This is one of the primary reasons I promote using the simplest possible tax and incentive structures. The simpler it is, the easier it is to avoid creating loopholes.

Besides, paying tax should be a much easier process for the small fish.

The loopholes aren't accidents.

Well one policy could be "tax companies with more than x lawyers".

Such rules only act as an incentive to find new loopholes and waist money using them. A large company can spend 99% of what they save in taxes to find out how to save it and its a net gain.

The solution would be to have absolute minimalist tax rules which are so simple that there wont be loopholes. Then also make judges apply common sense and smash every attempted loophole until everyone stops wasting money to find one.

Never going to happen obviously but we can dream.

The issue with this is that tax code is often used as a proxy to fix all sorts of social problems that lead to inequality. We give tax breaks to subsets of populations who really need them. We also push policy through tax incentives, for example solar related deductions.

I think we'd be better off fixing the deduction of such problems, but just pointing out that part of the reason taxes are so complicated are to enable this. Another reason is to create corporate tax loopholes...

Subsidizing anything should never be done trough tax breaks anyway. It just hides tax spending. Also this was about corporate taxes not private taxes. If a corporation "really needs a tax cut" its probably just unsustainable and if not it should find investors to bring the money voluntary not force spend the peoples money.

Yes the loopholes are intentional but it only helps very few individuals and a whole industry of layer, while corporations aren't actually in the business of finding tax loopholes they are indirectly forced to participate anyway because their competitor does. People blame the companies for evading taxes but they are not the problem they have to play along because everything else would be hard to explain to the shareholders.

Imagine if you are a business owner and your company slowly grows to amazon size. At what point would a sane person like to pay people to evade taxes? You would never want to do that instead of building a team of tax specialist or outsource that you could expand in real business. Your local small business owner and Jeff Bezos both have no interest in that.

Voilà! Amazon Legal Services LLC (no connection to Amazon.com Inc. ;), now provides all legal services to Amazon.com Inc.

This doesn’t work at all, many companies don’t have lawyers of their own but keep big law firms on retainer. And companies could just offload more onto JD-advantage employees/ law student interns anyways since they’re not “lawyers”

They have both in-house counsels and work with external law firms. A reason for doing this is to avoid liability.

Some big companies retain multiple law firms and ask the same advice a couple of times. If an overworked attorney who barely gets any sleep ever misses a point or drafts his/her advice vaguely in a way that would enable their evil plans, they rely on that single opinion. If there are any problems they don't assume any liability, because hey they got a legal opinion from a respectable law firm. Nobody needs to know/can prove they obtained multiple opinions on the same matter because of legal privilege.

In return, big law gets paid a lot of $$$, because of the risk of providing such opinions under considerable pressure and trickstery.

Having a legal opinion supporting an aggressive tax position that is eventually overturned doesn’t get you out of liability for that position. The appearance of food faith efforts to comply with the complex tax code may reduce penalties assessed.

Sure, my comment wasn't tax code specific. There is always risk involved, but it's much less. If you need to do it anyway, better pressure a lawyer into giving you a legal opinion. The company will pay pay the fine but who can blame you for acting on it.

In a big corp, I think most employees are concerned with saving the day. If the management pressures them to cut corners most will. What better way is there to pass the blame?

They'd just outsource them to a legal firm

One proposed reform was to give corporations an obligation to explain the difference between their profits declared to the IRS (as low as they can get away with) and their profits declared to their shareholders (accurate, because they want people to buy their shares).

Both declarations are available to the IRS; if you force corporations to declare how they "bridge the gap", while it would let them practice tax evasion, it would make it easier to assess what form that evasion takes; and it would make fraud much harder.

I don't remember if it went through.

Rate reconciliations are required disclosure. See page 64 of the 2019 financial statements [1].

[1] https://s2.q4cdn.com/299287126/files/doc_financials/2020/ar/...

Yes. Throw enough smart tax lawyers at a problem and limit your tax regardless of what law is passed.

The traditional solution is to lower taxes and simplify the tax code.

Large corporations have an effective tax rate below the nominal one due to antics with exceptions — while smaller businesses get hit harder. What’s called “progressive” often ends up regressive due to the imbalance in ability to do finance trickery. Rich people will always find or create exploits in the law, so those “high taxes on mega corps and billionaires!” hit the middle class and medium sized businesses: they’re who bear the brunt of taxes, in the US.

You get out of doing that unnecessary damage by removing the game: no whatever exceptions, just a flat rate everyone pays.

What’s called “regressive” is actually progressive in that it lightens the tax burden on the middle class and medium businesses, while making the richest pay a fair share. (Also, simpler codes are harder to cheat.)

Discussing the tax burden of the poorest is a misdirection used by politicians: the poorest in the US receive more benefits than they pay, so it’s a question of how that burden is split between the middle class and the upper class.

It's not that simple. As far as I know, corporate taxes are already flat. (If they weren't, corporations could easily split into several smaller ones to keep their profits below some threshold.)

The big issue is with "just a flat rate that everyone pays". What do you pay that rate over? Big corporations manage to pay that rate over nothing. Generally those corporate taxes are paid over profits, so corporations avoid taking profits in countries that tax them. They sit on their money, pay it out as bonuses to executives, and take their profits in tax havens.

The issue isn't the tax rate, it's the loop holes. It's that the amount that's taxed is easily manipulated. Instead of easily manipulatable profits, the tax should be levied on something less easily manipulatable. Like revenue. Of course that already happens: VAT taxes, only because you pay them on all products, they are effectively paid by consumers, not corporations.

But how about allowing corporations to deduct their local external costs from their revenue? Not easily manipulatable foreign external costs, but simply the costs made in the same market as where the revenues come from? Then you're effectively still taxing profit, but tied to the local market, cutting tax havens and internal trickery out of the picture. A company on the other side of the world selling in your country but not making any costs there; no labour, manufacturing, rent, etc; would pay tax over their entire revenue, whereas a local shop that has does have all those costs, and therefore cannot help but invest in the local economy, gets to deduct those costs and pay less taxes.

I think that could do a lot to even out the imbalance and make the playing field a lot fairer.

How does international trade work under such a system? Does my iPhone get taxed as 100% profit with no allowance for cost-of-goods-sold?

If a country doesn’t make automobiles or refrigerators, are those taxed as if they were pure profit for the retailer? It’s not like a local retailer is going to manufacture even refrigerators, let alone cars or phones.

Countries could decide they have enough in common in terms of taxes and trade that they calculate this over all those countries combined, as long as they exclude tax havens and other countries that seem to take a parasitic advantage of the markets of other countries.

> If they weren't, corporations could easily split into several smaller ones to keep their profits below some threshold

I think we need to address this somehow. Perhaps by counting size by which actual people control and/or own the companies rather than the current arbitrary legal structure.

Part of the problem with corporations is definitely that they're a massive concentration of money and power, with no person being responsible for it. If every company was just a small business of one or a handful of people working together, instead of this artificial legal construct that concentrates power and assets with no liability, these things would be a lot easier. But then you also can't do the massive investments that corporations do.

> It's that the amount that's taxed is easily manipulated

Did you even read my post?

It’s entirely about this fact: you wrote a long rant concurring, but phrased as violent agreement.

You just pulled a single phrase out of a multiparagraph post, then strawmanned my argument.

That’s not up to the standards expected of HN posts.

I did read your comment. Did you read mine? There's nothing violent about my agreement. I agree with some points, disagree with others, which I explain further. There's nothing strawman about that.

The first three paragraphs straw man my argument and misrepresent my position as saying flat taxes were the solution and it’s more complicated — when that’s exactly what I said. Literally, my entire comment is about loopholes and unintended consequences to tax policy... except the very first line, which seems to be all you read.

You had one more paragraph with some random technical considerations agreeing with me.

Then you concluded.

You literally just repeated my point, but started with “it’s more complicated than that” — which is phrased as a disagreement with my point.

That’s a straw man (misrepresenting my suggestion as being a flat rate, even though my entire comment was about loopholes — like yours) and violent agreement (phrased as disagreement when repeating the same thing).

Your reply here is just wrong. (: