When people deduct taxes for donations to universities to increase the odds of their child being accepted?
When people deduct taxes for charity to their church/temple/organization/other tribe in order to direct resources in a way that might benefit them more directly versus the nation as a whole?
It's either legal or it's not. If you want the "abuse" to stop, then elect the legislators that will make the loopholes illegal.
As far as where the ethical line is, that is a very complicated subject not conducive to generic discussion. But I am extremely certain that “we configured our multi-billion dollar international furniture business as a non-profit” is certainly well on the wrong side of the line. We can discuss other scenarios in their appropriate context, but the existence of other grey areas does not excuse the unethical behavior of IKEA here.
I do wish legislators would get their <explicative deleted> together and fix the tax code so that IKEA will pay their fair share, but condemning them for their behavior is a necessary prerequisite to that change actually happening. One can’t chastise other citizens for complaining about unethical behavior and suggest that instead someone else should change the law, that makes literally no sense. I have no direct capability to change the law, and it’s incoherent of you to tell me to stop complaining about it until the law is changed.
Yes, I would say that legally reducing one's taxes is not immoral.
>By necessity the law does not (and cannot) cover every single aspect of human behavior.
Yes, but in the case of tax law, the complications are created specifically to allow loopholes, and/or to allow the government to not have to transparently state costs. I would posit that any goal of tax deductions is more transparently accomplished by the government spending the cash outright and having to account for it.
>Just because what IKEA is doing is legal does not make it right.
In the context of tax law, I think it's all fair game. If the people want to close loopholes, then close them for everyone. As a business, I'm going to do whatever I need to maintain a competitive advantage. As a voter, I'm going to support legislation that levies taxes according to the quality of life I think people should have in society.
No point in continuing this conversation then.
Morality doesn't need to be codified into exact terms in order to be relevant. At what point does killing become a crime? When you kill an ant for no reason? When you kill an animal for food? Or when you kill another human for survival? Intuitively I know the differences. But articulating my intuition into words can lead to loop holes so I'd rather not.
The moral module in your mind is not perfect but when looking at Ikea, it's telling me Ikea is an getting an unfair advantage with this loop hole and it's ethically wrong. That's enough for most people.
>It's either legal or it's not. If you want the "abuse" to stop, then elect the legislators that will make the loopholes illegal.
You don't need a law to tell the difference from right and wrong and nothing is as simple as electing the right person to make things right again. Who do I elect to save dying infrastructure in the US? Who do I elect to stop corporations from paying less taxes than me? It's not so clear cut, what I'm voting for or how to fix this.
I don't know where you're reasoning comes from, but one thing is for sure. I'd share your exact attitude if I'm a beneficiary of said loop holes in laws. My mind would twist the obvious logic to justify my own crimes if I myself were the ass hole that was committing them.
A business that tries to do the "right" thing in a system that allows everyone else to do the "wrong" thing, will not survive.
Is it wrong to not offer a new mother sufficient time to bond with her newborn and breastfeed her newborn for a minimum year per the recommendation of medical research? Yet almost no employers in the US, and especially no employers of lower paid workers can afford to give a mother proper time for maternity leave or to pump breastmilk. The margins are so cutthroat that the business would not exist anymore.
I'm not saying this is comparable to IKEA's tax avoidance, or that IKEA would cease to exist if it didn't do what it was doing. But almost all businesses are doing the "wrong" thing, some more than others, but I won't blame them if they're playing within the rules.
However, if IKEA is then using its proceeds to lobby politicians to continue the existence of a tax code that allows it to steal from society, I do consider that morally repugnant and would judge IKEA negatively for that.
In my new mother not being able to breastfeed scenario, I'm not going to blame the individual business for only giving 15 min of break time. I'm going to blame the government, which only forced employers to give 15 minute breaks for pumping milk, which anyone who has ever pumped milk would tell you is an impossibly short time to travel to the break room, setup supplies, pump milk, store it, and go back to work.
I myself take advantage of various tax loopholes, such as the 1031 tax exchange. However, I use it to keep up with my competition, and further, I contribute and lobby those who I can to remove these tax loopholes.
As for your new argument, this is something I can partially agree with. If the landscape allows for such immoral behavior and thereby as a consequence requires everyone to adopt the same immoral behavior as a means to survive and stay competitive then I can't fully blame you for your actions.
That does not fully excuse it though. A Man dying of starvation may have no choice but to kill and eat his own child. The situation does not absolve the man of all guilt. Obviously, your situation is not as extreme, but the similarity it shares with you and your circumstances is the fact that you having no choice does not make you completely innocent. Apologies to everyone reading for the extreme example, the extremeness of the example helps fully elucidate the moral ambiguity associated with hard choices.
Also self justification flies far, people will come up with all kinds of excuses to give merit to their own actions. Is exploiting those loopholes truly absolutely necessary for survival? Or is it something you tell yourself without really knowing the full details? I don't know your exact case, but the above is a common trope people use to lie to themselves. People will refuse to look deeper into certain details that make them uncomfortable so they assume a reality that best justifies their actions.
The societal ethics, morality and the spirit of the law should all be taken into account when judging behaviour. Exploiting tax structures in order to conceal income is absolutely immoral and shouldn't be tolerated.
This is especially egregious when the tax loopholes are effectively gated behind behing a multi-national corporation. It leads to even greater concentrations of wealth in the hands of these companies which damages the health of the local markets they operate in.
If there's something unique about what they're doing, especially as a result of them lobbying for certain parts of the tax code, then I can see it being judged harshly.
If anyone can do what they're doing, then I don't see it as particularly negative.
> If anyone can do what they're doing, then I don't see it as particularly negative.
Typically not just anyone can do this, smaller firms do not have the resources set-up these schemes. Smaller firms are also much more likely to be slapped down by the government. The result of this is that larger corporations are further advantaged.
I think attempting to equate personal and corporate taxation is a mistake. Corporations are increasingly transnational in a way that people cannot be, and they are leveraging not just local tax codes, but often established treaties and differences between national tax codes that were introduced with different intent.
Whether a firm can do something similar depends on the specifics. I'm not sure how large IKEA was when they set up their corporate structure in the early 80s, but I doubt they were as large as they are today.
https://web.archive.org/web/20201112042116if_/https://www.ec...
I'm not trying to equate personal and corporate taxation though. If IKEA wants to funnel a large portion of their profits into a foundation to control themselves rather than paying taxes to the government instead, I don't see how that is tax avoidance. Many other foundations around the world are set up so the controlling interests of companies can choose how to disperse money instead paying taxes and letting the government choose how to disperse it. Not that there's anything wrong with that either, but having a corporation designed to minimize taxes by funneling profits into a foundation doesn't scream tax avoidance to me.
With that said, there could be other aspects of their corporate structure that I'm not aware of, but like I said, if other companies can also implement the same structure, even if it's across national boundaries, I don't see it as being particularly unethical. Although if someone believed for instance that companies should always repatriate all profits, then I could see how they would think this is unethical, so as usual YMMV.
Edit - To put it another way, there don't seem to be laws restricting investment firms from buying controlling interests in companies to manipulate asset prices/consumer behavior, which to me is far more detrimental than someone who may be pathologically frugal deciding they want to minimize taxes by setting up a complicated corporate structure with a foundation.
Non-profit taxation laws were not set up with the intent of allowing for profit businesses to avoid taxation. That doesn't mean that it wasn't the outcome.
> Edit - To put it another way, there don't seem to be laws restricting investment firms from buying controlling interests in companies to manipulate asset prices/consumer behavior, which to me is far more detrimental than someone who may be pathologically frugal deciding they want to minimize taxes by setting up a complicated corporate structure with a foundation.
The existence of a worse scenario doesn't prevent us dealing with the current one.
The worse scenario doesn't preclude us from addressing less bad scenarios, but I think we should focus more time and effort on that than on reforming the laws around foundations and non-profits, and by we I mean HN readers and the general public.
Personally I think arguing for levelling the playing field through tax reform would lead to quicker/easier results than arguing for altering the ways in which companies may invest in one another but that could just be because I've been involved in less discussion around the latter issue.
A 401k has the specific purpose of helping large businesses maintain a competitive advantage over small businesses. If the government wanted to help individuals fund their retirement years, then there is no reason to involve employers in the tax code. They could simply issue the same rules and contribution limits for IRAs.
But they don't. They punish you if you're employed by an employer that doesn't offer a 401k, by setting your contribution limit to a paltry $6k while 401k participants get tens of thousands, and your contribution limit is zero if your spouse is eligible for a 401k and your income is over a certain amount.
When something so blatantly tilted towards the rich, white collar world exists, and can so easily be fixed (by simply matching the terms of the IRA to the 401k), and has not been fixed for over 4 decades, I then take it to be intentional.
Making use of the ability to employ considerable resources to reduce your corporation's tax burden in ways that organisations without those resources cannot is absolutely a violation of the social contract surrounding taxation, which typically follows the convention that those who profit the most from society should return the most. As a result it's no longer shrewd but immoral.
Robust corporate taxation pays for decent social safety nets/UBI, such that people aren't at the mercy of the whims of whatever mega-corp they're dependent upon for survival. This has the added benefit of naturally improving wages and worker's rights, while allowing for the removal of a minimum wage.
It also has the added benefit of decoupling artistic expression from corporate funding.
That is, right now, we don't have UBI and the safety net, at least in the US, is very weak, so employment and decreased unemployment _are_ necessary for the time being and the ideal state described here is many more steps away than the current status quo.
Pursuing increased employment as the goal distracts from the real changes that have to be made in order to facilitate those social safety nets, since these inevitably require raising taxes in order to fund them.
The efficacy of job creation through tax cuts is also a matter of debate. This article[1] (which appears fairly well sourced) seems to imply that the expansion of unemployment benefits is at least as effective as cutting corporate taxes and potentially more so when taxes are already low.
[1] https://www.thebalance.com/do-tax-cuts-create-jobs-3306325
Don't business taxes (whether US taxes on profits or European VAT) ignore the costs of goods?
Someone defending IKEA could argue that if companies like Walmart of Target, which I think are the closest competitors to IKEA, were in the same position they would do even more nefarious tax evasion. It's a "lesser evil" argument but it does ring kind of true.
The simple thing would be to have every organization have the same tax rules, and then all tricks are prevented.
Once you start getting into what is and isn't for profit, and what is and isn't charity, is when things become complicated. Should megachurches where the leader flies in a private plane be taxed differently than a business? Should Scientologists get a tax break?
Corporations and politics are not two separate entity that act independently.
> have a very easy time to do stuff that is inside the letter but outside the spirit of the laws
That's like saying "My buggy spaghetti code isn't the problem, the user should just never do something that hits an edge case. My code doesn't need to change"