Hundreds of Companies Seen Cutting Tax Bills by Sending Money Through Luxembourg | Hacker News Reader

Hundreds of Companies Seen Cutting Tax Bills by Sending Money Through Luxembourg

nytimes.com

27 pointshokkos22 comments

As long as no laws are violated, tax arbitrage is responsible corporate behaviour. These companies aren't "cutting tax bills", so much as they are arbitraging between different tax regimes across borders. It is their responsibility to their shareholders to do so. Market forces will dictate that if they don't, a more nimble competitor will and will subsequently take market share.

True, from a first order perspective (short-term). But it's not the only perspective. It's also in the shareholders best interest when crime rates in the vicinity of their production and R&D facilities are low, education levels are high, transport systems are functional and well maintained, etc. etc. We can all agree on that.

However, cooperation would require negotiations of laws on a global scale. The existing systems in our old nation states are just not suitable for that.

Sure - but addressing social & public needs is the responsibility of government, not private corporations.

Tax arbitrage strategies can be shutdown by governments. Transparency would be a good start. Require every listed corporation to diagram all of their corporate/llc vehicles worldwide and their interdependencies. Require balance sheets and cash flow statements for each of these entities.

Govt needs fund (aka tax) to pay for carrying out the responsibility of govt. And yet these powerful new elites of the society now actively resist paying taxes. They obviously care for their own pockets only but they drag other wannabe riches into the same camp too. In the end the govt loses more and more tax revenue.

A little historical digression. Kings often had trouble keeping merchants and rich nobles in their places. Often the kings lost out, either completely as losing their heads or losing the power and become figure heads. And these kings often seemed to have absolute power and yet they couldn't keep the powerful in the society in check.

And nowadays these corporations lobby the govt and influence the high officials from early on with promise of cushy jobs for them or their kids.

Govts shutting down tax arbitrage? Yes, sounds so easy but it's near impossible because the powerful forces in society are resisting it.

A notable quote from Jean-Claude Juncker, the former Prime Minister of Luxembourg:

> No one has ever been able to make a convincing and thorough case to me that Luxembourg is a tax haven. Luxembourg employs tax rules that are in full accordance with European law. [1]

I wonder how such blatant tax evasion becomes legalized?

Oh right:

> The new European Commission formally takes office on Saturday under [new President] Jean-Claude Juncker ... [2]

[1] - https://twitter.com/dimits_/status/530105602312515584/photo/...

[2] - http://www.channelnewsasia.com/news/world/juncker-s-eu-commi...

When it becomes a viable business model for a nation-state?

There is no virtue in paying tax. Why do people think that paying taxes is a good thing tax evasion through legal means is bad ?

It is government's responsibility to run the state by stealing as little as possible. At the current rate US government is stealing our money to provide welfare to mostly irresponsible and lazy people.

Given that you use the word "stealing" to refer to a govrernment's collection of taxes we probably won't agree on this issue. Taxes in the U.S. are at mult-decade lows. At least as of 2012. Taxation was around 15 - 16% GDP. The vast majority of federal taxation is not used to provide welfare to irresponsible and lazy people. Note that Social Security and Medicare are not entitlement programs.

Do you believe the U.S. is overtaxed? What percent of GDP should be taxed in order to fund government operations? Do you have specific programs in mind and, most importantly, do you know what percent of the budget is used for these programs you'd like to cut?

I believe the middle class is overtaxed. 35% of my paycheck is taken by State and Federal taxes here in the Bay Area. I can't afford assets that would generate capital gains or a tax accountant for a clever tax avoidance scheme, so I'm paying all out.

This ruffles my feathers, so I'll be voting against any tax increases or bond measures (that may cause us to raise taxes later).

In Zug, Switzerland they have an excellent health care system with universal coverage. They also have very nice roads and a high standard of living, and low unemployment. They also have a strong defense based on armed neutrality, which kept them out of both world wars.

The income tax is 2%.

So if you are paying more than that, you are probably getting ripped off.

Zug? Really? The town that has more companies than citizens? Something tells me that their city isn't run via personal income tax, something else tells me that their tax policies won't scale globally...

http://www.theguardian.com/business/2008/may/31/taxavoidance...

You think 60% in taxes scales better than 2%?

Most of those things are inherent to Switzerland not the Kanton.

Zug is very bad example. It has a 2015 deficit of 140 Million almost double of last year, they have to cut deep into their savings [1]. The Kanton is destroying itself and will be forced to raise taxes eventually. [2]

[1] http://www.tagesanzeiger.ch/schweiz/standard/Kanton-Zug-rech...

[2] http://www.tagesanzeiger.ch/schweiz/standard/Warum-Zug-und-S...

Yes we disagree on the fact that taxation is stealing. Social Security and Medicare are one of the worst form of taxation.

Because only the rich can evade taxes in this way. Which means the middle class ends up paying a disproportionate amount of tax. Which is unfair.

If you think being fair is pulling those are better off down then I have nothing to argue with you.

I don't know why I'm trying, but here we go:

Personal virtues are characteristics valued as promoting collective and individual greatness. The opposite of virtue is vice.[1]

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

Instead of having my company pay 50% of our profits each year to the US government, I should get a massive rebate if I can offset those profits by hiring new employees over the following 12 months. I would hire 50% more people if this were the case. It's a major incentive and one that should be put in place.

In principle, the more people and companies avoid taxes the better: less revenue for states to use as collateral for their various wars and illegal projects.

In practice, Luxembourg appears to have given preferential treatment to larger corporations---more specifically, cronies. Low-tax jurisdictions where every kind of person or business can get in on the benefits of tax avoidance would be best.

This is a healthy trend. Also a good lesson to US government that the current levels of taxation are not viable. US government might end up earning more tax revenue with lower tax rates.

Absolutely shocking!

What's funny is we have our own internal tax haven's in the U.S., say Delaware and Puerto Rico to name two...

Delaware is not a tax haven; it's popular for its legal environment highly favorable to management of large corporations.

Puerto Rico is currently a tax haven, but only due to a temporary (but very generous) tax incentive that requires people to permanently and physically move themselves and their companies to Puerto Rico.

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