
Big tech companies have been at the cutting edge of corporate tax avoidance - Elof
https://www.vice.com/en_us/article/59n7e8/silicon-valley-owes-us-dollar100-billion-in-taxes-at-least
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halfjoking
The press likes to single out tech companies lately... but it's well-known
every industry is doing the same. Walmart, Exxon and Pfizer are just a few
companies that tax-dodge just as much as Google. It's estimated $700 billion
in taxes are dodged yearly[1] so singling out "Silicon Valley" seems strange.

[1] [https://americansfortaxfairness.org/corporate-tax-
chartbook-...](https://americansfortaxfairness.org/corporate-tax-chartbook-
how-corporations-rig-the-rules-to-dodge-the-taxes-they-owe/)

~~~
MuffinFlavored
> tax-dodge just as much as Google

It isn't dodge. It's "cleverly follow the tax laws that are allowed".

What are top 3 tax loopholes that could get closed? One on hand, it sounds
like robbery for companies to not pay taxes. However, if they were forced to
pay more taxes and therefore paid less to their employees/hired less... would
us consumers really win?

~~~
buzzkillington
>However, if they were forced to pay more taxes and therefore paid less to
their employees/hired less... would us consumers really win?

Yes because it would reduce the economic power of corporations vs people.

The point of a tax system is only tangentially to provide goods and services.
The main point is for it to stop the infinite accumulation of wealth at the
hands of fewer and fewer people.

Capital tends to a gini coefficient of 1 when left to its own devices. Without
the visible hand of government to stop that from happening the invisible hand
of providence [0] reaches in and does it for us.

[0]
[https://en.wikipedia.org/wiki/Wall_Street_bombing](https://en.wikipedia.org/wiki/Wall_Street_bombing)

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AcerbicZero
Best case - Politicians made rules. Companies took the most economically
favorable (to them) interpretation of those rules as they could get away with.

Worst case - Politicians made rules. Companies bought ("Lobbied") politicians
and changed those rules to make them as favorable as possible.

There seems to be something similar in both cases.

~~~
pc86
I used to be married to a lobbyist, and the actual events are closer to this:
Company lobbyists take a group of legislators out for dinner and drinks
approaching the cost of rent for most Americans. Company lobbyists and
attorneys (the venn diagram here is almost a perfect circle) write rules.
Company lobbyists give company-written rules to legislative staffers on a
relevant subcommittee. Company lobbyists attend 4- or 5-figure political
fundraiser for legislators and discuss desired rules. The next day, legislator
sees the agenda for the week, with a topic relevant to Company, and "draft
legislation" already available. Company then takes the most economically
favorable interpretation of rules written ~90% by them in the first place.

~~~
bsanr2
This is why the Tea Party wave was so devastating: not because of their
ideology, but because they swept into office with little experience in policy
or the topics they were then appointed to committees to govern. Compare to,
say, AOC: much maligned, but who sits on an economics committee and has a
degree in... economics (albeit a BA).

It's really, really important that our representatives have at least a modicum
of knowledge, or else you get a rubber stamp machine instead of a republic.

~~~
pc86
I'm no fan of them, but this paints the incorrect notion that the members of
Congress in the Tea Party are a bunch of uneducated rubes and is pretty
blatantly false. Current members[0] have the following degrees:

    
    
      * BA, Finance + MBA
      * BS, Journalism + JD
      * BS, Political Science + JD
      * BS, Computer Science
      * BA, Forestry
      * BA, Accounting + MPA
      * BA + MS (no major listed)
      * BA, Political Science
      * BA, Political Science + JD
      * BA (no major listed)
    

That's only about half of them but I got tired of listing them out. Only two
of current Tea Party Caucus members do not have a degree, both of them at
least attended college, and one of them was actually in an honor society
before leaving.

My point isn't to defend them, but to point out the dichotomy one can easily
reach from reading your comment (Tea Parties are farmers that can barely read,
similarly or less experienced legislators on the opposite end of the spectrum
are not) is false.

[0]
[https://en.wikipedia.org/wiki/Tea_Party_Caucus#List_of_curre...](https://en.wikipedia.org/wiki/Tea_Party_Caucus#List_of_current_members)

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jeffdavis
A 401(k) is also "avoidance". Are we next going to talk about all of the
retirees and how much they "owe" us?

If the author wants to suggest a new law, then suggest a new law that would be
a net improvement.

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stevehawk
I bet no one on here is mad at the tax break companies get by offering RSUs,
which is how a lot of Silicon Valley dodges taxes as well.

~~~
option
people who get RSUs in California pay about 50% (state plus federal) tax on
it. Where is that tax break again?

~~~
traviscj
My read was that the _companies_ get the tax break. The employees get taxed to
shit, but it's still better than not getting the RSUs.

~~~
outside1234
I don't think that's true, other than the value of the RSUs being counted as
an expense against earnings (like Salary would be).

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acchow
From the source: "The Silicon Six and their $100 billion global tax gap, which
examines the tax conduct of Facebook, Apple, Amazon, Netflix, Google and
Microsoft over the last decade."

One third of their companies are not based in Silicon Valley.

~~~
Y_Y
Of course, those are clearly all Irish companies.

~~~
crantefula
Population of potential US customers: 650 million Population of potential
world customers(minus US): 7.1 billion

But sure, let's pretend worldwide subsidiaries of those companies should not
turn a profit outside the US.

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jeffdavis
"Imagine what sort of world we could have if the Silicon Six [gave the
government more of the $15 trillion]."

The modern concept of wealth doesn't work that way.

If you transfer money from someone not likely to spend it any time soon (tax
shelter) to someone who is going to spend it right now (the government), it
works almost exactly like inflation.

And often the money isn't held in cash anyway. So, moving it to the government
requires divestment. That divestment has consequences that are complex, and
it's far from clear that the government would spend it better in every case.

~~~
bsanr2
That's only with a limited supply of product. Instead, I see a throwaway
culture, where we have a surfeit of product such that anything not perfect is
thrown away (safe but expired food, appliances with dents in them, electronics
with a single broken component, etc.). Likewise, Americans suffer through
services that run inefficiently, or go without services that don't exist
because there isn't a critical mass of demand for them.

People are pretty good at coming up with good uses for an influx of money
without crashing the entire system. That's the whole point of a market-based
economy, right?

~~~
jeffdavis
If what you want is inflation... why not just inflate the money supply more
directly? What's the point of trying to do so through the tax system?

~~~
bsanr2
Let me flip that: why would you create more money when there's already plenty
to go around, just that it's locked up in tax havens, and only used to allow
the wealthy to live, effectively, for free? If inflation is a menace, why
would we risk the absolute calamity that would occur if disappeared wealth was
repatriated after we'd created a bunch more money?

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jwally
Maybe I'm missing something super obvious, or I'm preaching to the choir; but
why wouldn't it make sense to eliminate all corporate taxes; but also
eliminate capital-gains-tax-rates?

I'm not sure you'd have a 100% wash, but it feels like it would be close
enough that you could re-jigger rates to capture any short-falls (or drop them
if you bring in too much).

It seems like it would:

\- Eliminate the need for corporate tax firms / accountants \- Reduce the
incentives for industrial lobbying \- Encourage hiring \- Enable Businesses to
save for "rainy days"

~~~
MuffinFlavored
How would corporations get taxed if you eliminated corporate taxes? You
wouldn't want corporations to get taxed on their income/revenue/profits?

~~~
Youden
I'm not the OP but it's fairly simple: corporations wouldn't get taxed.
Instead, shareholders would be taxed, as they're the ones who own the company
and ultimately profit from the company's activities.

You could do this by increasing the tax rate on capital gains (dividends are
already income if I remember US taxes right).

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chatmasta
Frankly, I’m happy as long as money is out of the government’s hands.
Politicians have repeatedly demonstrated they can spend money way faster than
they can generate it. What’s the point of paying more taxes if they’re just
going to waste the money? Leave it in the economy and let the market sort it
out.

~~~
KingMachiavelli
That's encroaching into a false comparison. Is the money politician's 'waste'
any less in the economy than the money the corporations spend? Of course not,
it's still going to trade hands after leaves the government.

I feel there are two real issues here that the article (which is mostly just
click bait) doesn't get into.

1\. Are any of the companies violating current tax code? (i.e if they actually
owe more taxes then the IRS should intervene)

2\. How are they achieving these low tax rates? And when/should we fix the
possible loopholes.

It's really stupid to get mad at companies following the letter of the law. We
should be made at the politicians who refuse to close the holes. And who
knows, if it results in companies just spending/reinvesting more money to
still avoid taxes than at least it's more in line with the intent of the tax
code.

~~~
AnthonyMouse
The issue is that it's not so much a loophole as it is a structural deficiency
in the way international corporations are taxed -- it's supposed to be a tax
on "profit" but it's straight forward to structure an international
corporation such that its profits happen in whichever subsidiary they want.
Then they naturally structure things so that profits accrue in a subsidiary in
a low tax jurisdiction.

The key to fixing this is to realize that VAT and corporate income tax are
basically the same thing, except that instead of corporate income tax being
paid to the jurisdiction where "profit" accrues (easy for a corporation to
move around), it's paid to the jurisdiction of final sale (good luck moving
all your customers).

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turk73
It's not just SV. One major company I worked for had only one validation
requirement on the code we checked in which was the ensure that the copyright
header saying that the code was owned by the subsidiary in Lucerne,
Switzerland was present. That had to be for IP and tax purposes because
nothing else makes any sense to me why that would be so important. It was not
a Swiss company. So all the code and business products of value were offshored
to some tax-friendly locale. Although I never thought of Switzerland as being
particularly tax friendly.

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chanbam
Yang2020.com Google Andrew Yang

~~~
oarabbus_
I do like that he seems to be the only candidate who talks about incentivizing
corporations to give back, rather than talking about enacting punitive
measures on corporations.

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TheSoftwareGuy
Well I'd just love for congress to increase the IRS budget again and then
maybe they could actually audit a few of those companies

