https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...
I know it's frustrating when others are wrong on the internet, but the portion of the internet that isn't wrong has measure zero—a fact we all have to make peace with, or else we end up making things worse.
I don't understand the analogy. Websites that 'always work instantaneously and never have any downtime' is technically infeasible, though you can get closer by pumping more money into the web side of your business. No company deliberately injects downtime into their website, but they do think it may not be the biggest priority, and hence there will be more downtime.
On the other hand, you need to actively look for loopholes, and get access to tax lawyers and accountants in order to do something like a 'double-Irish'. That's not a failure to pump money into your accountancy division in the same way downtime is a failure to pump money into your web division. In fact, it's exactly the opposite - doing a 'double-Irish' would seem to require more money to be pumped into the tax law part of your business.
The equivalent in your analogy would actually be exactly the opposite - if Google hired something like 'downtime lawyers' who would find the optimal way to inject downtime into their website. If Google sought out downtime, and actively pursued downtime.
Pump more money into the web side of your business and you get less downtime. Pump more money into the tax lawyer side of your business and you avoid more taxes. The analogy is bankrupt.
Reality is complicated, but even more complicated than reality is the tasks Google has set its tax lawyers to concoct to avoid paying taxes. I'm sure you yourself have a great many opinions, moral or otherwise, on subjects you don't know the technical intricacies of, but you hold those opinions because of a principle that applies to the base facts of those subjects.
Along the lines of another commenter, I don't need to understand the current debate in moral epistemology and animal rights in order to have good reason to think kicking puppies is immoral, and I need even less knowledge to know that I don't want to see puppy kicking in society. I can dislike puppy-kicking, even if it turns out that puppy kicking is legal, or even moral - and I have a feeling you would too.
What is the alternative? Multinational companies have to file tax returns in tons of different jurisdictions. Tax authorities are heavily biased and don't agree how transactions should be priced (they always want more tax revenue). Tax authorities often fight over the same profits and double tax.
Listen, I'm not saying that "these poor corporations have it so tough". But complying with tax laws for multinationals is ridiculously complex. And these tax structures are needed to lower the compliance burden.
The compliance burden can be huge for smaller companies. I've seen negotiations for small amounts of profit between tax authorities draw on for years. It's can be a massive cost for smaller multinationals.
Do I think there should be something better, yes. But that feeling goes for the entire tax code. I think the US tax code is garbage. Some other countries are even worse.
It is only complex because it has been setup that way. If they setup a simple structure they would pay more. So they don't.
Vaguely Relevant Comic: https://www.commitstrip.com/en/2020/05/26/experts/
Just heard the other day from AOC that the new COVID relief bill had such a ridiculous clause that no one even stepped up to claim they put it in, so they just removed it without any resistance. The whole bill authoring model is currently broken, representatives receive ridiculously little time to review what to vote for and massive bills are basically take it or leave it.
For the specific tax law that taxpayers have leveraged that the IRS now doesn't like, I'm pretty sure it came from an IRS nerd. The Residual Profit Split Method. That one could only have come from a new grad.
Individual members may not, but they probably have legislative staffers that do, and the staff (majority and minority) of the tax committees, who prepare and distribute analyses of all tax bills, definitely have the skills to read, understand, and explain the implications of tax bills.
Members of Congress may not care, but they definitely have access to a competent understanding of proposed tax laws.
You don't have to understand any of the OP's post to have a reasonable opinion on this topic - corporations should pay their fair share of taxes.
It's a bit like having a strongly-held opinion on garbage collection without knowing the definition of "mark-and-sweep" or "generational GC" (or, perhaps more significantly, lacking knowledge of the concept of memory leaks and use-after-free).
Tax law is very messy and detail-heavy, and absolutely full of tradeoff-based choices. It's very rare that a clear moral best-approach presents itself if one knows how we got where we are today.
Understanding of facts is very relevant to form proper opinions. Without it you’re very easily manipulated via emotions.
Taxation on international IP licensing is regulated in complex web of bilateral "no double taxation" contracts between nations and the whole Bermuda thing worked because ireland accepted "taxed elsewhere" but elsewhere was a tax haven with 0%. It is probably not a coincidence that trumps "tax cuts" create a tax rate that is slightly lower then the corporate tax rate in ireland. So it is better to move profits from the EU market towards the USA instead of taxing them in the EU. However the multinationals have likely already found a new way again to avoid both.
The article is right that the multinationals can't move money from these offshore accounts into the USA without getting taxed and they can't move them back into the EU without getting taxed either, but there still were, are and will be opportunities to use those tropical island shell company treasure chests with no or minimal taxation. Like for example for investing into companies and assets worldwide. As far as i know many multinationals only transferred a small part of their existing offshore money to the USA and used most of that to buy back stocks and pay dividends. The article doesn't mention how much money had been "repatriated" to the USA from these accounts.
It is correct that the whole idea of offshore shells holding intellectual properties for international licensing thing is done and over thanks to reforms in the EU killing the double-irish tax avoidance scheme and the USA introducing GILTI as a general measure against US companies sending oversea profits to a tax havens instead of the parent company. So the "intellectual property assets" are moving back to the USA. However i think the IP licenses also got a lot cheaper now that they are taxed, but i have no details on that. The european parts of the conglomerate will probably invest in some new data centers or a robotics company, lowering their taxable profits, instead of moving these profits to the USA.
I know that Google moved €19.9B towards Bermudas in 2017, €21.8B in 2018 and €63B in 2019, the last year of the 0% tax scheme. (note: these numbers are different then the articles) Google EU did not grow 200% in 2019, they put off investments and stored the profits while they could avoid taxes. I would love to see some numbers that tell how much revenue they made per region of the world and how much taxes they paid in those regions and how much cash they move between tax regions to abuse the complex international web of tax laws.
One side note: I do not know how much was initially invested to set up these global operations, if that investment money "leaving" even had any economic effect on the US market back then, if the investors got something, like shares of the privately traded international subsidiaries, and if the "repatriation" of money has an economic effect now. It is also completely unclear how big of a cut the US treasury got from all of that. As in: did the USA collect significantly more taxes in 2020 then in 2019 thanks to the "tax cuts" incentivizing moving money from oversea subsidiaries into the USA?
So yes, the claim is substantially incorrect because it argues that the USA could get a lot more taxes IF multi-national companies would send all their global profits to the USA. While that is technically the truth, it is also nonsensical, they won't ever do that. Being outraged about that is a misunderstanding on how multinational mega-corporations function.
And one last thing: only a hardcore american nationalists can truly believe that whenever someone in europa, india, south-east-asia or elsewhere uses the google pay app for a transaction in their own currency the american government is somehow entitled to get a cut because they collect taxes on the licensing fees of the google branding. How do they sayeth? No taxation without representation! (throws android phone into harbor)
Sure; the paperwork all gets done that convinces a tax official that transfer prices make sense in some way, but the fact remains that global companies pay a lower tax by choosing specific transfer prices despite not having any visible external changes (employing people in the same countries as they always have, doing business where they always did), and that's what annoys most people.
> Comments like "companies should just pay their taxes" are like when laypeople say "companies should have websites that always work instantaneously & never have any downtime". Reality is complicated and your opinion isn't that valuable if you don't know any basic facts.
Yes, the politicians are the ones to blame, and they seem to be taking their sweet time to fix the issues. That doesn't mean it's unrealistic to say "companies should just pay their taxes". It's more like saying "health care should just be available to people that need it" which is a truism that nonetheless isn't achieved in the U.S. to a large extent, but isn't the direct fault of individual actors in the health care system.
From what I can tell, most people have an adversarial relationship with tax authorities, and therefore assume any more beneficial advantage is a "loophole" like something that would even surprise the tax authorities, when a reality is that many people and organizations have a collaborative relationship with tax authorities.
Transfer pricing requires pre-emptive approval from the tax authorities involved. You are basically telling them how you won't pay taxes and they sign off on it, specifically the nature of the transaction and coming to an agreement on how it complies. Greater disdain from the general population can come from understanding how expensive that can be to collaborate with the tax authority, but I don't think that changes anything. It doesn't give a better argument with any nuance.
My tax opinion isn't based on a country passively deserving anything from the mere existence of a transaction, tax authorities aren't operating that way either and neither are the legislatures. My understanding of the tax topics seems to be more compatible and effective than what I hear from most people, just like the lawyers and CFOs of these fortune 500 companies.
But I assume you're trying to head off the usual spate of anger at Google (or whatever company) for taking advantage of these loopholes to legally avoid paying tax. I think that's in general a good idea, though these loopholes are in part shaped by the lobbying that Google (and others) take part in, so I don't think this anger is 100% misplaced.
At the end of the day, though, if you believe companies should be paying more tax, expressing anger at the companies themselves is pointless; call up your elected government representative and give them your thoughts instead.
Nah, it is not pointless. It affects the companies' public image.
And when we are talking about a company that built its empire marketing itself as a Do Not Be Evil collective, the anger at swindling us is not misplaced.
Politicians do deserve the ire, but so do the swindlers.
> Comments like "companies should just pay their taxes"
*HOWEVER* it's very cheeky to selectively demand better opinions while also taking a side.
edit: tax avoidance* (this changes nothing about the intent of my question, but is literally incorrect)
In this instance don't have strong opinions if:
* You have no idea what transfer pricing is
* You have no idea what companies have to do to comply with transfer pricing laws (remember that these are international transactions and they need to comply with two sets of tax authorities, both with different sets of rules)
* You have no idea what laws congress created related to these transactions
* You have no idea that these laws have been updated over the years (if you have no idea about what changed in Section 482-7T)
Comments like "companies should just pay their taxes" are like when laypeople say "companies should have websites that always work instantaneously & never have any downtime". Reality is complicated and your opinion isn't that valuable if you don't know any basic facts.