff (with the desired service level delivered as efficiently as possible, ie. at the lowest price).

Ireland luring businesses with a low tax rate and Americans and other higher tax countries complaining about a "race to the bottom" is much more similar to the creative destruction that takes place when say Postgres and MongoDB displace an expensive Oracle DB (and the reactions of both Oracle and high-tax advocates are pretty similar).

I agree that "race to the bottom" is often abused when all that is really at issue is competition. However, it is applicable when it's undermining ability to deal with externalities. When the pressure is "who makes their air unbreathable fastest", calling it a "race to the bottom" seems perfectly appropriate and like something we want to avoid.

That would not actually help small and mid-size businesses, most of whom are organized as pass-through entities and are therefore not subject to the corporate tax rate.

I'd be in favor of this zero rate, if, at the same time, all "corporate welfare" ended also: no coddling of corporations by the state. Also, no protective measures such as tariffs.

The corporate tax is the only disincentive to use corporations. There must be one, or the corporate veil will start to be used for trivial things. We see this already, even with corporate taxes, in e.g. patent trolls or Hollywood films.

Small businesses are mostly proprietorships, partnerships, and LLCs anyway, which don't generally need to pay corporate taxes. Mid-sized businesses might be hurt by the corporate tax, though.

The corporate tax is a terrible disincentive to make money. Wealthy entities that make money are more concerned with relative status than absolute status.

On the other hand, the corporate tax is a great way to ensure corporations retain profits instead of paying them out, thereby making the corporations larger.

This would all be obvious if people remembered rule 1 of economics, which is that actors respond to incentives.

There are plenty of ways to make money without incorporating.

I'd much rather eliminate the personal income tax and shift to user fees, and a flat corporate rate (a user fee for limited liability, if you will) and equal flat tarrif. But that's not popular for some reason.

Flat fees/taxes are unpopular because people tend to believe that the capitalist system is inherently unfair. For instance, a rich person who gets $100 can invest all of it, while a poor person must spend it on necessities. (And there are deep psychological drives and practical reasons that also cause most people to spend more irrationally when theyre poor as well)

Theres also Pikettys argent that return on capital grows faster than the economy.

But there are counter-arguments, and its always good to consider and experiment with new ideas, so believe what you will. But I think people have a prettty good reason for liking a progressive tax, even rich people like this.

Personally I think the economy has deep flaws. Like private ownership of natural and limited resources being a thing (which i believe will cause wealth to consentrate in a counter-meritocratic way) and the transfer of money not accurately reflecting the value of intellectual "property" (transfer of money of physical goods, which money is supposed to model, is zero-sum. sharing intellectual products is not). So I welcome new thoughts. But I dont think anyone has the right solutions yet, and flat fees/tax isnt exactly a new idea.

"On the other hand, the corporate tax is a great way to ensure corporations retain profits instead of paying them out, thereby making the corporations larger."

Corporations pay taxes on the money they retain, and not on the money they pay out in wages or other costs of doing business.

Of course, they also do pay taxes on money they pay out to shareholders, and they don't pay taxes on money overseas affiliates retain...

But "corporate taxes are an incentive to retain capital in the corporation" is generally incorrect.

You would have to somehow balance it out against the fact that eliminating corporate income tax would invalidate a lot of incentives built into the corporate tax structure. No more flexibility for the government to encourage capital purchases or otherwise use tax policy as a policy driver.

It would also decrease the incentive to invest in their own company because the cost of building a new factory or raising workers' wages or hiring more workers would actually increase. Think about it, if a company were considering giving all of its workers a $5,000 raise. In a world with a 30% marginal corporate tax rate, the actual cost to your company's bottom line of such a raise would be $3,500/worker, because you only pay tax on net income. But with a 0% tax rate, the cost would be $5,000/worker, that's a 43% bigger cost. Plus, presuming that personal income taxes would need to be raised by ~11% to make up for the loss of corporate income taxes, the workers are going to end up a lot less likely to get substantial raises.

The benefits of eliminating the corporate income tax are going to have to be huge to make up for the disincentives it would create.

I don't know, I think a ~35% boost in profits for all profitable American businesses is pretty huge.

If you had $100 in corporate profits now, you'd keep $65 and pay the government $35. If you got to keep all $100 in profits, that's a (100/65 = ~54%) increase, not 35%. So the effect would be even greater. :)

So if the corporation owners get a huge boost in profits, how does that benefit the country as a whole when the extra money is actually less likely to be spent on re-investment?

>the corporation owners

By "corporation owners" you can only mean "shareholders" for publicly traded companies. My retirement is invested mostly in the stock market, as is most people's. I would benefit, and so would anyone else that owned stocks.

>You would have to somehow balance it out against the fact that eliminating corporate income tax would invalidate a lot of incentives built into the corporate tax structure.

The current corporate income tax structure favors large bureaucratic institutions that can afford to pass the barriers-to-entry to avoid taxation. Thus small enterprises end up spending more on taxes than large institutions do: it's a regressive tax.

Eliminating the corporate income tax would heal that inversion.

Honestly most small businesses pay taxes on their members' individual returns. Keep the corporate rate where it is, how about a non-refundable small business tax credit?

Another aspect of the corporate tax is that it in-effect is a secret tax. You see how much the gov't takes from you on your pay stubs, or your receipts at the store. But you don't see the effects of the corporate tax.

I'd think it would be healthy too move to a model of looking at corporations are simply intermediaries for organizing people. Ultimately the money that flows into the corporation has to flow out either through salaries, dividens or sales - and the money should be taxed at those points. If you tax it in the middle people just end up thinking "oh, well they're taxing the evil corporates, so that's good!" without seeing the dampening effect on salaries and their investments.

I understand that it's a bit simplistic, but I think the current model of hidding taxes is parasitic. You look at the insane sales taxes they have in Europe. They keep going up and the citizens don't really perceive it and so there is no push-back. Here in the US, when the sales tax goes up by half a percent people are up in arms.

I agree, maybe not 0% rate, however, instead of focusing on chastising and ridiculing companies that make [business smart] choices to alleviate their tax burden, we need to focus on fixing the core of the problem that promotes businesses to seek tax relief in the first place!

Instead of 0, how about 20%? Right now the nominal rate for large companies is 35%, but they spend a lot of resources bringing the actual number lower. If we set the rate at 20%, then it becomes unprofitable for them to work so hard to avoid the tax. That means we get two advantages: companies can use that money for actual investment instead of dodging taxes, and the government might actually get more money since companies are dodging less and have more money to grow with.

Planet Money did a series on "policies economists would love and politicians would hate". One of their biggest suggestions was "eliminate the corporate tax rate and significantly raise income taxes on the high end". For exactly this reason, as well as what is said here https://news.ycombinator.com/item?id=8087103

The more money a company has, the more money they can use to employ people and be productive. The general public usually gets upset at what they see as severe profits to a corporation, but in general those profits aren't being "wasted" on the rich until they draw them out in salaries or dividends. It makes more sense to simply tax them at that point (at least, according to NPR)

It's worth noting that it's not corporate revenues that are taxed but corporate profits. Money that corporations use to hire people is not taxed at the corporate level.

That said, "[t]he more money a company has, the more money they can use to employ people and be productive" is still true and relevant because money is fungible. It is just less extreme than if corporate taxes were applied to that money as well.

Or table this with WTO, G20 or new body to set a minimum tax at a few key points like company tax and income. We're going to see increasingly mobile assets and company structures IMO so a global body working together to set benchmarks makes sense. The alternate seems to be countries will be stuck in a race to the bottom in trying to attract companies & talent.

Hi! This is the Market Economics Fairy! Just a quick reminder that if virtuous people selling a stock would predictably lead its profits to be temporarily priced lower relative to the rest of the stock market, even a small group of profit maximizers can just swoop in and buy that stock! So this is a completely ineffective strategy for virtuous people to drive a stock price lower! And if Cuban sells the stock after the news of their move breaks, he's already locked in all of the company's expected profit from that move, because the stock will already be priced higher! Sincerely, the Market Economics Fairy!

He doesn't care about that. He's not looking at it from the trader's perspective but from the value investors.

His actions follow through completely with his intentions here - he's signaling that the equity has lost value. This can hurt the company's value if he builds consensus, whether they lock in the short term profit or not. It's even the subtext of his whole argument: they aren't looking at the long-term consequences of their actions but are chasing short-term gains completely at the expense of their future.

Edit: And as much as I align with the trader's perspective on markets, traders tend to blow up and with great frequency...much more-so than value investors.

> he's signaling that the equity has lost value.

But it hasn't. If anything, such announcements are followed by a stock value increase since the savings that will result from this move will add up to the bottom line, and the market responds positively to this kind of news.

Lay offs are another of these things that tend to drive stocks up.

Edit: Rephrasing because I worded it poorly.

His sell action _right now_ signals that he thinks it has lost value. What happens after that with the stock is independent of his opinion there. Sure, the stock may go up in the short-term because of all of this, but his action now agrees with his sentiment that they're doing something harmful that has effects _in the future_.

What happens with the stock price isn't just reading tea leaves, but totally unimportant to the discussion. Whether you think a stock is going to go up or down isn't the only (and at the institutional level not even the most important) reason that you buy or sell a stock.

I think there is really no connection between moving your taxes abroad and how well the stock will fare. Maybe it will go up, maybe it will go down, but that tax optimization move will have very little impact on that in the long run.

What Cuban is doing isn't a financial move but a principle one. He's unhappy with the company's decision and that's how he shows it.

It's emotional, not rational.

I find it difficult to balance my distaste for corporations that act irresponsibly with my laziness in regard to my investment portfolio. I use a slight variant on the three-fund portfolio (http://www.bogleheads.org/wiki/Three-fund_portfolio). I value its simplicity because it saves me time and gives an acceptable expected return. However, using large total market funds means that I'm invested in so many companies that it would take a very long time to investigate each one for responsibility.

Good on Mr. Cuban for standing up here.

I don't understand the whole "If you behave logically as a business we hate you" sentiment.

You enact business unfriendly practices business leave. It is the job of a business to make money, the most money possible, at all costs. That is its single purpose existing.

Just because you "behave logically" does not mean you behave morally or ethically. Perhaps you should reflect on why immoral behavior would result in people hating you.

Are you saying that a company moving money around in an advantageous way is immoral? How so? Presumably you deduct the maximum amount you can from your taxes. That's what the business is doing: shuffling it's money around in a way that minimizes their costs.

Sure, I can see the argument of people who don't really like it, but to say it's immoral seems a bridge too far for me.

There's a big difference between the government asking you what deductions you qualify for - those are intended under the law - and a corporation making convoluted corporate structures to avoid paying the intended amount of tax. Generally, double irish sandwiches and the like don't pass the smell test.

If the convoluted corporate structures are legal then they are paying the intended amount of tax because they are following the law. It may not pass the smell test but they are legal. The complaint needs to be placed upon the laws and those write them, not the companies who abide by the law.

Just because a law exploit is possible doesn't mean it's acceptable to exploit it en masse. Yes, the law writers should fix their laws, as browser writers should fix holes in their browsers, but that in no way gives the exploiter a free pass.

I think you continue to misunderstand my point. It is not an "exploit" if it is the law. It is simply the law.

Your comparison to exploiting browser security holes doesn't even come close to being a proper analogy.

"Minimizes their costs" can also be read as "minimizes their contributions back to the society they're benefiting greatly from", hence the ethical concerns.

That's his point though. Can't you say the same thing about you hiring a tax accountant (or hell, TurboTax) to get you the deductions that you're eligible for?

I think the companies would argue (not necessarily myself, for the record) that they do contribute to society via high-paying jobs, collecting payroll & sales taxes and income taxes. According to [1], Apple paid roughly $14.2b in 2012 income taxes, and according to [2], they paid $1 out of every $40 collected (using Apple numbers, although I'd imagine other companies are similar).

[1] http://www.usatoday.com/story/money/personalfinance/2013/03/...

[2] http://www.imore.com/apple-already-pays-1-out-every-40-tax-d...

> via high-paying jobs, collecting payroll & sales taxes and income taxes.

In other words, doing what's absolutely necessary and expedient in order to make profit and not flagrantly disregarding certain portions of tax law?

And in the case of tech companies such as Apple, the "high paying jobs" bit comes with an extra bit of irony since they were doing the exact opposite to a criminal extent.

Color me unimpressed.

Median Apple salary is ~$110k[1]. Sure, there was the lawsuit about colluding to depress salaries, but according to [2], the median personal income of a person with a bachelor's degree or more is $56k. That's essentially double.

[1] http://www.salarylist.com/company/Apple-Salary.htm [2] http://en.wikipedia.org/wiki/Personal_income_in_the_United_S...

Wow. Are you really claiming Apple gets moral high ground for its salaries even after criminal collusion to keep them low?

As Apple's aptly demonstrated, it doesn't pay those salaries for any other reason than that it must, and even then it will break the law to pay less.

Finally, most US Apple employees are located in California, where cost of living is substantially higher than most of the country. There's far less disparity in your figure when taking cost of living & the common academic pedigree of Apple's employees into account.

> "minimizes their contributions back to the society they're benefiting greatly from"

Or it could be that society is greatly benefiting from them: the people and companies that make the goods and services.

There could be ten thousand other companies or just individuals who bring significant benefits to society, but who are forced to pay more in tax to make up the deficit from big corps avoiding it. It doesn't add up - you can't measure the benefit a corp has to society.

Of course there's the counter argument that corps can be a drag on society - for example, it's pretty clear that pesticides are causing significant problems for bee populations, yet the costs aren't paid by the big corps producing those (cough Monsanto). The big corps don't pay for their drag on society unless they're doing something illegal or due to negligence, in which case they usually pay a fine, which is a pittance, and still won't cover the overall losses society has. Banks are another example - does society really gain shit by bailing them out? Shouldn't they in fact, be paying way more - the same tax gambling establishments pay.

> for example, it's pretty clear that pesticides are causing significant problems for bee populations

You are attempting to refute what was said by replacing it with a different argument. What you are touching on is what should happen as a result of theft and/or damage to property. I was pointing out that OPs original statement could be equally valid when reversed.

Because you're shifting that burden onto somebody else.

If you're a company that primarily does business in the US, you're benefiting from access to all of those customers and a friendly business legal infrastructure. You should be paying tax for that privilege. If you want to move out of the US and lose all of that, I don't have a problem of that, but what Mark Cuban is talking about is different.

Multi-billion dollar product and finance companies move to the Cayman Islands or Ireland or elsewhere and do virtually no business there. It's purely to shed tax liability.

It's not much different than banks and lenders who choose to incorporate in places like South Dakota or on Native American reservations where there are lax/no usury laws so they can charge absurd interest rates (the latter of which 50-100% are common) that have been voted illegal in the places where they actually have their customers.

It's immoral as it gets. I used to work in Finance and those companies justify it as ethical because "everyone else is doing it". It's bullshit, they just don't want to be the nail that sticks out...

There's a difference between immoral and irrational.

It is rational for a company to maximize their returns for shareholders and to skip taxes wherever legally possible.

Morality is relative, but if you went simply by utilitarian ethics, then a company would be acting irrational by maximizing the amount of good it provides.

There is crossover between rationality and ethical behavior for companies (especially B-Corps). A good case would be plastic water bottles. It's good that they are using thinner plastic lids now, and is rational because it cuts costs, but non-biodegradable water bottles are a huge filler for landfills, and probably are not maximizing the good.

It's very immoral to benefit from the utilities, roads, emergency services, etc provided for by tax money and work very hard to not contribute.

Think starting a business is hard? Try starting a business without any infrastructure.

What's worse is that companies like Walmart get cities and towns to build infra to new Walmart locations and funnel lots of the money away from the areas that provide the infra.

I don't know about you, but I'd prefer if the gov't didn't start enforcing "morality".

How is following the law to a "T" morally or ethically wrong?

Isn't the greater moral or ethical wrong here is how terribly convoluted the tax code is?

If I find a loophole in the law that allows me to murder someone without punishment, surely that's not moral or ethical, despite being legal?

No, but there is an ethical duty to not commit murder, but there is no ethical duty to pay more taxes than the government asks for.

Funny enough - that exists [1]

That said, murder & paying the least amount of taxes possible are slightly different scales of morality - don't you think?

Should you be judged morally because you have a tax accountant maximize your tax refund every year or should you just pay as much as possible without regard to being fiscally responsible to your own self?

[1]

I'm sure it's not intentional, but you don't actually give a source.

I'm not sure why I find the missing citation so funny (probably because the claim is pretty surprising), but I laughed really hard and up-voted you in case it was a joke and not a mistake.

He probably meant to link to something about the Yellowstone anomaly. The idea is you kill someone in the 50 square miles of Yellowstone National Park that is in the state of Idaho (most of Yellowstone is in the state of Wyoming).

The Sixth Amendment says in a criminal trial the defendant has a right to a trial by a jury from the State and district where the crime was committed.

The problem is that all of Yellowstone is in the District of Wyoming, including the 50 square miles that is in the State of Idaho. Hence, the jury must consist of people that are from that 50 square mile region of the park and state.

The permanent population of that region is 0, and it is a part of the park that is rarely visited so the transient population is close to 0.

No jury can be impaneled for your trial, and without a trial, you cannot be convicted.

Thanks. That's hilarious. If I ever decide to kill a man, I guess I now know where :-)

Yup - sorry about - mind blank.

Here's the link - http://www.vox.com/2014/5/22/5738756/you-can-kill-someone-in...

> That said, murder & paying the least amount of taxes possible are slightly different scales of morality - don't you think?

Certainly, which is why I wouldn't advocate the death penalty or life in prison for tax evasion/avoidance.

> Should you be judged morally because you have a tax accountant maximize your tax refund every year...

No, but I'm not asking them to engage in stuff like http://en.wikipedia.org/wiki/Double_Irish_arrangement.

http://www.vox.com/2014/5/22/5738756/you-can-kill-someone-in...

Why assume paying higher taxes than necessary to a government is moral? It is not as if governments are widely considered to be admirable ethical organizations. Just the alternative, really.

yet, downloading software and music for free, without compensating the author/creator, is seen around here as 'moral'. So is using Adblock on websites, depriving that company of revenue.

I see this as leveling the playing field.

How is it leveling the playing field, if it equally harms people how religiously pay for all their software and music and don't block ads?

Judge Learned Hand would disagree with you:

"Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes."

Helvering v. Gregory, 69 F.2d 809, 810-11 (2d Cir. 1934).

"Over and over again courts have said that there is nothing sinister in so arranging one's affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant."

Commissioner v. Newman, 159 F2d 848 (1947)

You're conflating "permitted" and "encouraged". Both of those rulings said that people may arrange their affairs so as to minimize their tax burdens. In no way is that saying one should.

Way to miss the point. Courts enforce laws, not morals. Just because something is legal does not make it moral.

This discussion thread started with: >I don't understand the whole "If you behave logically as a business we hate you" sentiment.

Yes, companies can legally and rationally reduce their taxes to the absolute minimum. Viewing as immoral the act of taking from society while maneuvering to give nothing back seems completely reasonable. Disliking someone you see acting immorally should be perfectly understandable.

HOLY SELECTIVE QUOTING BATMAN!

The Supreme Court decided exactly opposite of what you try to covey with your quotes (from the dissenting judge of a lower court):

In these circumstances, the facts speak for themselves and are susceptible of but one interpretation. The whole undertaking, though conducted according to the terms of subdivision (B), was in fact an elaborate and devious form of conveyance masquerading as a corporate reorganization, and nothing else. The rule which excludes from consideration the motive of tax avoidance is not pertinent to the situation, because the transaction upon its face lies outside the plain intent of the statute. To hold otherwise would be to exalt artifice above reality and to deprive the statutory provision in question of all serious purpose. GREGORY v. HELVERING, 293 U.S. 465 (1935)

It's really strange to attach morality to a corporate headquarters location. I am not sure it's any more moral for a corporation to be headquartered in the US than in Ireland. Congress is free to prohibit corporate inversions.

I'm disagreeing with viewing as immoral legally reducing your tax burden. I picked a few quotes for that.

The IRS goes after (and the courts have supported doing so) those attempting to use loopholes to reduce their tax burden. If the IRS isn't going after the money of corporations doing this, then it likely is within the bounds of the tax code.

The IRS does not go after people or corporations using loopholes to reduce their tax burden so long as those loopholes are legal.

If items being referred to as loopholes are legal, then they are not loopholes but part of the tax code.

I've never liked the term "loophole" when it comes to the law. Either it is legal or it is not. The best I can do in terms of that is referring to the act of a politician inserting an exception to benefit a few as "inserting a loophole". But once that has been placed, voted on, and signed into law it is at that point the law.

That would be true if everybody concerned interprets that specific law exactly the same. One problem is there can and is ambiguity in natural language, and another is you cannot cover all possibilities in a single bill.

In short there are a lot unsaid, and what is said is not always clear.

One could say the same about the continued use of the word loophole in this context.

But I agree, that's part of my point. Just because one person feels it is a "loophole" that has some sort of negativity connected to it doesn't mean that everyone else will feel the same.

I agree with you again, that no law can be 100% clear and that's why we have the courts to decide on such things on a case-by-case basis. Until a court decides that the so-called loophole is illegal, then it is a legal thing to do. You cannot hold a person and/or company responsible for what was unsaid in a law nor when what is said is not always clear. If the thought is that the companies in question are not abiding by the law then take them to court, that's what the judges are there.

This whole meme that a company is immoral for not following the unsaid spirit of a law is just a result of people not knowing the proper thing to complain about when it comes to such laws.

As if a dissenting judge's reasoning has no merit.

So, in that case, did the company actually break the law in some way? Because if they did not, then the reasoning behind their "devious" reorganization and the morality behind it is irrelevant. Unless we want to say that the line dictating illegal tax avoidance is whatever the Supreme Court happens to say it is that year based on their own personal moral fiber.

From what I'm reading of that decision; it wasn't made because the transaction was deemed a somehow "immoral" abuse of the law to avoid taxes, but because the reorganization wasn't valid under the relevant statute. Conducting the reorganization solely for reducing tax liabilities is apparently not a valid reason for the reorganization under the statute. Someone could attempt the same reorganization for reasons other than reducing tax liabilities and it would still not be valid, under the same statute, if it did not meet the requirements.

I feel the quotes are fine within the apparent intent of the original thought, that hating a company because it does logical things that some feel are immoral makes little sense. Hating a company because it breaks the law to avoid paying taxes is a different matter.

I would also through back "HOLY SELECTIVE QUOTING BATMAN!" since you address one quote while ignoring the one from Commissioner v. Newman, 159 F2d 848 (1947). Although I'm not going to read through that decision so it could be a bad quote for all I know.

http://www.leagle.com/decision/19471007159F2d848_1759

He quoted from the dissent in Commissioner v. Newman. He found a single judge who wrote an opinion at one point in American history that fit his mindset. An opinion to which that judge's peers disagreed. Selective quoting if I've ever seen it. I didn't think I needed a quote considering the decision itself is entirely written in opposition of the dissent.

Your inability to differentiate between legal and moral has been sufficiently addressed by other posts.

Have an example of a company acting legally, yet immorally: http://en.wikipedia.org/wiki/Nestl%C3%A9_boycott

Again, as if a dissenting judge's reasoning has no merit.

I'll take note that in the future one has to provide numerous quotes to avoid being labeled as selective quoting. Even though you provided one quote to counter his one "selective" quote. I don't necessarily disagree with what you state in that context, I simply disagree with the selective quoting label.

I was trying to point out that the majority opinion was not really relevant to the point because it was not decided on morality, but on not following the law. Therefore, a quote from the dissenting judge that was relevant to the topic at hand, i.e. whether it is moral or not to reduce one's tax liabilities, was fair. Using the majority opinion to counter the poster's point is not fair because the opinion is not relevant to the point.

I shall attempt to provide an example. Let's say there's a court case about the legalities of puppy mills. The majority opinion is that they are illegal. In the dissent there's a statement concerning the desire for a certain breed and that's why the defendants ran a puppy mill. I quote the dissenting judge about people's desire of that certain breed, not mentioning puppy mills. You state my use of the quote is not valid because the majority decided that puppy mills are illegal. That's all I'm saying.

Finally, I know that the law should have nothing to do with morals. Morals are subjective and attempts to legislate morals almost always results in unintended consequences. I simply disagree with judging a company by moral standards based on their actions under the law. As for other posters, I think there the opinions all over the board about what people feel on moral/legal activities in their own worldview. Which is why I think that judging morality on legal matters is not always a good idea.

> HOLY SELECTIVE QUOTING BATMAN!

I claimed that a single individual disagrees with the proposition that legally reducing one's tax burden is immoral.

I provide quotes from that individual to support that. If you think that the individual does not hold the point of view that I claimed, and that I cherry picked two quotes in an attempt to misrepresent his opinion, then I have selectively quoted.

Note I never claimed that the Supreme Court found this to be true, nor that it was the law of the land in the US.

[edit]

I would also like to point out that I didn't pick the individual at random. He is one of the more respected judicial philosophers of the 20th century, and easily the most influential judge to never have served on the supreme court.

>I claimed that a single individual disagrees with the proposition that legally reducing one's tax burden is immoral.

You are butchering his position even worse than I thought. He never said what you claim. The best case you can argue with his support is that the bluster of morals cannot be used to legally force someone to do more than the law requires.

Never once does he come anywhere near "disagree[ing] with the proposition that legally reducing one's tax burden is immoral". He makes no moral judgement on the matter whatsoever.

And I don't see how trawling nearly 100 years back in time to find a dissenting and disregarded opinion is anything other than selective quoting. You may as well have quoted yourself from 10 minutes prior.

TIL judges cease to believe things that they write in their opinions once it gets disregarded.

Woa there. So judges define what's moral and what's not now?

I believe judges quite specifically help define what's legal. Whether they include a little addendum about morality in their verdicts or not is completely besides the point: This whole thread is about that ethics and law aren't the same.

There's a huge difference between not paying the intended amount of taxes, and executing Herculanean acrobatics through (probably lobbying-induced) loopholes.

Also, these (implicit) appeals to the authority of judges always confuse me. Judges have political opinions, just like anyone else, and land on both sides.

I'd argue if your morality is illogical, it's probably the morality that is wrong

How did this become gospel?

Sure, and as Cuban spells out pretty clearly in his tweets, he is taking into account the higher taxes he will personally pay in the calculation of his overall returns.

An extra 5% return on 2% of your portfolio may be dwarfed by increased income taxes as the result of multiple large corporations re-domeciling.

Considering that not all giant companies are bad actors, shouldn't we hold them to higher standards?

> It is the job of a business to make money, the most money possible, at all costs.

By that logic you would support the removal of all consumer, labor, and environmental protections?

This is a false premise. OP said absolutely nothing about changing / eliminating existing laws. Even if OP said something about tax laws your argument would be a slippery slope fallacy.

> I don't understand the whole "If you behave logically as a business we hate you" sentiment.

I agree with this. Businesses will work to maximize their benefits under a system (just like most humans will).

> It is the job of a business to make money, the most money possible, at all costs. That is its single purpose existing.

I think that is the market-pressure for what businesses should do and the single goal of many investors. But I am not sure convinced that is truly the single purpose of a business.

Yes, the concept of a Benefit Corporation [1] does exist, and we should encourage more of them, and more business to write their charters to act like them. Maximizing investor profit is only one metric of a business.

[1] http://en.wikipedia.org/wiki/Benefit_corporation

And that's not worth hating?

wat?

this isn't what cuban is doing. at all. it's more like:

"because you behave logically, i can and will encourage you to behave in my best interest."

hate has nothing to do with it.

"It is the job of a business to make money, the most money possible, at all costs. That is its single purpose existing."

This is a popular meme, but I've also read People On The Internet claiming there is no legal basis for this belief.

Do you have any sources to persuade me otherwise?

It is not the job of a business to make "the most money possible." That tired bullshit meme needs to die.

Yes, businesses need to make money. I'm not saying otherwise. But even the fiduciary duty that publicly traded corporations have to their shareholders isn't "maximize profit above all other considerations." The kind of short-term, next-quarterly-results-are-all-that-matters thinking behind that notion is possibly one of the most destructive ideas in the history of markets.

Because the very same business try to play themselves as being society-minded, if it helps them.

Business' goal is to make money, but countries let business exist to employ people and sustain the economy. Clients deal with businesses to have services provided. Employees work for businesses to sustain their lives, etc.

Businesses don't exist in a vacuum, they don't only exist for themselves and should act more like a part of a whole. If a business breaks the social or economic tissue around it, it will eventually be seen as harmful and face sanctions. If a business is unwilling to benefit the society, it might be a good thing to let it leave for somewhere else.

"It is the job of a business to make money, the most money possible, at all costs."

I hear this a lot, but its not true. Why do you think this is true? I think this belief often come from a misunderstanding of fiduciary duty.

For context, I own 3 businesses. They do not exist to make the most money possible at all costs.

Could you explain what a corporation's actual fiduciary duty is?

each corporation has a charter spelling out its aims. any agent of the corporation is compelled to further those aims. many charters principally aim to maximize monetary profits but not all.

>It is the job of a business to make money, the most money possible, at all costs. That is its single purpose existing.

I don't think that's the single purpose of a business existing. I hear this all the time and I'm not sure where it comes from. Lots of businesses exist to change things or provide ways to solve problems with money being the means to allow them to do this.

It's why you can have businesses that take long bets on better tech (Tesla, Space X) or work to fix large broken systems that are hard to enter (Palantir). Google also started with similar goals.

"It is the job of a business to make money, the most money possible, at all costs. That is its single purpose existing."

I don't know if you are terribly inexperienced or trolling, but this is provably false. Besides the obvious examples of non-profits, one can easily imagine a business model that desires market-share over margin (looking at Japanese business models or even Amazon). I think you should read more before you take such an amoral view towards business and I sincerely hope you are never at the helm of a business I invest in.

At its heart, business is about creating value and exchanging that value for currency. You build a great house, mine raw ore and create steel, invent a new medicine... your product is your goal and future growth is just as important (if not more!) than your current revenues.

What missing here is any reference to time. Amazon is taking a short term loss on profit to maximize their long term ability to make as much money as possible. That's what maximizing market share is about.

It is not expressly the job of a business to make, "the most money possible at all costs." There's a component of to what degree, and priority. Apple, for instance, could probably make even more money than they do, using cheaper, lower quality parts/builds, or with lower manufacturing standards, but they don't do that because of the priorities they have, driven by their corporate values. It's a trade off.

Mr. Cuban, as an investor and citizen of the US, is willing to make a personal and professional trade off investing in companies that have a lower P/E multiple (earnings) at the expense of staying in country and keeping jobs there. This is based on his values.

I bring Apple up intentionally because they're an example of a company that uses international tax law & vehicles to basically have no U.S. liability. So, they don't share the same values as Mr. Cuban, but they do make other trade offs in their business that come at the expense of the absolute maximization of profit, because of different ones.

A corporation has a duty to do right by it's shareholders, in this case a shareholder is making a judgement about what he considers right.

That's weird that you sort of put your foot in the water here and are more right than 8 or so of these replies. A business, that Cuban's referencing, job is to optimize shareholder value. There might be rare occasions where that means paying higher costs or having lower revenues than is possible but for the most part the best way to do that is to make as much money (profit) as possible within the law.

That's assuming that shareholders care most about positive returns, he's stating that for at least his shares that isn't necessarily the case. It also has the side effect of hurting the company's bottom line if he does drop the shares.

> I don't understand the whole "If you behave logically as a business we hate you" sentiment.

FWIG, Cuban's attitude sounds like "what is good for the business isn't always good for the investor". In a less twitter-friendly format, filing offshore creates a tax-shortfall that will be borne by your stakeholders. While this cost might not be felt by Mr. Cuban, in this case he would be acting logically (in a sense).

> It is the job of a business to make money, the most money possible, at all costs.

First time I've heard that one. Here I thought the purpose of a business was to create value for its stakeholders. Mind you, value can be products for your consumers, jobs for your employees, or capital for your owners. Usually this means money, but not always.

He's saying their economic behavior will hurt his overall wealth in the long run so he wants to discourage their behavior. Both are acting as rational economic actors.

It's funny how people behave as if taxing companies is some sort of NP-Hard problem. When in fact, we've done it before, and even during the greatest market expansion in the 1950s-1970s. But no, we should go ahead and give up taxing companies, and allow them to use our courts, our infrastructure, our legal protections as American entities and American natural resources to their hearts content.

Inverted companies still pay taxes on US income, it's just foreign income that is no longer taxed.

The resources they are consuming are for the ultimate goal of satisfying consumer demand in an efficient enough way to profit from it. Are you a consumer? If so, you're an direct and indirect consumer of those resources.

Why? I don't understand how businesses are morally obligated not to select the optimal tax environment for them.

After all, a very common defense for compulsory taxes is "if you don't like them, you can leave." Is that not what's happening here?

I don't understand why Mark Cuban is morally obligated to invest in corporations doing things he doesn't like.

>I don't understand why Mark Cuban is morally obligated to invest in corporations doing things he doesn't like.

I never implied he was. I'm curious what his reasoning is.

You are curious why he thinks businesses are morally obligated not to select the optimal tax environment for them. Only he never indicated that he thinks that.

Your question should be: Why would Mark Cuban want to encourage companies to stay and pay taxes? The answer to that question is somewhat obvious.

The point is that a lot of companies keep their funds in offshore tax shelters but have their de facto bases of operations in the US. They benefit from the advantages that the US government provides (stability, well-educated workforce, infrastructure, etc.) without paying their fair share of the cost (i. e. corporate taxes), and it's not like they can't afford it.

What's missing in your comment, though, is that many other developed countries offer those same benefits, and yet they don't tax foreign-earned income.

They're certainly entitled to optimize their tax structure. It's the age old tension of capitalism where optimizing for the individual can harm the greater good. Joe Smith at the top of the river dams it not realizing/caring that it'll impact 100 farmers down the river. Cuban's just calling them out saying "Your actions will dry up the taxation pool resulting in me being squeezed elsewhere and forever so I don't want to encourage that behavior as it's not in my long term economic interests"

Let's remember that Mark Cuban didn't receive his fortune by making smart investments. He received it by winning the dotcom lottery. When listening to investment advice, perhaps we should listen to people that made their fortunes through smart investing. Public companies have a responsibility to their (rational) shareholders to minimize expenses that have no possible ROI. Taxes are chief among those.

Give me a break. Cuban is the first to admit that he got lucky in terms of his valuation, but it wasnt his first exit and his extensive writing on business should show that his success was not the result of luck.

Further, if it werent for his intelligent investing, he would have lost nearly all of the proceeds from that sale, like so many others did(1). It was exactly his smart investing that allowed him to _keep_ his "lucky" windfall

(1) http://investmentxyz.blogspot.com/2006/05/cubans-collar-anat...

You're missing my point. He "made" his fortune by selling a company at a spectacular overvaluation. That's fine, but don't pretend that he turned a few million into a few billion through smart investing.

With regard to the moves he made after the ridiculous Broadcast.com sale, all he did was lock in his profits. That turned out to be the correct move, but that doesn't necessarily say anything about his investing skills. It just shows that he realized that he had hit the lottery and wanted to insure his win.

Warren Buffett made his money through smart investing. Mark Cuban did not, so I'd rather listen to Warren Buffett and others like him than an opinionated guy that got lucky.

Such naked ad hominem. Your argument would be much more compelling if you were capable of addressing Mark Cuban's arguments directly.

I did address them. I said:

Public companies have a responsibility to their (rational) shareholders to minimize expenses that have no possible ROI. Taxes are chief among those.

If you're asking for my opinion, in my opinion what he is saying is absolute nonsense. The populist drivel spewed in those tweets is an attempt to appeal to his Shark Tank audience. If he appears relatable, the show's ratings rise and he gets the accompanying ego boost. He's doing it for the same reason that centimillionaire Hollywood types advocate for socialist candidates & ideals that are in direct conflict with their own financial interests: popularity.

Any company that has options available to it that will lower their tax bill without negatively affecting their income and growth prospects should pursue them. In fact, they have a legal responsibility to their shareholders to do so.

Wait, so companies are legally obliged to maximize income, even if it goes against the will of the shareholders?

Wait, so you're saying that most shareholders in public companies want to sacrifice earnings in furtherance of Obamacare subsidies or whatever the expenditure du jour is?

You are countering your preconception of his arguments.

So what about companies who incorporate in Delaware? Are these companies he doesn't want to invest in?

That's to take advantage of Delaware's well fleshed out corporate law, not to avoid paying any taxes. I pay more in taxes to do that, in fact.

That may be some, but a good chunk of companies save a lot of tax dollars by doing this (according to http://www.nytimes.com/2012/07/01/business/how-delaware-thri... among others).

Or companies that aren't repatriating their profits to avoid paying US tax?

Delaware, Nevada, etc. let you skip STATE tax but your corporation would still be based in the United States and Federal taxes would still be due.

If Mark Cuban resides in Texas then the net effect of lower tax revenue in the state of Delaware should be almost zero to him personally.

> Delaware, Nevada, etc. let you skip STATE tax but your corporation would still be based in the United States and Federal taxes would still be due.

It's not that simple, and it doesn't allow corporations to skip state taxes. I only know Texas' law in detail, but Texas imposes franchise taxes on all companies "transacting business" within the state. Basically, any company with a physical presence in Texas is considered to be "transacting business" and may be subject to franchise tax. So, if your entire operation is in Texas it doesn't matter if you incorporate in Texas or Delaware, you are going to pay Austin the same.

U.S. could probably address this issue if they moved to a territorial tax regime. It would bring a lot of offshore cash back to the United States (especially in tech) that can later be redistributed back to investors and the economy via buybacks, dividends, and domestic M&A.

The United States currently has a "worldwide" tax system and taxes U.S. companies on income earned both domestically and abroad in foreign countries. The tax on foreign earnings usually isn't assessed until the company brings it back to the United States (you'll hear companies talk about getting hit with a repatriation tax if they bring their "trapped" offshore cash back onshore to the U.S.). Most U.S. companies will try to avoid paying repatriation tax and keep substantial portions of their foreign cash earnings overseas to "reinvest" indefinitely.

At this point, the United States is one of the few advanced economies that still taxes its companies on their active foreign earnings (I believe only 8 of the 34 OECD countries use worldwide tax system) and also has one of the highest tax rates. Most OECD countries use a territorial tax systems that largely exempts active foreign earnings from domestic taxation.

This point is not brought up enough. It is often buried or left out entirely in these discussions.

Corporations that invert will not stop paying US taxes. They will stop paying it on foreign-earned income.

Unfortunately, you can always game the system:

http://www.bloomberg.com/news/2012-10-05/pfizer-s-u-s-losses...

I appreciate the sentiment but that will not mean much. Ethics rarely figures in Investment decisions, which are made on the basis of excel spreadsheets and quant algorithms. If on the other hand you were to find employment for people who found their employers' tax avoidance to be distasteful and wanted to quit to make a statement, then you might be able to make a difference by starving such companies of talent.

> Ethics rarely figures in Investment decisions

However, it seems to be a "coming thing". I began altering my investments a handful of years ago to include what I found tasteful not just on return, but on ethics//morals as well. I don't see how this is different from "voting with your feet" or "voting with your dollar".

Starving companies of investment and sales are part of the same mixture as starving companies of talent.

A significant chunk of investment in the American stock market and real estate is done by foreign investors and funds and hedgefunds etc. These decisions are made primarily based on the spreadsheets ; as a backend software guy in the capital markets and banking sector, I see first hand how automated this decision making has become. I have had score of meeting with Investment and Financial advisors ( for s/w development/testing , not financial advise )and I see first had how hard data oriented these folks are in their decision making.

i'm sure you know this, but when you invest in a company, you are actually just buying shares off of some other investor - the money doesn't go 'to' to company (except in IPOs and secondary offerings). of course the stock price can affect a company in some pretty important ways.

In order for this to work, everyone would have to hold the same set of ethics, which is not only untrue, but grossly untrue as you span the globe.

Otherwise, the varying ethics among people will more or less wash out, even if everyone did act based on a set of ethics in their investing.

Voting with your feet/dollars works because it stays inside the realm of utility, and is therefore much more "standard" across the population.

A car is useful almost everywhere, for example, but how that car is made might rub different people different ways.

In some cases, those dividends can be blood money.

There are plenty ethical ways to make money from investments.

Cuban's not arguing this from an ethics perspective. He's saying that it may temporarily boost shareholder value, but the trade off is increasing his personal tax liability (he's assuming the tax shortfall will be made up by increased taxes to the remaining taxpayers).

Go Mark Cuban, I never liked you before today. Thanks.

Let's put it a different way. Let's assume for a second that the taxes are more or less "fixed" and need to be paid. SO - you can have companies participate to a lesser or fuller extent. The rest falls on us as INDIVIDUALS.

The moral angle here is that companies shouldn't avoid the taxes of the very environment that enabled them to succeed in the first place.

So I think what he's basically getting at is that paying your (corporate) taxes is basically like "giving back" to that system/environment.

That's the way I think about it, anyways.

What if you believe that the actual taxes are overinflated & used improperly?

Then you just joined a very large club. I don't think that means you shouldn't pay them, however.

Also, there are tons and tons of people who complain about taxes but don't do anything about them. Do you vote? Did you ever run for any public position? Did you ever write a letter to someone in a public position making an awesome suggestion, or volunteering your time to help fix the system you think is overinflated? (Just examples, you know what I mean...)

Of course I WISH taxes were lower, I love money! But I also believe that despite it's many, many, GLARING flaws... The USA is the best country on the planet, and I want to support that.

Move? Vote? Write your Congressman?

Move?

Isn't that what they are doing?

Nope. Companies can put a small portion of themselves in a foreign country, then say that that small portion is the most important part. I cannot cut off my big toe, mail it to the Cayman Islands, then say that I should be taxed under their laws instead as a result.

That analogous thing would be for a company to stop all business within a country, which is not being done.

They can't put a "small" portion of themselves in another country, that's why Pfizer was trying to buy Astra Zeneca. You need the merger of two relatively sized (by value) companies.

You know what you need to do that? It's in the tax law.

But can't a small portion of themselves be the most important part?

If it's saving them billions dollars a year - then that "small part" just might be your most important asset as a company.

Let's assume for a second that the taxes are more or less "fixed" and need to be paid

That's a big assumption.

That's totally going to convince companies to stop doing that.

This sounds like a tragedy of the commons. Is it feasible to excise tax corporations who move overseas like a tariff?

Businesses are fungible. What's the difference between "I'm moving my business overseas" vs "I'm closing down my American business and starting an overseas business?"

Trying to catch this is nailing jelly to a tree.

I would say it slightly differently: if your company is willing to spend time and resources on the move for tax reasons and if taxes is such a big part of the future expected bottom line, that it's likely the company is not seeing huge opportunities going forward - and that is a negative signal for the stock.

So, I guess this means Cuban has no stake in Apple & Google to name a few?

Corporations are people.....

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