I've bought some flat-pack furniture from some of IKEA's competitors. After having struggled through putting that together I have to say I have new found respect for the amount of thought and design IKEA must put into how their furniture goes together.
Never bought any furniture from Ikea. The furniture I have bought from other low end places generally has very low res and out of proportion drawings. Its not a crazy conspiracy that the manuals are not very well put together. If you think about it economically, they already have your money by the time you've opened the box and tried to piece your furniture together.
If you think about it economically they only have a tiny fraction of my money. Sure they have the $60 I just spend on a new side table, but they don't have the countless thousands I'll be spending on a new bed, bookshelf, kitchen, dining room table etc. etc. over the next decade. Why on earth wouldn't they want to try to grab that money as well.
Low end furniture competes on price more than brand. If you bought a really cheap side table, they know you'll probably but a really cheap bed -- whether it's made by them or not.
I've observed that many people react badly when presented with instructions that come with a purchased product. ("I can't/don't read manuals," etc.) This bias tends to sabotage their attempts to follow them once they do concede that the instructions might be useful. ("See? These instructions are useless, that's why I never bother with them.") Combine this with the fact that spatial-temporal reasoning skill seems to vary quite a bit across the population.
If you've ever watched Canada's Worst Handyman, you'll see that this kind of attitude is quite prevalent with them. Now I know that this doesn't give us causation, but it's a pretty strong correlation.
After watching a few videos from that show, I swear we have hired some of those people to do work on our rental properties. I have some pictures of bad work that I really need to put up on my blog.
Try buying some assemble-your-own furniture from Target or Wal-Mart. You'll get that much more appreciation for the ease of assembling IKEA furniture and how much sturdier the IKEA furniture is.
They really could use a few words on some of the instructions, but that would violate their "one package for all countries" philosophy.
Also, have you ever tried to hang a pair of doors straight? Their hinges have like 9 degrees of freedom, which doesn't really help. Plus I don't think it is actually possible on this TV cabinet I have, since it isn't actually square once you put a TV on it.
Yeah - their backings (or whatever they're called) on drawers and bookcases are really flimsy. We purchased an entertainment unit from them a few years ago, and I ditched the cardboard-like backs and nailed a strip of solid wood diagonally across the back. Not as pretty, but you need access through the back anyway and the wood kept the structure much more rigid than was originally designed.
Pandering much? This is Hacker news, you have to show how you assembled several packages in a creative way to get in. But, yeah: “outside” there is an alarming proportion of people who get upset for hours, failing at what I did blindfolded at 11.
Most things are extremely easy, but there are some individual packages that are horrible. I remember putting up a wardrobe that seriously took a whole day to assemble. All parts were there though!
To be fair, Ikea founder Ingvar Kamprad just recently admitted (2011) to the existence of the ownership foundation.
> In an email from Ikea sent to the TT news agency, Kamprad admits that the Interogo Foundation in Liechtenstein exists and that it owns Inter Ikea Holding SA, which in turn owns Inter Ikea.
"Interogo Foundation is a company foundation whose only goal is to invest in the expansion of the company business and secure its long-term survival. In other words, the assets of the Interogo Foundation are held as financial security and are only used if Inter Ikea has financial difficulties," wrote Kamprad.
"The assets can also be used to support individual Ikea dealers who have financial difficulties or for philanthropic purposes. Interogo Foundation is controlled by my family and is administered by a board of directors consisting only of outside representatives." he added.
This is a pretty common scenario for international companies. Maybe most of them do not go as far as IKEA and lock their whole corporate structure, but most of them manage to achieve pretty low corporate tax rates. As an example Google was estimated to achieve an effective tax rate of only 2.4% [1]
The only thing unethical about it is that these tax avoidance schemes have inherit economies of scale - startups can't afford the advice.
The solution is not to eliminate the tax paradises (which would cause a revolution btw), but to eliminate the tax code altogether.
If your ideology insists on coercion than at least make it a flat rate.
Edit: I get accused of supporting corporatism below. I don't. I just support anyone to avoid taxes as much as possible and oppose all forms of collectivism.
Makes your furniture cheaper... and your taxes higher.
Helps big companies and the politically-connected... hurts upstarts and people who focus on business not politicking.
Makes people angry at tax distortions, not taxes themselves.
So this sort of gaming doesn't advance your hopes at all.
You'll have better luck with fair, broadly-based taxes, and structural protections against constant tinkering with both the progressivity and exceptions. Then we could have a rational discussion about the overall level of taxation, or possible replacements for taxation, without the distracting class-warfare and favor-trading sideshows that dominate tax policy in conventional shallow politics.
Government won't lower taxes on the middle class if they find a way to tax the rich. They'd just increase taxes on the rich and keep on taxing the middle class as before.
Tax levels are just a product of a) how much there is to take and b) how tax inelastic the subject is.
Public choice theory assumes that Ikea will act in a way that benefits it as an organization (and its shareholders) and fuck the rest of you. Public choice theory essentially states that everyone is a self interested actor, the difference is that I have some control over those actors if they are elected officials, and none if they are a private company. Can I vote with my wallet? Sure, but be honest with me here, how much power does that actually give you? If a chemical company is dumping waste how do I stop doing business with everyone who does business with that company?
We can't, we don't have the information or the power. Instead we elect officials that do have the information and give them the power. This applies to all situations in which I simply don't have the perspective to make the decision, including taxes. Do I think the tax system is screwed up? Sure. Do I think that eliminating it will fix the problem? Nope, but hopefully I can elect people who will fix the problem.
I don't get how people want to put more power in the hands of private organizations instead of one they at least ostensibly control.
Government is an industry with extremely high barriers to entry (want to start a country? Win a war first) and customer lock in (don't like this country? have to leave your entire life behind).
In other words, your argument is that a monopoly in a certain service, given the power to force customers into what it wants at the price it wants, will care more about you than a private entrepreneur just because they have to keep elections once every 4 years...
The reality is that elections are just forward actions of future loot, where politicians buy votes by promising goodies to certain people at the expense of others. Laws that benefit a special interest in a huge way but cost every tax payer a dollar or 2 always pass. Democracy is divide and conquer on steroids.
You also give an example of a negative externality. That's what courts are for. All the law principles that help solve externalities efficiently (habeus corpus, compensating the victim instead of the state) were the result of free competition in common law merchant courts. Again, if the government cares so much about you, why is the murderer of your family member now doing cheap labor in prison for the state rather than for you to compensate the loss?
You know, I wish life were as easy as just coming alltogether, wishing for a better life and giving a TED talk about it. It just isn't. You need to stop looking at intentions and start looking at incentives.
There's so much wrong with this argument I can't even think where to start. Democracy is not perfect because it's made up of people, but a system that gives people control is the best system. The democratic government in the US gives, among other things, critical access to information and regulation of self interested actors. It's the checks and balances that are important. Elected and non-elected officials, civil servants and private actors. Even if I bought your argument that the government is just some self interested autonomous agent (which I do not), we still have control, and most important information about it. That information gives us power.
A private entity does not answer to the public, not truly if there is no information. If they act in way that is unethical or undesirable, they simply hide it from the public. With no reliable information flow (forget for a moment the Internet would not exist in your governmentless world), there is no way of controlling these entities. It sounds peculiarly like feudalism.
No. The system is not perfect, but it is a system we control. It's a system that enables information exchange, money, regulation and the equitable standard of living that has ever existed in the history of the world. Not too bad.
Makes your furniture cheaper... and your taxes higher.
You can't produce evidence to support that. An entirely reasonable idea: the increased economic activity generated by Ikea success and happy, employed staff and nice affordable furniture more than offsets the tax revenue that would have been collected.
The flexibility that success stories have to move around and chase better taxation rates makes taxation lower for the rest of us. The barbarians in the capital know that if they make conditions too unnice, the successful people will up and leave. The rest of us are free-loaders on the desire of countries to attract those groups.
If Sweden or Europe changed things to crack down on Ikea, they could move plenty of their operation to Singapore.
You'll have better luck with fair, broadly-based taxes
By fair, do you mean something like the same rule for everyone? Anything broader than that will move into the sort of cajoling you dislike.
An entirely reasonable idea: the increased economic activity generated by Ikea success
But it doesn't work like that. We, as a society, don't let individuals or organizations decide what's best. We vote in a government who (in theory) decide the rules that apply to everyone, then they tax and spend accordingly.
I know it doesn't work like that, which is why you get situations like this (or like Bono campaigning for higher government spending, while squirreling his own money away where it can't be taxed). Hell, I reckon that a better use of my taxes would be supporting the luxury goods industry which is suffering during the recession, but I don't get to cancel my income tax and spend it on champagne and caviar instead...
I'm honestly not sure it makes furniture cheaper, either.
Here in the UK at least I found IKEA to be about 10-15% more expensive to local furniture stores. And about on par (about 2-5% more expensive) with national chains.
- Homebase: (2 or 3 units together to make that design) £140
- Local Furniture Store: £130 - £150
- Second Hand: £100 ish
- Self Build: about £85 plus my labour (plus; leaps and bounds better quality)
Off topic note; it's currently half built :D because it's a no brainer really to have built it myself once I sorted out the costings. Highly recommend building custom furniture if you have a bit of practical skill - next up is a decent desk (cost of £200 down to under £100 with self build)
I don't find IKEA cheap at all. If you get their cheap offerings (where the so called "savings" are) it's garbage that will barely last a year. If you get something decent it costs at least as much as any other store or more.
Could you elaborate on the fixed costs of the self-build option? I'm curious what tools and experience you have. If I tried to build that I imagine I'd end up paying more in medical bills from banging my head in frustration. It does sound fun though.
- Decent power drill/screwdriver (the battery type)
- Tenon Saw (the sort that is fixed with a metal bar to the top for straight cuts)
- Set square
Upfront you're looking at £40-£55, probably, for adequate tools. However I consider it reasonable that anyone practically minded will have some of these anyway (I bought myself a set when I bought my house last year and they have already proved their worth :)).
The main part of the project is careful design, figuring out the exact dimensions of the pieces you need (sketchup is good for this, or graph paper). Then you can go to the nearest hardware store (I live in a medium sized town and we have at least 5 places I can go to) who will provide the wood cut to length for you.
The only real sawing you need to do is fiddly bits - for example I have to fit mine around skirting board at one point, so need a notch.
In terms of construction, that's fair easy. Wood is really forgiving to work with as long as you are sensible about it :) my design is very simple. I have a piece of wood for the base, with the sides going up to the roof - they are secured top and bottom for rigidity. On both sides I have batons secured horizontally at the intervals I want my shelves, then each shelf just sits on that.
If you get nice thick wood (18mm or more) and don't make the shelf length too long (i.e. about about 80cm) that will work great!
Pre-drill holes first - make sure you use a wood bit substantially smaller than your screw - and make sure you have decent wood screws of the right length.
Bookshelves are pretty simple once you have pieces of wood the right length. Cutting yourself will make it harder, but not impossible :)
EDIT: everything is 90 degree angles, which simplifies things a lot. I'm currently working on a plan for my desk which involves Z shaped legs :) cutting the angles on that will be fun!
Making furniture is wildly rewarding; particularly for me as my dad is pretty practical in terms of DIY so it's some common ground for us!
Well true, but the end result is the same. First two (IKEA & Homebase) are flatpack. The local shop & second hand are pre-assembled (the second hand is real wood construction so was never flat pack), but it makes little difference.
Self build, sure, there is a labour "cost" - but you're looking at a couple of weekends max construction, so if you have the interest it's no biggie :) I only included it because I thought it would be interesting to encourage people to consider it as an option.
What I mean is pricing isn't always the same on the pure product for an individual. Not everyone can load up a huge dresser into the trunk of their mini and get it to their flat. And if those places have delivery charges... =)
IKEA was founded on solving that exact problem.
That being said, I wish I had the room to do my own wood work. One day, one day. =)
Fair point. FWIW none of those places charge delivery in this case.
You are right; IKEA sell cheap. And they also sell convenience - and market economics means that cheaply convenient is more expensive than cheaply awkward.
I generally enjoy reading hn but such right wing ideologies make me feel sick in the stomach.
Please take into account when making such statements the US (or whereever you live) is not the world. And just because you got brainwashed after decades of conservative government doesn't mean the rest of the world is. But the rest of the world also participates in this community.
I don't care - I just don't want to see these endless debates here. They are always the same and go 'round and 'round and nothing is ever accomplished other than pissing people off.
This is pure semantics but are you really comfortable calling anyone who doesn’t want a flat tax a socialist? Someone who doesn’t want a flat tax could have voted for any party in my country.
I was being a little facetious, yes, but if someone to be actually sickened by ebaysuck's position then that constrains my prediction of his beliefs a little more than just not wanting a flat tax for e.g. practical reasons. In other words, I don't think just anyone who doesn't want a flat tax would say what xtho said.
I'm an anarcho-capitalist i.e. I've never seen proof for objective morality of any sort (including democracy) hence I support free markets to make the rules of society by group selection and feet voting.
Just as humanity doesn't need a forced state religion to be religious, humanity doesn't need a forced tax system to be social.
Please consider this view point. Don't confuse personal ethics and political morality.
Do you have any good (online) literature for your position? It seems to me that having money/bartering implies a government no matter how you slice it. I can see potential with some anarchical systems, just not primitivism or ancap.
From the Chicago School of Economics, there is David Friedman with "The machinery of freedom". [1]
A large part of the Austrian school of economics is also ancap. A great overview of the insights today can be found in "Libertarianism today" by Jacob Huebert. [2]
Sigh, I think it is a damn shame that you were put to -1 for attempting to clarify. I'm happy to get you to zero.
Personally, I prefer the term "Abolitionist" to "anarcho-capitalist." I'm an abolitionist because, just like the movement of old, I endorse the abolition of slavery. Governments consider people property (the US taxes worldwide income) and believes it owns the output of said property.
Thanks. Abolitionist is also a good word indeed. Another one might be political atheism.
The downvotes are OK though. People feel very strongly about certain ideas for society and mistake freedom for critique on the idea instead of just on the method (coercion).
For some reason parts of the world got over religious coercion. One day we'll hopefully have the same for ideological coercion.
I'm really saddened to see that so many people have come to believe that thinking differently is wrong and should be suppressed. That coercion and violence against the innocent is the norm and that people who think that we should live free from violence and coercion are "right wing" and "brainwashed".
To tell him not to participate here because he thinks differently than you is to say that your mind is not open to new ideas and that you cannot bear to be exposed to anything that comes from a different philosophical basis than the one upon which you were raised.
Replacing income tax with a consumption tax would see the super rich pay even less tax as they spend a smaller percentage of their income compared to those with a lower income.
Replacing income tax with a consumption tax would see the super rich pay even less tax as they spend a smaller percentage of their income compared to those with a lower income.
I've heard this argument before, and this is going to sound pedantic, so I apologize, but just exactly how rich can you be if you don't spend your money on things?
Or, put a different way, the rich only (bother us/owe more/are easy targets/need to pay up) because a) they don't have to work to live, and b) they buy and own cool stuff we want.
Obviously being able to live without working is a goal for everybody, so I'm tossing that out. What I'm left with is that we identify rich people by the stuff they buy or own. Without that, you wouldn't really have rich people -- or if you had them, as far as their participation in society they would be just the same as anybody else. They'd be invisible -- both in their appearance and in their stress on the social fabric.
So if you want to sack the rich, do it by taxing the things that we identify with being rich -- buying and owning stuff. That way -- poof! -- there are instantly less rich people in the world, and you've created a stable societal goal for people to strive for which kind of boils down to "make as much money as you need to not work" which is a laudable goal for every society, I would think. Right?
Not trying to argue, just thinking out loud. I've spent some time thinking about this, and I think a consumption tax could be supported by folks no matter what their political philosophy or party. The idea is inherently less political than an income tax. Of course, we'll all get hung up on whether it should be progressive or not, but hey -- baby steps.
The problem is that consumption inequality is not nearly as large as income inequality. If your desire is to soak the rich, you pick the statistic which gives you the broadest base for doing so - consumption is simply not that statistic. In the US, the rich have iPhones while the poor are stuck with iClones [1].
As for why we want to soak the rich, it's clearly not (a) - most poor people work very little (by choice).
[1] Note: this is not my opinion on Android (I hate Steve Job's walled garden, and am very happy with my N1), but it is the opinion of several lower class people I know.
The argument for rich people paying more tax isn't because we don't like them, it's because government is expensive and we can't afford it without rich people subsidizing everyone else.
Keep in mind that rich people also have more of a vested interest in maintaining the system, so it's not entirely unfair to them, either.
Most government spending is simply taking money from some people and giving it to other people. This is explicitly not in the interests of the rich.
This is categorically untrue. Social welfare and wealth redistribution, from the perspective of the rich, are a concession to the poorer classes in the interest of pacifying them and preventing a violent leftist uprising. Of course, this has to be done through the government rather than voluntarily because, for game-theoretic reasons, it can't be done voluntarily.
Most of the transfers are to old people, a group which is disproportionately unlikely to be poor or to engage in a violent uprising.
Of course, if the poor are truly as evil and dangerous as you say, wouldn't it be better just to wall them off from the rest of us? For the cost of welfare, we could triple the money we spend on the police.
Most of the transfers are to old people, a group which is disproportionately unlikely to be poor or to engage in a violent uprising.
You're right, and there other self-interested motivations for rich people to support social welfare, including hedging against future misfortune, support of friends and loved ones who may not be as well off and who would be more expensive to support on an individual basis, and the fact that end-of-life health care is often expensive enough to matter even to the significantly wealthy.
Of course, if the poor are truly as evil and dangerous as you say, wouldn't it be better just to wall them off from the rest of us?
Where did I say the poor are evil? I'm accounting for self-interest, not making a moral argument.
Oppressing the poor in order to keep them from rising up against the ruling class has never worked. Taking care of the poor in order to prevent them from even wanting to rise up against the ruling class consistently works.
This isn't even a new idea. I ripped it off from Bismarck, who, "working closely with big industry and aiming to head off the Socialists, implemented the world's first welfare state in the 1880s." http://en.wikipedia.org/wiki/Otto_von_Bismarck#Bismarck.27s_...
As notahacker points out, a lot of this stuff is also a side effect of having a democracy. Having a democracy is perhaps an even better hedge against violent uprisings.
You're right, and there other self-interested motivations for rich people to support social welfare,...
If that were true, there would be no need for force. We could make SS/medicare an opt-in scheme.
Where did I say the poor are evil?
If the poor will use violence unless they receive tribute, they are evil.
Oppressing the poor in order to keep them from rising up against the ruling class has never worked.
I'm only advocating separation. If the poor truly are dangerously violent, lets wall them off from the rest of us. A fence is pretty easy to police.
Oppression is only necessary if you need the labor output of the poor, which we manage to survive just fine without (in the US, the vast majority of the poor don't work at all).
If that were true, there would be no need for force. We could make SS/medicare an opt-in scheme.
No, you couldn't. For game-theoretic reasons, it has to be mandatory to work.
If the poor will use violence unless they receive tribute, they are evil.
Again, I'm not making a moral argument at all. It's your own moral judgment to tar hungry people as "evil" for rising up against a wealthy ruling class--and expressing sentiments like that, quite frankly, reveals far more about you than about me.
If the poor truly are dangerously violent, lets wall them off from the rest of us. A fence is pretty easy to police.
Oppression is only necessary if you need the labor output of the poor, which we manage to survive just fine without (in the US, the vast majority of the poor don't work at all).
The poor aren't "dangerously violent" unless they starve or otherwise slip into absolute destitution, at which point they will try and take what they can get from the rich. The entire history of violent revolution bears this out.
And I think you're misunderstanding this. I'm talking about the distinction between the richest 5% of society and the other 95%. Because that's roughly how the original problem--progressive taxation--is meant to break down anyway. And if you add up things like Medicare, Social Security benefits, and unemployment insurance--frankly, there's a lot of legitimate need for those things, even among working and middle class populations.
Sure, but the 20%[1] of government spending that actually is explicitly in their interests is so fundamental to most rich people's ability to accumulate and enjoy their fortunes. The 80% of the rest of the spending is an acceptable price to pay if you consider it to be explicitly in their interest that the government is not subject to the capricious behaviour of the unaccountable ruler too. Today's government systems weren't designed by the poor.
What it means is... The first $5000 of consumption will be tax free, the next $10000 at 5%, and the next yet at 15%, etc.
So, the super rich would indeed pay a smaller percentage of their income, only if they spend the same as an ordinary consumer, but they would pay much more tax (e.g. 60% after 1 million) if they spend everything they earn.
This would encourage them not to swap pieces of paper for real goods. It would make them have more money in the bank but less million dollar cars and yachts. The productivity saved from not producing those non-producing consumer goods can be used, e.g., on farming, so that food becomes cheaper for the general populace.
I'm not sure how shutting down Porsche factories is going to make food cheaper? In western countries only a few percentage of people are in the business of producing food. By moving workers from building yachts into food production will not make food production cheaper.
This plan would see the rich hording money, rather than spending it on luxuries. The kind of luxuries that are produced by western economies. When the rich spend their money on frivolous luxuries, it helps redistribute their wealth to the workers producing those luxuries.
To take an example to the extreme, it would be wasteful if Warren Buffet hired 10,000 painters to paint a portrait of himself everyday. The GDP would go up, but it wastes effort, effort that can be allocated more efficiently. (Using his own example here)
It exists in most countries, in a form of estate or death tax. Also has same problem, as it forces people subject to it, to spend on accountants and lawyers to minimize it.
You could argue that it makes your furniture cheaper, but isn't it more likely that the additional profit that IKEA accrues due to this complicated scheme is 1. siphoned directly to a small number of individuals 2. divided amongst the shareholders or 3. simply wasted on the tons of accountants and lawyers that it probably takes to keep this system running.
Even if its not the case (at least not entirely) then you can still argue that the fact that IKEA is doing this is anti-competitive, which is surely against your ideology of anti-collectivism because it distorts natural market forces.
Even someone adamantly in the Chicago school of economics would be against a scheme like this because it implies that IKEA is effectively able to compete under markedly different market conditions than its competitors.
What's with posting articles from 2006? There are more recent sources with updates, including from FT.com (behind a paywall) and the investigative documentary about this which aired last week in Sweden:
http://translate.google.com/translate?hl=en&sl=sv&u=...
I personally prefer the economist article. I read it back in 06 and I've read a few more on the Ikea tax setup since then. It seems to still accurately represent the situation, some numbers might be out of date but the gist is the same. That ft.com article is a bit sparse, seemingly written as an update for people already aware of the issue, and as you say paywalled.
Thanks for the additional and up to date info though.
I always think of that when I see a PBS show like NOVA, sponsored by the Howard Hughes Medical Institute. At one time, they owned Hughes Aircraft, mainly as a tax dodge for Howard Hughes. The tax dodge has long outlived the company.
What's terrible about IKEA's whole tax avoidance scheme is that it gives an unfair advantage to IKEA over Target, Walmart, etc. who are all presumably paying expected amounts of corporate tax and additionally, by virtue of being public companies, provide a great amount of transparency versus IKEA.
Another example of a business built in part on a tax loophole--Amazon.com and its online brethren whose customers generally don't pay sales tax. That's a huge, unfair retail advantage compared to Barnes & Noble and other brick-and-mortar stores, especially since retail margins are generally so thin.
>gives an unfair advantage to IKEA over Target, Walmart
Ugh. You correctly note that tax avoidance is an unfair advantage but list among your victims some of the biggest companies in the world. Do you think Walmart is at a disadvantage? They almost certainly avoid more taxes than IKEA (if nothing else, because they make a lot more money).
When Adam Smith wrote about "the invisible" hand, he noted that it would only work if companies weren't allowed to grow too large. Once a company gets big enough it no longer has to participate in the market. Massive tax avoidance is just one of the many ways that companies like Walmart can use their size and power to keep small players out.
> When Adam Smith wrote about "the invisible" hand, he noted that it would only work if companies weren't allowed to grow too large.
Citation? I've read most of Wealth of Nations, and I recall Smith spending a lot of time on monopolies - where the monopoly can constantly undersupply the natural demand, and charge premiums because of it.
But I didn't recall anything about companies becoming too large... in fact, he wrote famous defenses of companies like East India importing, so long as they didn't receive exclusive (monopoly) trade rights. That was one of the larger companies of the day.
But Smith wrote a lot, so I might've missed it. Cite?
"Also chartered companies were well known as witnessed by Adam Smith’s negative assessment of chartered companies in general and the East India Company in particular, contained in the Wealth of Nations."
Smith was wrong about quite a lot, including stuff that was known at that time. For instance, Smith believed in a labor theory of value - this to a great extent influenced Marx, IIRC. They were both wrong, Marx disastrously so.
First, let's not forget that Walmart is the largest retailer in the world, for several reasons. But skimping on state and local tax regulation is something that Walmart has done over the years. Most states (not all cities tho) want a company like Walmart, it provides lots of jobs (we won't take about labor wages), and creates perpetual economic growth in a neighborhood / city / region through a whole ecosystem of consumers, employees, vendors, shippers, contractors, etc. To entice Walmart, states give tax subsidies, devalue property assessments, etc.
I'm not saying IKEA doesn't have the same retail financial prowess with state regulators, but let's be fair, many corporations do what they can to get tax loopholes. Accenture, a global consulting powerhouse was incorporated in Bermuda strictly to avoid paying taxes on billions of dollars.
yea true, again for taxes... And it should be noted that Accenture struck a deal with the Bermuda government (me thinks) to pay limited amounts on a fixed timeline, in any case, they were paying pennies (and got a lot of heat for it) while raking in billions.
Ireland, good find, hopefully the gov't can get more into their pot of gold :P
I mentioned Walmart because they sell some furniture too, though the article points out that IKEA doesn't really have true competitors. You're right, Walmart has avoided quite a bit of tax, and that would be unfair relative to other big box stores or supermarkets. However, I don't think the magnitude of tax savings is anywhere near that of IKEA running in the guise of a charity.
In any case, I'm certainly not arguing for Walmart. I'm merely pointing out that these tax avoidance schemes lead to unfair competition when not all players have access to the same schemes. It should be a level regulatory environment for everyone.
If you keep a tight control on the number of shareholders you have there is no reason why you have to go public - of course the reporting standards are going to be lower for private companies, if you don't want that overhead don't go public!
Indeed some companies use multi-level shareholdings to avoid scrutiny (warning: I am not a corporate lawyer and corporations law varies remarkably from country to country. Do not rely on this advice.).
Say you have Actual Company, Inc (ACI). ACI can't have more than 500 shareholders or it must go public.
So instead ACI issues only 500 shares. 250, say, are kept by the 2 founders. The other 250 are divided up as the sole assets of 250 other companies (ACI Holdings Number 1, ACI Holdings Number 2 etc), each issuing 500 shares.
This means that in one sense, ACI has only 252 shareholders. In another sense, it has up to 125,000 owners.
I believe Goldman Sachs used something like this tactic for the recent Facebook deal.
In the US this won't avoid the 500 shareholder limit. This came up in the discussion about Goldman's Facebook investment vehicle. The SEC can make a determination about effective shareholders.
In the UK the way to avoid scrutiny as much as possible is to become a partnership (not an LLP though) - you don't have to report very much but you do have the rather scary joint and several liability.
A former I-banker of my acquaintance once tried to explain schemes like these to me. There's one call the "Double Dutch Sandwich", involving sending the money on a roundtrip through Holland, then Ireland, then Holland again. Or was it the other way around? Either way, it made me think fondly of PHP spaghetti code.
edit: I got it wrong. There's the "Double Irish" and the "Dutch Sandwich".
I think the Dutch Sandwich is something like - you move all the money to Netherlands, so no tax in the rest of Europe (common market) then to a Dutch owned off-shore tax haven like the Dutch Antilles - so you pay no tax in the Netherlands either.
Re: Amazon - all products from amazon have to be shipped. There is no sales tax, but there is shipping charges. Not quite the same, but consumer do not care usually.
The story would be much different if Ikea's owners were American.
American citizens don't have the same affordances as foreign nationals when it comes to tax minimization. If these foundations for Ikea were majority owned by Americans, they would be subject to taxation by the IRS, regardless of in which country they were created.
This is an amazing write-up i read to counteract the piece about google's tax avoidance... I had to find it on another site though, how do you get the link to go around the paywall?
Google cut its taxes by $3.1 billion in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda (Double Irish).
Am I the only one that enjoy assembling flat-pack furniture and believe it is extremely easy?.