Until Ireland further lowers its taxes. Your argument leads to a race to the bottom.

The problem with only taxing dividends is that corporations only pay out a small portion of their profits in dividends. I may theoretically be a billionaire in my holdings, but I only need a million in dividends per year to live my preferred lifestyle. Thus I only pay tax on the million dollars instead of on my billions. You can try and get at the money via capital gains, but what if the bulk of the money is being held by a foreign company, with only a small amounts to pay dividends to the owners filtering into the main company?

Don't complain that others provide the same service at lower cost, try to innovate and outcompete them.

You appear to assign to the government of Ireland some sort of rationality and ignore things like regulatory capture and corruption. Your belief that a government will only lower until "revenues raised == cost of services + small margin" is not rooted in fact.

I fully agree that the losses from the War on Iraqis/SS/medicare/etc don't outweigh the profits made by taxing Apple/etc and providing them with a few cheap services (corporate registration, enforcement of contracts, etc). That's a separate issue.

Regulatory competition helps - if the profitable people/businesses flee from corruption/inefficiency, then those wasteful programs will eventually run out of money.

The existence of corruption and regulatory capture is all the more reason to have regulatory competition. If California is captured by corrupt special interests (e.g., prison guard unions), corporations can purchase corporate registration and contract enforcement from states which offer a better value.

Ironic that you mention SS and Medicare. Two programs designed to help companies out (and people too). Do the cheap services include a road system? Do they include an education system capable of producing adequate workers? Do they include protection from enemies? These things are not cheap. And it is especially helpful to be located in a country with great influence that helps smooth things in other countries.

I think you don't understand what regulatory capture is. When an industry has capture the regulators that is a good thing from the perspective of that industry. Regulatory capture is what oligopolies want. It's the good kind of corruption from their perspective. Large companies don't flee from corrupt societies. They use that corruption to their advantage. Obviously there are counterexamples to this but overall the gist is correct.

Why should Apple be taxed on profits earned in Ireland to pay for CA roads?

As for protection from enemies, we should simply stop defending Ireland. Then Ireland will be forced to defend itself (from Iraq, I suppose) and charge corporations commensurately.

But supposing Apple does pay it's share of all these things. Given our current deficit and that a large portion of our deficit goes toward maintenance of both soft and hard power and that such power is used for the benefit (not solely) of large corporations its clear that business are not paying their share of the burden. And a large portion of the current deficit comes from stabilizing the economy. Without infusions of cash into the system after Lehman went bankrupt Apple would have been greatly disrupted.

Corporations in the U.S. currently sit on a great hoard of cash. I don't know another hoard of cash government can access to pay for the maintenance of the system. From you last paragraph it seems it would be advisable for you to read the Wikileaks cables. Your view about the role of military power and its relationship with soft power the use of said power for the benefit of corporate interests appears to naive.

In an environment where public policy has been co-opted by corporate interests to serve business interests to the detriment of other interests it's hardly reasonable to think that "we should simply stop defending Ireland". Why would businesses want such a thing when they benefit from our power without having to pay for it?

http://www.usgovernmentspending.com/year_spending_2010USbt_1...

As for the federal road system, that's paid for by gas taxes - Apple (or fedex, or whoever delivers iPhones) pays for it whenever they fill up their gas tanks roughly in proportion to how much they use it.

It's also hardly clear that businesses are not paying their share of the burden. The services businesses require cost very little - corporate registration, police protection, roads, etc. The fact that these services are cheap is demonstrated by the fact that Nevada provides those services and charges very little for it.

Most other services are given to individuals and different individuals (usually younger ones) are charged for those services. The individuals who work for Apple raise their prices commensurately.

Labor has very little power in the U.S. and in an environment of 8%+ unemployment (15% U2 rate) it's hard to believe that labor can raise prices.

https://en.wikipedia.org/wiki/Interstate_Highway_System#Fina...

There is a pretty simple solution to this problem - raise user fees until the system is revenue neutral.

As for "soft power", could you define that in a less vague manner? Are you asserting that dead Iraqis somehow benefit Apple?

And again, I'll note you keep harping on a few cheap, useful items, while ignoring the fact that the vast majority of spending is merely redistribution from the young to the old which doesn't benefit Apple at all.

Consult Wikileaks cables for how corporations benefit from U.S. soft power and hard power. Apple benefits from being in the U.S. It should pay for this benefit. I don't know the optimum rate. It should not only pay for the tangible, easily understood benefits. It and other corporations benefit from the U.S. exerting its power to their benefit. The U.S. does this quite a bit.

The US has been running up the debt for many years http://en.wikipedia.org/wiki/History_of_the_United_States_pu...

The biggest problem is the lack of a passed federal budget in over a 1,000 days. This is causing a lot of budget increasing in a time when we cannot afford it. What the media and politicians (from both sides) chose to concentrate on is emotion grabbing (good for votes and ratings), systemic issues with how the government is being run are boring and not emphasized.

Low taxes don't kill budgets (check right after WWII when they had to drop), it is runaway spending. Income from taxes of all sorts has averaged 19% GDP, spending above that is the problem.

Your last two paragraphs are not germane to my point and they are wrong in any case. However, let's assume your last statement is correct.

Right now taxes around 15.4% GDP [1]. You seem to believe that 19% GDP in taxes is a reasonable amount to pay for government services. The GDP of the U.S. is around $15 trillion [2]. A 3.5% GDP increase in taxes to get us to 19% GDP for taxes would mean an increase of taxes by $525 billion. Current budgetary projections have the U.S. deficit at slightly over $500 billion in 4 years [3]. A lot of the current deficit is in non-recurring expenditures that are related to the fiscal crisis that started in 2008.

I might be wrong on my belief about the Bush II tax cuts being a large portion of our long term fiscal problems but from your sentence one must conclude that you agree that raising taxes by a reasonable amount would eliminate our long term fiscal problems.

[1] http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Doc...

[2] http://data.worldbank.org/indicator/NY.GDP.MKTP.CD

[3] http://www.usgovernmentspending.com/federal_deficit_chart.ht...

I have no idea how any of the links prove my point on not having an actual budget in 1000+ days isn't increasing the problem. Heck the debt ceiling raise had parts that immediately added quite a lot of debt. Given that [3] says the deficit amounts will be going down is off base. I assume it ignores the CBO estimates[1].

[1] http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/116x...

It has been clearly demonstrated time and time again that in periods of depression you DO NOT dramatically cut government spending. All it does is hamper growth which results in less tax income.

I have no idea why the US debt is being touted about as being the number one priority when surely increasing growth rates and reducing unemployment are key.

That is the Keynesian point of view, but it has counter examples. The difference between three points in history 1920, 1929, and 1945-46 show a different story. Herbert Hoover was a Keynesian and made the increase spending decision in 1929 as opposed to the tactic that worked while he was Sec of Commerce under Harding. Harding didn't pull the spending panic despite Hoover's recommendation. 1945-47 is even more interesting in that Congress didn't let Truman continue the massive WWII spending into civilian government programs. Taxes and spending were cut drastically which finally led to a booming economy and an end to the shortages and rationing. So, I would say the case for the Keynesians is not as clear cut. The 19th century also has some good examples.

gains pretty much explained why debt is bad.

It would be one thing if spending had been static during all the tax cuts; it's quite different in reality.

I don't know nearly enough about taxes or economics to propose a solution. Would a VAT tax at a lower rate be more consistent than a higher corporate income tax that may or may not be avoided depending on the corporation? Europeans seem to hate the VAT tax but I'm not sure if that stems from a high tax rate or the concept of the tax itself.

I hate to say this, but the only solution I can see to rise of worldwide corporations is... worldwide government, exactly like the answer to the rise of "national companies" in the XIX century was the creation of national governments of similar size. We can discuss about implementation details (the current arrangements -- going through WTO, WMF, UN etc -- are ineffective, opaque and/or fundamentally corrupt), but I don't see how else we could ever get out of this mess.

This is assuming that others are providing the exact same services for lesser cost. Right now on the front page of HN there is a story about a cheap iPod charger that can burn your house down or kill you because of the corner cutting done to make it so cheap.

We have states that have no personal income tax. Not surprisingly, these states are doing fine because they raise revenue other ways.

If you look at the CFED chart [2], those nine states [1] with no income tax make up the top 9 slots where the bottom 20% pay many times more in taxes than the top 1% (as a percentage of income), from 3.8 times (Tennessee) to a whopping 6.7 times (Washington).

[1] http://www.irs.gov/efile/article/0,,id=130684,00.html

[2] http://scorecard.assetsandopportunity.org/2012/measure/tax-b...

By itself, this statistic is meaningless. A state with a progressive tax system but lower rates of inequality will score poorly on this metric than a state with higher inequality but an identical tax system.

I.e., you might be showing Tennessee has a regressive tax system, or you might be showing Tennessee has low inequality. Without more details we cannot determine this.

The only thing that truly captures the vagaries of 'where money is held' is the stock price. Wall Street don't care if that money is in New York or Guatemala, if Apple has it it's making the stock go up.

And pay salaries, bonuses and dividends with the rest - without paying the appropriate corporate income tax rate first. That's why.

Should Guinness also pay the US taxes for profits earned in Ireland?

Unlikely. Ireland is currently in an IMF/ECB bailout programme, and will be for a few more years. Financial policy decisions cannot be made by the Irish government, and must be approved by the IMF/ECB. Recent budget changes (e.g. a change to VAT rate) were discussed in the German parliament before the Irish parliament.

But it is morally wrong because it is that same society that enables me to make my money in the first place.

Simple, right?

"The legal right of an individual to decrease the amount of what would otherwise be his taxes or altogether avoid them, by means which the law permits, cannot be doubted." - US Supreme Court

There are people who honestly believe that? It’s not that simple, it really isn’t.

I, for example, think there are many immoral but legal things and I want it to stay that way. The law is not supposed to perfectly mirror our morality, that would be a clusterfuck, tyranny, and otherwise a really bad idea. (For example: I think not tipping in the restaurant is immoral. I, however, never ever want that to become a law. Just one example.)

In short: Just because it’s legal, doesn’t mean it’s right. Just because it’s not right, doesn’t mean it should be illegal.

Think of it this way: if you can get an effective tax rate of x% by doing this and y% by doing that, and x < y, what's the moral difference between doing what you need to do to pay x% and the government changing the tax rate so you pay x% either way? It's not a question of what's the most moral percentage to pay in tax, it's a question of whether or not you're defying the law, which you aren't in either case. If the government lowered the tax rate to x% and you decided to cut out the middleman and just pay it, no one would howl at you to voluntarily pay more. So why do people howl at you for obeying other laws that allow you to effectively lower your effective tax rate to the same amount?

You personally may agree or disagree with this, but that's what someone probably means when they say it is immoral to avoid paying taxes, even if it is perfectly legal. Taxes are part of the general social contract of our society, and aggressively finding ways to avoid paying them tends to a tragedy of the commons type situation.

Surely it's also immoral because it's moral to contribute to the society you benefit from, particularly when the laws are constructed to attempt to make you do so, even when there are loopholes?

So if a company follow the law and they gets tax deduction, it means that that's the tax the society agree that the company should be paying, right?

> loopholes are involuntarily, while tax deductions are intended.

So can the company exercise tax deduction without being called using a loophole? Is it ever intended for tax deduction to be okay for a company?

Whether or not not paying taxes is immoral (by abusing obvious loopholes) is different from the law.

Bluffing is misrepresenting what you have to fool your opponent into something you don't, or more commonly, something better than you actually have. There are a variety of ways to bluff, with either betting patterns or by outright lying verbally. There are different rules in different casinos that determine whether or not you're allowed to talk about your hand, so exactly how you perform your bluffs may be limited.

Regardless, you should bluff, at least occasionally. The person who never bluffs is likely limited in the amount of money they can make as everyone will fold to the always truthful player.

Ignoring the societal questionability of poker on the whole, some poker players consider bluffing to be immoral. Generally, and certainly the people who recently fell for a bluff might feel so more strongly than those who just successfully bluffed but, and this is important, bluffing is within the rules of the game.

So long as you're not breaking the rules, there is no penalty for being clever.

In the case of cash transactions, with the 10k reporting limits, people are now routinely prosecuted for "structuring" their >10k transactions into a series of <10k transactions, even when it is clearly demonstrated that there is no underlying criminal activity. There have been cases where it is just cantankerous believers in privacy being prosecuted.

For my part, I'm on the side of the tax avoiders & believers in privacy, but it wouldn't surprise me to see the government's views/regulations on tax avoidance come around to their current policies on currency controls.

There is a singular lack of realization about the societies in which we live, possibly because it does feel like every man for himself most days. The societal web that makes us interdependent and upon which we rely without knowing it isn't as apparent.

Addendum: there's a lot of confusion about the differences between something being legal and something being moral/ethical in the responses to this post. Legal too often simply means exploiting loopholes.

Given those conditions, I don't feel there's anything immoral about doing everything legal to pay less in taxes. I suspect things are different where you live.

The military keeps foreigners from invading/suicide bombing and thus creates stability which lets you make money. Social safety nets including welfare, social security, etc, create the same sort of stability since there's less of a likelihood a starving person or angry elderly woman will rob you, etc, etc.

I'm not saying social safety nets aren't valuable. I'm saying that the current implementation does little to encourage or help people who use them to move on to something productive. I'm also saying that social security is an unsustainable pyramid scheme and that medicare is both inefficient and a poor allocation of resources.

I don't necessarily have solutions in mind for the latter problems; they're hard problems and not in a field with which I have experience. What I am saying is that I don't feel obligated to pay any more in taxes than I have to when on the order of 90% of the money will go toward things that I believe aren't constructive.

Oddly enough, New York has implemented an effective Henry George-esque tax system: to merely exist in the city, you have to live in fairly pricey real estate, and the taxes your landlord pays are effectively passed through to you by market rents. Other places have much cheaper real estate, so they don't have the same dynamic.

Another factor is that long-term capital gains taxes are much less efficient than income taxes in terms of adverse impact on the economy. If you need to raise additional revenue, it is better for economic growth to take it from income (or sales) than capital gains.

Investing in startups returns a couple points over investing in boring things like corporate debt and startups have higher risk. Unless you think more social good comes from investment in corporate debt than startups, it would be foolish to incentivize everyone to ignore startups because the risk adjusted returns are better elsewhere. I accept that some people think investing in startups is a waste of money but I would prefer that our tax code does not force that to be the case.

The argument about inflation adjusted returns is really the baseline case. Most investors account for it. However, they also adjust for risk as well. I would prefer investments in tech startups to be attractive, net, after accounting for the tax code relative to boring investments like debt instruments.

Properly designed, it all evens out.

I admit to being in the flat-rate tax camp with exclusions for one time capital gains (selling stock not dividends) and estate tax. I also wish they just gave a large basic deduction ($15K or $20K) and had everyone file as individuals.