Facebook Paid 0.3% Taxes On $1.34 Billion Profits 592
theodp writes "Facebook is unlikely to make many new (non-investor) friends with reports that it paid Irish taxes of about $4.64 million on its entire non-U.S. profits of $1.344 billion for 2011. 'Facebook operates a second subsidiary that is incorporated in Ireland but controlled in the Cayman Islands,' Kenneth Thomas explains. 'This subsidiary owns Facebook Ireland, but the setup allows the two companies to be considered as one for U.S. tax purposes, but separate for Irish tax purposes. The Caymans-operated subsidiary owns the rights to use Facebook's intellectual property outside the U.S., for which Facebook Ireland pays hefty royalties to use. This lets Facebook Ireland transfer the profits from low-tax Ireland to no-tax Cayman Islands.' In 2008, Facebook COO Sheryl Sandberg cited 'local world-class talent' as the motivation behind Facebook's choice of tax-haven Dublin for its international HQ. Similar tax moves by Google, Microsoft, and others who have sought the luck-of-the-Double-Irish present quite a dilemma for tax revenue-seeking governments. Invoking Supreme Court Justice Potter Stewart's famous common sense definition of ethics ('Ethics is knowing the difference between what you have a right to do and what is right to do') is unlikely to sway corporations whose top execs send the message that tax avoidance is the right thing to do and something to be proud of."
People will say their duty is to shareholders... (Score:2, Insightful)
Simple solution, more government! (Score:2, Informative)
Government makes stupid laws.
Companies follow those laws.
This is the fault of the companies and requires more government.
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Or you know, enact laws to deincentivise the practice of tax havens. I couldn't begin to guess at the complexities needed to write it in useful legalese, but essentially: "money you earn in the country gets taxed in the country end of story."
Of course, such a thing will never happen while a large number of politicians have ties (at least "campaign contributions" if not a direct link) to the very companies that benefit from tax havens.
FB tax avoidance (Score:2)
Re:FB tax avoidance (Score:4, Informative)
Certainly when HP sells products overseas they are required by many of the countries in which they sell products to keep the bulk of the revenue for those products inside that country -it seems odd that US companies are allowed to get away with this in the US when they are not allowed to do this elsewhere?
Here is something I found in the way of background -although the source is somewhat disreputable
http://www.goldmansachs.com/our-thinking/topics/accounting-policy/tax-time-foreign-profits-PDF.pdf
I guess one of the big differences is that most other countries use the 'Territorial' tax system in which the home country's taxation of foreign profits is only the difference between the foreign tax rate and the local one -afaiu
Can someone without an axe to grind as far as laissez faire capitalism, etc explain how this works?
thx
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Home Country (Country A): Effective Tax Rate of 35%
Foreign Country (Country B): Effective Tax Rate of 10%
The company's operations grossed $100,000,000 (Home currency) in income (before taxes) while operating abroad in Country B. Based on the tax rates, the company would pay $10,000,000 to Country B for taxes. From there, that $10,000,000 is normally deducted from Country A's tax rate to avoid double taxing the income, so what would have been $35,000,000 becomes only $25,000,000 taken in by Country A.
Th
The solution to offshoring profits to tax havens (Score:5, Interesting)
...is to pass a law which states that the government will not provide material support or assistance to companies who offshore their profits.
Your container ship full of product headed to Europe gets hijacked by Somali pirates? Well, you can either ask the Liberian government (your ship's flag of convenience) or the Cayman Islands government (your international HQ) to help rescue your ship.
Website breached or attacked? The FBI isn't going to help.
The Chinese pirating your IP out the back door? Sorry, the State Department won't be lobbying China on your behalf.
You want a real government's help? OK, well then you have to pay taxes to the real government. Having a shiny sign on some skyscraper where 1% of your workforce lives, 50% of your profit is generated and nearly none of your income tax is paid means you're really not a local entity and won't get the government on your side.
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Re:The solution to offshoring profits to tax haven (Score:5, Interesting)
How about we just close the loopholes? If you have a US based company that is clearly operating a subsidiary, that subsidiary (even foreign) will be subject to US taxation. Far simpler strategy.
You miss the whole point of the story. This story isn't JUST about US tax being avoided.
paid Irish taxes of about $4.64 million on its entire non-U.S. profits of $1.344 billion
The problem here is that Ireland offers ridiculously low tax rates to attract investment and employment.
They realize that the spending and the taxes Ireland gains from income taxes and sales taxes paid by the employees and the jobs that are created helps Ireland more than the corporate tax. So they set crazy low rates cor corporate taxes and Facebook and Google set up data centers there.
I'm hard pressed to declare this a totally bad idea. If it works for Ireland, good for them. If it works for Facebook and Google, how can you blame them for doing exactly what the law was set up to encourage?
The US can fix their tax laws too. They could easily make it more profitable to keep the investment mostly at home. Irish tax and legislation isn't exactly secret sauce. Washington State gives Boeing and Microsoft and Amazon astounding tax breaks just to keep its citizens employed. So do a lot of other states.
Side note: There is a school of thought that says taxing corporations is counter productive, and taxing the compensation AND THE PERKS of people that work for the corporations makes more sense. (Lets not start the corporate owned cars, planes, yachts and houses rant m'Kay? I said "compensation"). When you get right down to it, the reasons corporations are taxed is to gain some measure of government control over them [businessweek.com], not to gain any real tax revenue that would not otherwise be collected from shareholders or employees.
Re:The solution to offshoring profits to tax haven (Score:5, Informative)
paid Irish taxes of about $4.64 million on its entire non-U.S. profits of $1.344 billion
The problem here is that Ireland offers ridiculously low tax rates to attract investment and employment.
This isn't due to a ridiculously low corporate tax rate in Ireland (it's 10% or more according to wikipedia, depending). The country with ridiculously low corporate tax is Cayman Islands (no corporate tax). Ireland's subsidiary pays licensing fees to the subsidiary in Cayman Islands, so that on paper the Ireland profit becomes miniscule, and thus the tax sums are low too.
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How about we just close the loopholes? If you have a US based company that is clearly operating a subsidiary, that subsidiary (even foreign) will be subject to US taxation. Far simpler strategy.
You miss the whole point of the story. This story isn't JUST about US tax being avoided.
paid Irish taxes of about $4.64 million on its entire non-U.S. profits of $1.344 billion
The problem here is that Ireland offers ridiculously low tax rates to attract investment and employment.
Somehow when employees are forced to compete for jobs, its okay, when companies are forced to compete for marketshare, thats okay too, but when goverments/countries are forced to compete to attract international business, politicians scream bloody murder.
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Its an open question as to whether corporations should be taxed at all, a question that even economic theory can't agree on.
You keep saying that. You sound like Fox news reporting "the controversy" by stating there are two sides, even if the controversy isn't nearly so contentious. Corporations are people. While they gain the rights and privileges thereof, they should be taxed like it. It isn't an issue of economics, except as a distraction to the massive rights boost corporations get over people. all (or most of) the rights, and none of the responsibilities.
No, the solution is admit they are tax collectors (Score:3)
The truth is, facebook only collected X million dollars while making a lot more. As in, all their services and such cost a certain amount of money plus that owed to the government. It is known as embedded taxes, this is a great tool of governments to use in avoiding the general population from understanding their true tax load.
A tax on corporations is just an indirect tax on those who directly or indirect interact with that corporation. Any penny paid in taxes by the corporation comes from its customers and
Comment removed (Score:4)
Maybe your tax laws ought to be adjusted (Score:5, Insightful)
Seems logical to me. Ireland is happy to get 4 million that they wouldn't otherwise get at all. Ireland's simply undercutting other governments. Makes sense.
But if you want to collect tax dollars from companies that operate in the .U.S.A., you might want to assess their global revenues, period. Global companies paying global rates makes perfect sense.
Otherwise, you're looking at a future without tax revenue. Good luck with that. Let me know how it goes.
On the other hand, you can look at this as simple capitalism. Ireland made a better offer. You lost. Suck it up, or learn to compete.
Either way, don't bring ethics into it. You're talking about taking someone's money for "the greater good". And you're forcing them to participate. If you're going to discuss ethics, you might want to start with your own.
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But if you want to collect tax dollars from companies that operate in the .U.S.A., you might want to assess their global revenues, period. Global companies paying global rates makes perfect sense.
Problem is, many of the large companies that operate in the U.S.A. operate in many countries. If all of them followed the same policy and taxed global revenues, the total tax rates they'd have to pay would exceed 100% pretty rapidly.
Additionally, such a policy would make it extremely unattractive to operate in the U.S. at all. So Facebook, Google, etc., would simply close their U.S. campuses and move them into Canada. The U.S. would not only lose the employment those companies provide, but also the incom
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Exactly. So these global companies would need to choose a place to operated -- if all of the countries followed the same policy. That's the point. All of these tax games happen by splitting up a company into multiple places, and playing those places against each other.
You can't have it all ways. You can't get money, allow everyone to get money, have the company pay money, and not control where they are.
At some point, you need to either globalize the policy -- having all governments agree to an umbrella
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why tax abstract entities at all? Set CIT to 0 and tax the money when it goes to live people if you really have to. People are material and it's them who use roads, police protection and what not. The corps on the other hand are an idea that can uproot and move with few strokes of a pen, good like pinning it down.
Re:Maybe your tax laws ought to be adjusted (Score:4, Interesting)
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But it's illogical because you don't allow companies to opt out of something that they've designed their business to avoid.
As the GP said: Suck it up. There's a balance between having people pay for what they use and having the government fund things. And that balance is not decided by you alone. Not paying is the same as going to a potluck and not bringing food. If you want to participate, you need to bring something even if you don't eat most of the stuff others bring. Otherwise people will dislike you.
Also, your world-view seems a bit shortsighted. Maybe your business doesn't use roads, but chances are your customers do. Sam
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If his customers use the roads, let his customers pay for them, and don't extort him.
"You were robbed by a mugger, and he's threatening to burn down your house and rape your dog if you don't keep paying him? He's using the money he gets from you to mow my and my friend's lawn every Tuesday - we voted! - so SUCK IT UP!"
And you are surprised? (Score:2)
Come on people, get with it! You realize that Facebook is owned by a member of the "family" right? Look at who the owner is related to, and what they are doing for the Government. I'll bet that after they get paid by the Government for spying, that US citizens actually pay them to exist and be a business.
/sigh
Hypocrisy writ large (Score:3, Insightful)
Re:Hypocrisy writ large (Score:5, Insightful)
Yeah, but I suspect the poster, like most people, doesn't have the option of transferring all his money to a shell corporation in the Cayman Islands so he doesn't have to pay tax on it. If he did that, the IRS would probably put him in jail.
The law needs to be changed so that it is fair; either he should be able to do that, or Facebook should not.
Re:Hypocrisy writ large (Score:4, Interesting)
actually, you're probably paying way more tax that you're required to pay - as seen by the recent scandals in the UK where various celebrities simply pay their money into an offshore account owned by a privately-held company and then take out a loan from said company, thus meaning their income is roughly 0, and therefore they don't have any tax to pay.
See, these schemes are quite legal, and the celebrities involved weren't required to pay any tax on an income on nothing, so why do you pay tax?
'course, said schemes are incredibly dodgy and caused a lot of backlash from the public who do see tax as a necessary evil, and rich people being able to scam their way to not paying anything as an even greater evil. The only real solution is to simplify the tax laws considerably so clever accountants cannot come up with these workarounds and loopholes. Oh, and to refuse to recognise the tax status of countries that have 0% tax systems, or to make companies that do "set up shop" (usually a post-office box) in these countries have a certain percentage of their workforce be employed there.
Corporations should not pay taxes on profits (Score:5, Interesting)
Making corporations paying taxes on profits is double taxation and should not be done. Rather the profits should pass through to the owners (investors) and then the investors should pay taxes as if that was their earned income. Any retained earnings by the corporation (profits not passed through to investors) should be taxed as if it were earned income. This includes paying SS, Medicare, Medicate, workman's comp, federal, state and local income taxes.
While we're at it lets eliminate all the loopholes, subsidies and deductibles on the personal income taxes as well.
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Any retained earnings by the corporation (profits not passed through to investors) should be taxed as if it were earned income.
That's not necessary. Profits not paid out as dividends get passed through to investors another way, in the form of higher share values. If investors are taxed on capital gains, they'll pay those taxes when the gains are realized. Plus, eventually the corporation will either spend that money or pay it out, at which point it will be taxed.
Re:Corporations should not pay taxes on profits (Score:4, Interesting)
As I have no mod points I will simply bump this post with a response. This is an interesting assertion that I have not heard before. Anyone have any solid counter-arguments? I'm not sure I buy the whole "double-taxation" aspect - where is it doubled? If you are referring to the revenue coming into the company being taxed and then paying out to employees who are also taxed on income, then that situation is false. The cost of wages is a tax deduction for the company and they would not be taxed on those dollars that are paid out as an operating expense.
Regardless, I think the premise falls in line with the argument that "corporations are not people", and therefore should not be able to own property, have rights, or, in this case, be taxable. It's the owners of the company who bear those resources/responsibilities.Personally, it seems to me that eliminating corporate tax on profits would substantially benefit the growth of a company and could consequently lead to a number of beneficial side effects including higher employment rates, higher wages, and overall national economic growth. It would most certainly help small businesses which struggle the most and which are among the top sources of employment in the U.S. Since the biggest players are already skirting around this responsibility anyway, why not formalize the model for the betterment of all?
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The double taxation is because income is taxed first as corporate income and then as capital gains (by the shareholders).
I'm surprised you've not heard this argument before. It's not exactly new. Another problem with corporate income taxes is that corporations don't pay taxes. Their customers and employees do, in the form of higher prices and reduced salaries respectively. A tax on a corporation is just a hidden flat tax on individuals. Not just a flat tax, either; a flat tax with no deductions, exemptions,
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Why is "double taxation" a dirty word (phrase) when applied to corporations? I double, triple etc. pay taxes on my money.
1) I get paid a salary, and pay income tax and national insurance (I'm UK).
2) I buy something; let's say petrol. I pay VAT (or in this case, fuel duty).
2a) Incidentally, the petrol supplier will have already paid import duties for this petrol.
3) I put the petrol in a car and drive it away. To enable that I've paid Road Tax.
4) On the way home, I cross a toll bridge, and pay the toll.
So the
Simple Fix (Score:3, Interesting)
Wouldn't a simple fix for the countries involved just be to impose a tarrif on the importation of the "IP Rights"? Just set it to be equal to taxes on profits, and the problem is solved. So, FB UK doesn't make a paper profit of, say, 3 billion because their revenues of 3.2 billion are offset by "IP Licensing Costs" of 3 billion - just tax the importation of the right and collect the same amount as you would if they didn't try the shifting.
You think that's something? (Score:5, Interesting)
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They have a complex (even worse than their product assembly) ownership structure where most of the profits go to a nonprofit that gives away a few percent of income. Here [economist.com] is a quick overview.
Start linking the IRS with the DoD already (Score:4, Interesting)
Start using the NSA for some good and uncover the people involved.
In addition, start taking advantage of the nature of these tax domiciles as being easily knocked over by a superpower's military. Offer to disclose each conquered country's information to other regions such as the UK and EU. In any case, move in a way that thwarts any effort to move out assets to "somewhere else".
Finally, be willing to use extraordinary rendition to moot jurisdiction movement. This would be viable for cases such as Eduardo Saverin, and assets of companies sent offshore.
In any of the cases, there will be no shortage of people willing to defend their country from tax jurisdiction abuse. With plenty of people out of work - more than a few leaving from good jobs - opportunity exists to discourage/deny the use of creative accounting.
(If you really want to turn up the heat, ensure that nobody involved, whether directly or indirectly, will have any protection from the US)
This is capitalism (Score:2)
Corporations follow the laws of capitalism, not the laws of ethics. They will never pay more than they are legally required. If you don't like it, change the laws.
Fiduciary Duties (Score:3)
At risk of being modded down -1: Disagree, there's an important counterpoint worth mentioning here:
Companies have a legal duty to pay taxes according to the laws.
Companies theoretically have a moral duty to pay taxes according to the spirit of the law.
Companies have a legal duty to minimize expenses and maximize returns for their shareholders and investors.
Accordingly, corporations have a legal duty to engage in legal-but-potentially-morally-questionable tax sheltering to minimize expenses and maximize returns for their shareholders. If a director is not using every tool at his disposal to make a business profitable, then at best he will be fired or reprimanded for being a bad director, and at worst he will be sued for breach of his fiduciary duties.
It would appear that a better solution is simply to write simpler tax laws that don't create the loopholes in the first place rather than to try to patch the loopholes with more convoluted tax law. But that is so very much unlikely to happen while Congress is immune to the insider trading and securities exchange laws. Congress won't think that this is broken so long as they're the ones making money off of the loopholes, even if it's at the expense of the U.S. taxpayer.
Maybe a simple solution... (Score:5, Interesting)
Maybe a simple solution is to not tax corporations income at all and to pass the taxable income to the owners of the corporations like a partnership. If you own 10% of the company, then you must claim 10% of the net income on your personal taxes. If you own .0001%, then you claim .0001%. In this modern age of computers, corporations can issue 1099 statements with your weighted average share of income.
Doing so treats corporate income like any other business income for tax purposes and dividends just become a return on capital investment. The downside to all of this is that some very wealthy people won't be able to shelter their money in off shore corporations any more because they will have to claim it as personal income just like a sole proprietor or partner.
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You are thinking along the right line. I'm a big advocate of not taxing corporations, and instead taxing individuals.
The current situation causes corporations to be far too involved in the political process and to make decisions such as location based on a venue shopping process that is generally quite corrupt.
I think the result would be a much more efficient economy and better political process.
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"Maybe a simple solution is to not tax corporations income at all and to pass the taxable income to the owners of the corporations"
Except corporations are legal citizens and should pay taxes given that legal status, just like the rest of us. Otherwise, strip them of their legal and other supports and treat them like simple businesses again with all the risk and direct accountability that goes with it.
Corporations are not legal citizens. They are legal entities, there is a difference. Of course, these corporations are registered/incorporated in other countries, so that would make them foreign citizens. To take your approach a step further, then, they couldn't work/operate in the US without the appropriate visa, like any other foreigh citizen. Since they would be a special class of foreign citizen, the government could price that visa at a different rate, possibly to offset the loss tax revenues for seek
Is it legal? (Score:3)
They why is this a problem? If they are paying what they are legally obligated to pay, then why should they be forced to pay more? Who's the authority on how much more they should be paying? Why should they pay more? Ethics? Does that mean there is an ethics tax now?
If we don't like how companies use the laws that are set up, I guess we know what we need to do, don't we? Make laws that force companies to pay what we feel is justified. Just don't be surprised by the outcome.
Econ 101 laws apply to Corporate taxes (Score:3)
The higher you raise corporate taxes, the more inventive ways large profitable companies are going to find to avoid them. So we end up taxing the crap out of small players that can't afford to globablize (and are a small percentage of oerall tax revenue), while the big boys just offshore their financials. If the USA were to lower corporate taxes 80-90% it probably wouldn't be worth the effort for a lot of companies to maintain foreign entities to get the tax benefits. This might make for an interesting economics investigation...
My ideas to fix this (Score:4, Interesting)
1. Lower the corporate tax rate, and raise the unearned income rates in response. This fixes the problem with richer people paying an effective tax rate lower than poorer people and makes it less likely that companies would want to set up such complicated shell corps. It has the negative effect of hurting the retirement of anyone that has all of their money in non-Roth investments suddenly subject to the new higher rates.
That's a pretty common solution. I think this one also works and is more novel:
2. Require companies to pay taxes based on the nationality and/or country of residence of the majority of their executive officers and board of directors. The tax rate is based on the income earned by all subsidiaries. This means that Facebook wouldn't have to just set up shell corporations in other countries, they would have to find a board made up of non-US people, and likely move the top executives out of the country, too. And at that point, well, they aren't really a US company any more at all, and it doesn't matter if they pay US taxes on their non-US income. But really I don't think most companies would go to that effort, as that is far beyond their fiduciary duty to their American shareholders. While business is offshore-able, most people still want to live in the same country as their friends and family. I think this can be used to "fairness'" advantage in tax law.
Why should corporations pay taxes anyway? (Score:3, Insightful)
I still wonder what's good about corporations paying taxes anyway.
Wouldn't it be more beneficial if they didn't pay taxes?
So, if corporations didn't have to pay taxes. They would hire more people or pay them more. Those additional hires or higher salaries will then be taxed again. So the Gvt. does get it's money.
The effect is, that corporations won't have to go offshore for the best tax deal and pay taxes there.
So we would benefit a lot more if the corporations stayed here - tax free - but in return hire more people or pay higher salaries.
Re:Tax avoidance (Score:5, Informative)
Oh so you would like to pay for the police, the firemen, the roads, and everything else? We can argue about a bloated government, no doubt. But to argue that we should pay zero taxes make NO SENSE WHATSOEVER.
For if we don't pay taxes you better be prepared to pay Vinny down the street a bit of money to make sure that you don't get mugged, robbed, or killed.
Simply put, you sir are a nutter! Even Adam Smith knew we had to have a government and had to pay taxes!
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where the police are obliged to protect your personal property and your life
http://en.wikipedia.org/wiki/Warren_v._District_of_Columbia [wikipedia.org]
where we have a military that enforces our economic interests
did you just advocate colonialism 2.0?
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sorry, meant to reply to another post
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On another note, I think the state fixes most of the roads, so cali would benefit from taxing facebook / MS / etc... the most there.
I'm sure the pro's of
Re:Tax avoidance (Score:4, Insightful)
But to argue that we should pay zero taxes make NO SENSE WHATSOEVER.
Suggesting no corporate taxation is not the same as suggesting no taxation.
For if we don't pay taxes you better be prepared to pay Vinny down the street a bit of money to make sure that you don't get mugged, robbed, or killed.
Even if Facebook were paying more in taxes, that money wouldn't be paying police in my town. It wouldn't even be paying police in the town where Facebook's employees live. Or fire departments, or roads, etc. Taxes paid by Facebook employees, however, do pay for government services where they live.
Focus on taxing the money at the point it gets transferred to individuals and the only way the taxes can be avoided is to move the people... but if they move the people they move the costs as well as the revenues. Note that companies can't work around this by giving employees (or executives) cars, houses, etc., because those sorts of benefits are treated as taxable income.
Counties and cities can, and should, also use property taxes to get the cash required to maintain roads and other local infrastructure used by corporations and their employees.
Set corporate taxes to zero and focus on taxing the money as it flows out. This would include taxing capital gains. Then corporations would have no reason to move to Dublin... unless they really are looking to use Irish labor.
Re:Tax avoidance (Score:5, Informative)
You live in a complex society where the police are obliged to protect your personal property and your life, where food is not full of melamine, where we have a military that enforces our economic interests, where roads improve the flow of goods and services.
Pay for it.
--
BMO
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Good luck with the police thing.
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It is a fact of law in the US that the police are not required to protect you or your property (at least in most jurisdictions).
In its landmark decision of DeShaney v. Winnebago County Department of Social Services,” Stevens writes, “the U.S. Supreme Court declared that the Constitution does not impose a duty on the state and local governments to protect the citizens from criminal harm.
In Warren v. District of Columbia, it is a "fundamental principle of American law that a government and its age
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so... in the castle rock v. gonzales case, we have the supreme court taking a federalist position (can't sue a town under a federal statute), which is something libertarians generally like (smaller government and laboratory of the states and all that). at the same time, you're using that case to argue that public services are ineffective, because they aren't enforced at the federal level.
which one is it going to be, then? you can't have it both ways. (well, actually you can, but only because no one stops to
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where the police are obliged to protect your personal property and your life
http://en.wikipedia.org/wiki/Warren_v._District_of_Columbia [wikipedia.org]
where we have a military that enforces our economic interests
did you just advocate colonialism 2.0?
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>did you just advocate colonialism 2.0?
We've already had it ever since the end of WWII.
What the fuck do you think the military is /for/?
--
BMO
Re:Tax avoidance (Score:5, Insightful)
When talking about income taxes, yes, you are member of the society, you benefit from such things, you should pay taxes. Companies, however, don't benefit from army, from healthcare and from any other things that society provides. In fact, when nobody uses the company, the company ceases to exist. Taxing the companies only forces the companies to spend every year the most so they don't have to pay such high taxes. For me, it is not bad if for example Microsoft holds great untaxed amount of cash this year and invests it the next year or the year after. The company is already punished for not spending their money by inflation, the income tax is just bad tool and shouldn't be used.
Complete bullshit across the board.
Example: Halliburton rebuilding the Middle East
I work in the Healthcare analytics world, a healthy population has a DIRECT correlation to higher productivity from your workforce, ergo higher profits. This is why companies track Health and Productivity Management and implement programs designed to change employee lifestyles to be more healthy.
Drop the corporate shill routine that companies don't benefit from the government. They benefit a hell of a lot more than most citizens and at a lower effective tax rate.
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Example: Halliburton rebuilding the Middle East
PEOPLE in charge of Haliburton profit from it
a healthy population has a DIRECT correlation to higher productivity from your workforce, ergo higher profits
PEOPLE are using the healthcare services ad PEOPLE realize the profits
Roads and other public infrastructures allow your employees to come to work and customers to purchase your product/service.
true, both employees and customers pay for their right to use the infrastructure with their taxes plus property taxes dependent on value dependent on quality of infrastructure are paid on company's real estate
Police and Fire departments help to protect corporate assets from theft and destruction.
property taxes cover that
Legally Corporations are defined as people, only they officially lack the capacity to vote aside from lobbying. However, if you are really going to push the people ticket, then Capital Gains tax needs to be raised to 35% across the board instead of the 15% cap as the investors have the most to gain by corporate operations. The normal workers are actually producing and already paying full income tax on their wages while investors merely front capital with no additional effort.
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Tax avoidance impoverishes the job creators in order to transfer wealth to the leaching class.
Job creators being the working people who actually create wealth through their labor, and consume goods to drive the capitalist system.
Leaching class being the plutocrats who do nothing but extort and siphon off the labor of others.
Re:Tax avoidance (Score:5, Insightful)
I like to pay taxes, with them I buy civilization.
That a lot of deluded "rugged individualists" falsely think they are entirely self-made and have no obligation to pay back into society amuses me. Seeing them frustrated and resentful at paying taxes makes me smile.
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I think most of the disagreement depends on the definition of "society". Binning coarsely, we have group A who wants a libertarian anarchy. Group B wants to pay for shared infrastructure, but not the welfare state. Group C wants a social democracy with a variety of personal, non-infrastructure services guaranteed as rights. Lines blur of course, but that's the general idea.
Choose your own definition of society. I'm not sure exactly who you mean with your comments - I agree with you on the group A nuts
Re:Tax avoidance (Score:4, Insightful)
I like to pay taxes, with them I buy civilization.
Please feel free to hand your entire paycheck to the government. There is no law stopping you. It will make you much happier knowing that you are getting much more civilization than your neighbor.
I suspect, however, that you really mean that you like the concept of taxes paid by others because it pays for the control over them that you appreciate (and that you call "civilization").
That a lot of deluded "rugged individualists" falsely think they are entirely self-made and have no obligation to pay back into society amuses me.
I have an obligation to pay back into society that which it asks me to pay and I have agreed to. There is no EULA or "shrink-wrap license"; no unilateral contract. If "society" wants to promote home ownership and does so by creating tax deductions, then I will use them and feel no sorrow at paying less in taxes. Ditto for energy-efficient appliances, weatherization, charitable donations, etc. If the sum of the deductions meets or exceeds the "tax liability", then why should I have any obligation to pay at all? After all, society has told me what it expects; I have met that expectation.
This same concept applies to corporations. Obeying the laws and paying what is owed is their obligation; paying extra because you want "more civilization" isn't.
Seeing them frustrated and resentful at paying taxes makes me smile.
Why would anyone be resentful at having to pay for things that you think they should pay for but they don't? How silly of them. And isn't it such a wonderful feeling of accomplishment when you can force them to do so, and feel superior to them at the same time?
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Even a libertarian can acknowledge the fact that you don't want Crassus Maximus as your fire chief.
Re:Tax avoidance (Score:4, Insightful)
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Re:Tax avoidance (Score:5, Insightful)
Because it is flamebait! Some folks have this fantasy that you can get everything for nothing. Things cost money! As I was writing to the GP, sure we can argue about a bloated government. But to argue that tax avoidance is a good thing is not correct either.
Police, military, firemen, judges, etc, etc all cost money. Adam Smith who was a capitalist wrote in his papers that government and taxes were needed. The question is how much government, not whether or not government there is a government.
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"Some folks have this fantasy that you can get everything for nothing."
Some folks wish they got a lot less from government.
Some folks have this fantasy that they are entitled to someone else's money.
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You are raising an argument that does not exist. I wrote very clearly we can argue about a bloated government, but not about taxes. You are saying that I somehow want people to pay high taxes for other people. I did not make this point and thus please stick to the argument.
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You are raising an argument that does not exist. I wrote very clearly we can argue about a bloated government, but not about taxes. You are saying that I somehow want people to pay high taxes for other people. I did not make this point and thus please stick to the argument.
Facebook paying no taxes is the kind of crap you get when you get a large powerful government that makes it worthwhile for entities with a lot of money to bribe, err, lobby that government to make rules favorable to them.
Don't like it?
Quit voting for candidates who want more and bigger government.
THAT'S the root cause of the problem.
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And if there wasn't a large and powerful government, then corporations would suddenly have no power over the system? How does that work?
Rob
Re:Tax avoidance (Score:5, Insightful)
Re:Tax avoidance (Score:4, Interesting)
The less that a government can do the less that the power that the corporations have over the government matters to the rest of us.
Re:Tax avoidance (Score:5, Insightful)
wrong.
The government is accountable to the people, when all is said and done,. Money doesn't vote, people do.
We have seen time and time again where the government has fought and one against a multitude of corporation and their abuses.
With strong government regulations, you can limit damage corporations do. With out it it means corporation can do whatever they want. We have seen that. we have seen the results from that, it's not pretty.
Re:Tax avoidance (Score:4, Informative)
If you are really at a 50% tax bracket, you need to do one of two things (perhaps both). First, get a tax adviser and second, consider moving out of New York City or wherever it is that you're getting shafted for on local / state taxes. That's about 20% higher than it should be unless you have some really odd financial issues.
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So?
They question is not about taxes. Just saying Lower taxes otr raise taxes is meaningless.
It's don't to create an emotional argument and fear mongers.
What do you get for those services? Do you kniow what it takes to keep a city running? the 1000's of miles of infrastructure?
Safety, etc...
For the record I make nearly 100K, and pay 21% in taxes, all said and done. Minus fuel taxes, I don't want to figure that out. No time, but it's not much. I get about 8 gallons of fuel a week, most weeks.
If my taxes jump
Re:Tax avoidance (Score:5, Insightful)
The problem isn't "more" or "bigger" government - but having a government that has the balls to stand up and say "pay your fair share"
Unfortunately - here in the UK we have the same problem... the people pay more while the corporations pay next-to-nothing
Re:Tax avoidance (Score:5, Interesting)
Unfortunately - here in the UK we have the same problem... the people pay more while the corporations pay next-to-nothing
This is a complicated issue in my mind, I'm conflicted. One the one hand, my thought is that as long as we're going to tax corporations, we should do so effectively, limiting/eliminating the tricks that international companies use to avoid taxes like this. Note: To me tax avoidance is using legal means to lower your tax burden. Tax evasion is using illegal means. Using the former is shady, but not illegal, and we should expect companies to be immoral when it comes to saving millions of dollars.
But I also have the thought of 'why bother taxing corporations'? We suck at it, and ultimately companies are owned by individuals, everybody from fat cat industrialists to the retired grandmother who bought $100 of IBM stock 50 years ago. That makes taxing corporations both regressive and ineffective - it's regressive in that it hits those who have low incomes and low amounts of stock(mostly in retirement accounts) as much as it hits the rich. Ineffective in that the big companies have all figured out how to shelter the vast majority of their profits legally. It's the small to mid sized companies that are handicapped by actually having to pay the high US taxes.
Maybe make the corporations collect sales tax instead? What about VAT? Maybe put proper tiers on non-earned income(IE capital gains)?
My idea is to split personal income taxes into two categories - earned and unearned. Earned is salaries, piece work, etc... IE you 'did' something to earn that money. Unearned is capital gains, interest, dividends, and such, money earned from the simple fact that you 'owned' something. Your first ~$10k of income in either category is taxed at 0%, after that it's tiered in parallel like the current system. Assuming an average return rate of 5%, that's $200k in investments before you start having to pay taxes on the return, which is a good amount for emergencies, college, early retirement, and what not.
If you make as much as Romney though, you're going to be paying near the top rate, no matter how you structure your income.
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Corporation also cost society money. SO they shoudl also pay. 20% on the net no deduction except RnD, 30% on any money leaving the US.
I would also tax 100% on all net over a billion dollars.
Put that money into RnD, or hire more people, or get it taxed.
What people discussion economics seem to for get, is that the only way money has value to society is if it is moving.
When you pay a dollar to buy and orange, the dollar is only worth something at the moment of the transaction. In fact, it's worth exactly 1 ora
Re:Tax avoidance:....root cause... (Score:5, Insightful)
contractors are not included in the official headcount yet for all intents and purposes they are govt employees. And they are not cheap.
It's simple - see through the bullshit and judge the size of the govt by what it spends.
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Big government means and has always meant big in terms of budget. It has nothing to do with number of government employees.
Outsourcing a government employee does not reduce the size of the government.
Re:Tax avoidance (Score:5, Insightful)
I get it. You don't like paying for lazy people. Fair point, neither do I.
But what happens if you stop welfare? Crime rates go through the roof. People that can't eat get desperate and start doing things they'd never do otherwise. Poor people won't just starve and go away, they WILL rise up and take a lot more from you.
People are only complacent when they have something to lose. If you give them a little something to lose, then you can control them better. Create a society of have's and have not's and eventually the have's are all destroyed by the have not's.. It's happened throughout history, and apparently people don't learn from it.
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Actually there is. During Clinton's presidency they enacted Welfare Reform that required getting work to continue receiving welfare, no work meant no more welfare. We dropped welfare roles by record amounts and as far as I know there wasn't a spike in crime.
Or were you looking for an example like the guy who brougt it up where cutting welfare was bad? I don't know of any examples like that except maybe for current day Greece.
Re:Tax avoidance (Score:5, Informative)
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You can use the United States as a prime example. I'm not here to do the job of educating you, we have complimentary public schools for that. Since you couldn't be bothered to participate in your education, then you can just research crime rates in the US.
Also, since you couldn't be bothered to participate in your education, you can research the Roman Empire and its welfare system and the reasoning behind it.
In addition, since you couldn't be bothered to participate in your education, feel free to researc
Re:Tax avoidance (Score:4, Insightful)
Yes. The solution is helping people to be gainful members of society. We all know that.
The problem is that the current right wing philosophy is cut cut cut, with no money to spend "Teaching a man to fish". He just wants to take the fish away and say "Go get a job" when there are few jobs to be had, even for those that are motivated and educated.
I'm not arguing Welfare is good, but it's a far sight better than simply throwing people to the wolves.
Re:Tax avoidance (Score:4, Interesting)
I guess thats we birth rates are down.
You might want to get a reality check on that opinion.
The Great Society worked. The money for it has been stripped by the pubs.
I used to be poor. very poor. No one I knew was having more kids for money. Even the most poor not that doesn't make sense. However low education, emotional stability and boredom can lead to more sex.
The problem we have no has NOTHING to do with Lyndon Johnson. A bunch of banker and financial 'experts' from around the world at the largest institutions lied, cheated, and stole. THAT is why we are in this mess.
Had Greece(and the world) been given correct data, they would not be in this mess. Note that countries with strongly regulated financial system weren't hit that badly at all. Countries with good education and health care system. The impact they did feel was do to the country with not so well regulated financial systems being hit.
It's the same thing. Every financial scandal that impacted the economy at large cause the pubs to scream 'it's the social program fault' and never at the actually liars who created the mess.
no no, all these problems are becasue poor people have kids.
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Wow. Wow. Wow.
That article appears to be a textbook example of the old adage "Correlation does not imply causaility". It cherry picks data, then tries to imply a correlation and causation without examining the other factors that affect such data points.
And it's funny, but I work with a lot of people from India, all of them say they are better off her than at home and they all want to bring their families here (many have). If they're so happy, why are they in such a hurry to get out of India?
Crime rates
No IP Laws then? (Score:3)
Some folks wish they got a lot less from government.
How about the IP laws that seem to let these companies make all this money and/or let them fiddle the books so they pay almost no tax? The only reason a lot of these companies have such large profits is because our freedoms are restricted to let them do so. This is part of the social contract. We collectively agree to have our freedoms restricted in order for companies to make money. This lets them generate employment and contribute to public services through their taxes.
It seems to me that these compan
Re:Tax avoidance (Score:5, Insightful)
And some folks believe they should get a lot while giving very little.
This is called tax avoidance and is legal, immoral and unjust.
If Facebook thinks 0.3% tax is reasonable than their fire protection should be limited to a tall glass of water, their access roads should be reduced to trampled grassland and they should dispose of their sewage waste using government-provided paper bags.
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facebook is not real - it doesn't drive on roads and it doesn't shit. Employees and shareholders who do these things paid for them with their own taxes.
Re:Tax avoidance (Score:4, Insightful)
It also can't have profits and can't pay taxes - it's a company, not a human being.
So I suggest we get rid of the notion of "companies". It's harmful to society. Instead, let's have the employees and the shareholders responsible for taking the profits and for paying taxes. That'll be a lot simpler, and would require them to actually relocate to the Cayman Islands before they can enjoy the tax benefits.
And if specific employees and/or shareholders find ways not to pay taxes, then the government can find ways to withhold services such as education, health, roads and sewage. Agreed?
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A vast majority of tax money, though, goes either to waste or to things that are outright harmful for the taxpayer. And even for police and judges, a big part is spent gathering the driving without disrupting traffic flow tax, and to patent/etc litigation, respectively.
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Yeah, and? I wrote clearly, we can argue about the bloat, not about the argument of paying taxes. Vast amount of money goes to things that are harmful? Please check the budget of governments. The stuff you mention is peanuts compared to what really sucks up the cash. It is things like military (depends on the country), and pension benefits (most countries). Unemployment, etc do not suck up much cash. Those are just populist arguments as people and politicians want to keep things the way that they are.
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However, the world we currently live in has few if any countries where the overwhelming majority agree that the bulk of government spending is on important things for the government to spend money on.
Indeed. In America, between federal, state and local governments more than $21,000 per person is spent per year (FY 2012).
Now think how much easier it is for someone that only pays $4,000 a year in taxes to go around not thinking that their tax dollar isnt being greatly wasted.... after all, even if "only" 80% of the money is being wasted, they still get (on average) $4,200 worth of value for their $4,000.... a net win for them.
Its when they turn around and say that the rich arent paying their "fair sh
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As an individual or a business, you are supposed to look for ways to pay the least amount of taxes. That's life and there's nothing really wrong with that. If someone didn't look for ways to get as many deductions as possible on their tax return, you'd wonder if they were mental and just enjoyed paying a higher rate. The same applies for businesses. The government so far has said that there is nothing wrong with what they are doing.
The core problem here is with these loopholes. The tax system is a constantl
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Police, military, firemen, judges, etc, etc all cost money.
Well, when a fire erupts at the Facebook HQ, simply don't send the firemen when Facebook calls and tell them to contract a private firefighting company. They will have the fire put down by that company and will simply pay an invoice for the services rendered. :-)
Re:Tax avoidance (Score:5, Interesting)
Well, when a fire erupts at the Facebook HQ, simply don't send the firemen when Facebook calls and tell them to contract a private firefighting company. They will have the fire put down by that company and will simply pay an invoice for the services rendered. :-)
Actually, this is exactly what used to happen before (roughly, and depending on where you live) the early to mid 19th century. The earliest firefighters in modern times were either volunteers or employed on a private contractual basis (ie they would literally turn up at the scene of a fire and try to negotiate payment before putting it out). As insurance developed in the 17th century, naturally insurers started to provide their own firefighters to reduce the losses sustained to fire. The insurers in London, for example, set up a system after the Great Fire of 1666 whereby each had their own group of firemen and they placed "fire insurance marks" on each house so that they could identify whether their unit was supposed to fight a particular fire or not. Eventually the usual pressures of commerce meant that these units usually merged into a single unit covering the whole of London across multiple insurers in the early to mid 19th century, however, still under a model of privately funded provision.
What happened next could be viewed as an example of "corporate welfare"... the insurers lost large sums in a few particularly bad fires and they decided as a result of this that they would lobby the government to provide a beefed-up firefighting service at taxpayers' expense. At the same time, there was a growing movement to "profesionalise" the remaining voluntary provision in other parts of the world which led to them becoming paid rather than voluntary. Following the model set in the insurer-led markets, these areas paid their firefighters out of the public purse.
I would suggest that it seems the right thing to do to fund fire defence by extracting the costs directly from insurers on an incident basis rather than simply relying on general taxation - i.e. if my house catches fire, my insurer would then have to pay the government back the cost involved in calling the fire brigade out (you can argue about the corner case of how to deal with people who are uninsured and whether you fund their costs from general taxation, a levy on those who are insured, or by trying to pursue them individually). One benefit is that the insurers then have even more incentive (beyond just the threat of loss) to ensure that fire prevention measures are adequate. You could also compare this to the idea that the court system should be self-funding through filing fees etc. Just because it's a legitimate use of a government monopoly, doesn't mean it has to be funded through general taxation.
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THANK-YOU!!! I used to work a hedge fund and talked to a guy who lived in Monaco and worked on tax avoidance schemes. He was not happy about the idea, but liked the work because it paid well. The issue here is that governments have to clamping down on this royalty kickback scheme.
It is a really bogus idea. Here is how it works. You have a company, it does not matter what kind of company. This company produces a widget and sells it across the world. You open a subsidiary, and that subsidiary sells your widge
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In a simmilar way that his credit card legislation didn't result in banks raising fees and interest rates to recoup lost profits.
They didn't have to raise their fees, they raised their fees because they had an excuse to. If they thought they could charge more before that happened they would have charged more. Just because someone gives a reason as to why they are screwing you over that reason shouldn't be believed, but it should be acknowledged that you are being screwed over.
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