Not paying your fair share isn't contrary to the spirit of tax law because there is no discernible spirit of the tax law. If the tax law says if you do Foo with shell company Bar through subsidiary Baz, then you get more money, legislators wrote that there for some reason because they wanted to encourage or discourage some behavior. I think it is neither reasonable nor moral to live in a society where corporations are "morally" required to second-guess the intentions of the writers of 10,000s of pages of tax law.
Judge Learned Hand was the most important judge never to sit on the Supreme Court. Here's what he has to say:
"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes... Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands."
It doesn't appear that this is what was happening here. They did the deals in London and then claimed that they were done in Ireland for tax purposes.
Essentially, they expected that no one would ever check whether a tax nexus was established in the UK. The fact that the UK didn't have any ability to check if this was true doesn't mean a law wasn't broken.
A paywall mysteriously went up so I can't go re-read the article. But IIRC the article accused Google of avoidance, not evasion. Avoidance is legal and evasion is not. So the article seems to be saying that closing deals in Ireland to avoid taxes is legal, or at least likely to be legal.
This is england. We have strict libel / slander / defamation laws.
Saying that Google is avoiding tax is fine. Saying that Google is evading tax is not fine unless I can prove that they are.
Note that "tax avoidance" used to mean normal "tax planning" - using purely legal means to reduce your tax bill. Now it feels a bit different. Now it feels a bit sleazy, a bit of a grey area, a bit borderline. When people say "tax avoidance" it feels as if the steps taken are right on the borderline, or are loopholes that just haven't been closed yet.
Tax avoidance has evolved into a shell game of jurisdiction shopping and regulatory arbitrage.
In the USA, states got so fed up with companies assigning their trademark and copyrights to DE subsidiaries they could make tax-free royalty payments to that they started doing combined reporting to nullify the effect of those constructions. Even though companies had no offices, employees, or business in DE, they nonetheless were claiming that their very valuable IP was situated there.
The net effect is that it's easy to deduct royalty payments in a high tax state and have them appear in DE, a low-tax state.
Not to be undone by combined reporting, they've (companies) now expanded this approach to offshore destinations to keep the benefits of transfer pricing. GOOG does it. AAPL does it. MSFT does it.
EDIT: People keep saying that it's fine if they're obeying the law. There's a chance that they might not be obeying the law. While they're not evading tax (not using clearly illegal means) they're not just tax planning. Indeed, the schemes used by these companies are pushing a language change. Tax avoidance used to mean normal tax planning.
The tactics of Google, Amazon, Vodafone, Starbucks, etc etc etc mean that "Tax avoidance" now means complex schemes which are probably legal, but that might not be. The schemes are complex, and require believing odd things to be true. For example, Starbucks makes no profit in the UK[1], something that people will find baffling if they've ever bought a £4 coffee.
Any one of the big four accountancy firms has more staff that the HMRC. There's big money to be made in avoiding tax. When firms are caught they negotiate deals to repay some, but not nearly all tax.[2]
But the final slap in the face is that underfunded, understaffed HMRC gets "help" from the big four accountancy firms. What's the catch? What could possibly go wrong with allowing the poacher to play at gamekeeper? They lend staff to HMRC to draft tax law; they then use their knowledge of those laws (that they helped to create) to exploit loopholes.[3]
People really don't mind if you plan your taxes to reduce the bill. But they do get angry when they see people "taking the piss", especially when the country is going through austerity measures and when the NHS is being crunched. All these companies make use of UK infrastructure (police; education; health; roads, etc etc) - they should pay their tax.
The only winning move is not to play here. Economists and policy wonks across the world, of all political persuasions, are constantly suggesting better ways to tax than corporate income. Corporate taxes are lower, more even, and less of an issue outside the U.S. and U.K., but over here "corporate profits" is a dirty word and so you win votes by taxing them, the seeming logic being that if you tax a behavior that makes the behavior less evil.
"Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands."
Aside from this being false (not everyone arranges his affairs so that his taxes shall be as low as possible), Hand's observation is rather strikingly like another, more famous about equality before the law: "The law in its infinite majesty forbids the rich as well as the poor to sleep under bridges, to beg in the streets and to steal bread".
It's true that the law itself is pretty nuts, but things would be a lot better if people (natural as well as merely legal) didn't regard taxes as a punitive burden to be lessened by any means. Functioning and funded governments are good!
>> If the tax law says if you do Foo with shell company Bar through subsidiary Baz, then you get more money, legislators wrote that there for some reason because they wanted to encourage or discourage some behavior.
But the law doesn't say that. It says if you don't have any profits then you don't pay tax, so the company sets up another company in another place and charges the initial company all of its money for "branding services".
This was very clearly not the intent of the law, it's a dodge and the people doing it know it's a dodge.
I generally agree with Ben Franklin here, that taxes are not theft, rather the opposite, failure to pay taxes due is theft from the rest of society. He hated the "all taxation is theft" libertarians of his own day:
"The Remissness of our People in Paying Taxes is highly blameable; the Unwillingness to pay them is still more so. I see, in some Resolutions of Town Meetings, a Remonstrance against giving Congress a Power to take, as they call it, the People's Money out of their Pockets, tho' only to pay the Interest and Principal of Debts duly contracted. They seem to mistake the Point. Money, justly due from the People, is their Creditors' Money, and no longer the Money of the People, who, if they withold it, should be compell'd to pay by some Law.
"All Property, indeed, except the Savage's temporary Cabin, his Bow, his Matchcoat, and other little Acquisitions, absolutely necessary for his Subsistence, seems to me to be the Creature of public Convention. Hence the Public has the Right of Regulating Descents, and all other Conveyances of Property, and even of limiting the Quantity and the Uses of it. All the Property that is necessary to a Man, for the Conservation of the Individual and the Propagation of the Species, is his natural Right, which none can justly deprive him of: But all Property superfluous to such purposes is the Property of the Publick, who, by their Laws, have created it, and who may therefore by other Laws dispose of it, whenever the Welfare of the Publick shall demand such Disposition. He that does not like civil Society on these Terms, let him retire and live among Savages. He can have no right to the benefits of Society, who will not pay his Club towards the Support of it.
That being said I think it's a problem that needs to be fixed in the culture and governance of a people, not in Google itself, since attempting to assign any civic duty to a multinational is probably laughable. Singling out Google probably doesn't do too much good, except maybe to make people think of "favorite company X"'s role in society.
"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone
does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands." - Judge Learned Hand
The use of differing tax laws between two or more countries to try to mitigate tax liability is probably as old as taxation itself. In Ancient Greece, some of the Greek Islands were used as depositories by the sea traders of the era to place their foreign goods to thus avoid the two-percent tax imposed by the city-state of Athens on imported goods. In 1721, American colonies traded from Latin America to avoid British taxes.
In addition, the pilgrims from the Mayflower Pilgrims were not individuals fleeing religious persecution, they were given a "patent" or license by the King of England to settle Virginia, they were actually corporate recruits and given stock in the company in exchange for the risk they took to settle the New World with all assets (crops, livestock, ect...) to be owned by the company.
I am not sure if sentiment about taxation has ever changed over time, going to the Bible and Jesus was betrayed by Judas, a tax collector, the disciples vilified Judas before he became a disciple. Then again Jesus himself in relation to taxation may have said render unto Caesar what is Caesar's for ours is the Kingdom of heaven. Sure you have people like Warren Buffet publicly claiming they are willing to pay more, but the reality is nothing is currently stopping him from paying more, he does not need a law mandating him to pay more, he could take it upon himself to pay a flat tax of 35% across the board, but he does not, he still pays less than his secretary. Otherwise as of late the US has helped lower corporate taxation through the advent of the "election to be taxed as a small corporation" (S-election) and the more recent advent of the LLC, both of which which offer a single taxation structure down from the double taxation of your standard corporation.
Releveant to the issue at hand: in the state of nature, pasty nerds like Zuck and Brin and Page don't rule the world. Their lot in life is to be subservient to the physically strong, or else be the victim of their strength. Its society, acting through a government that makes possible the kind of orderly world in which Google or Facebook are possible.
There are practical reasons to tax more or less. But no moral ones. Without ordered civilization real wealth creation, beyond the savage subsistance level Franklin points out, is not possible and by virtue of that fact there are no moral limits on taxation.
There absolutely are moral limits on taxation. Otherwise we are all just slaves to the state.
"Property is the fruit of labor...property is desirable...is a positive good in the world. That some should be rich shows that others may become rich, and hence is just encouragement to industry and enterprise. Let not him who is houseless pull down the house of another; but let him labor diligently and build one for himself, thus by example assuring that his own shall be safe from violence when built." -- Abraham Lincoln
We're not slaves because we choose the level to tax ourselves at and presumably we're free to leave whenever we want. Its more like a condo complex with a ridiculously high HOA fee. You gotta pay it if you live in the building, but nothing is stopping you from getting on the owners board and voting yourself a lower fee, or moving to a different building.
Taxes are theft precisely because we don't tax ourselves. In America, taxes are set by the majority choosing to not tax themselves very much and instead to tax a rich minority. It's two foxes and a chicken voting on what to have for dinner.
The minority nonetheless choose to participate in that group vote. Moreover, they often do so before they become rich, and only complain about the outcome after they reap the benefits of participating in that society.
Though it shouldn't go without saying that "in the state of nature" the planet's carrying population for humans is far below 7 billion.
Regardless of whatever fine tuning is needed for long term sustainability, the solutions that have already allowed so many humans, with a good portion of them even having an excellent quality of life, are not possible through the naive exercise of brute force.
Of course, that all goes to reinforce the idea that complete independence and self-sufficiency are unrealistic—the planet can handle far more humans living in communities and cities than it can handle humans as hunter gatherers or humans farming for themselves without trade—and that no one today is successful independent of the economic environment where they find themselves, but it doesn't mean that there is something "unnatural" about people other than warlords having the most influence and power.
> but it doesn't mean that there is something "unnatural" about people other than warlords having the most influence and power.
I didn't say it was "unnatural." Indeed, given history, you can say that it's the natural tendency of humans to organize into collectives. The term "state of nature" usually refers not to whatever humans do naturally, but rather the condition that exists prior to the creation of society.
But with all the technological advancement, I wonder how much physical strength matters anymore in a world where everyone can own and use a handgun or a rifle.
I think guns and the 2nd Amendment help the "weak" much more than taxes.
If I am correctly understanding you, the physically strong are paying for a system designed to keep them under. If Zuck and Brin and Page deserve to pay protection, my high school prom king deserves recompense.
The physically strong are giving up the only thing that can be termed as akin to a natural right: their ability to use violence to take what they want. They do this because society as a whole recognizes its better for most everyone to have a different set of rules. But the only basis for that state of affairs is the social contract.
But in a sense you're right. Under our system someone who might be a warlord is stuck bagging groceries. Whether he still benefits is a philosophical question. He may be better off in absolute terms in a society with modern medicine, even if he is a grocery bagger in that world. But psychological research shows that humans perceive prosperity in relative terms. Better to be a warlord in a primitive society than a peasant in a modern one.
Taxes are theft, you can twist it anyway you want.
Say that to workers who have to pay 40-50% of their tax & mandatory pension saving only to see it being swiped out by the government on the next recession.
No. Taxes are a service fee paid as agreed to in your social contract (which you signed by participating in said society). If you disagree with this contract, you're free to move elsewhere that is a. Devoid of taxes (good luck) or b. Devoid of society.
Society functions by and large by public services which, whether you like it or not, need money; not magic. Every functional society has had tax collection in some form or another as a result.
There are communities that don't charge taxes for things, and they're heavily de-regulated as a result. They also heavily favor self-reliance and don't feature luxuries such as Police or Firefighters.
I had a more "radically libertarian" view before I "settled down" (bought real property, got married, made a child). I've increasingly bought into the idea that paying a fair fee for the services that society offers is a reasonable bargain. Paying the fee isn't the issue for me anymore. Rather, the uncivil political discourse and refusal to make reasonable compromises to deal with disagreements about how that money should be spent (and how government, defense, and social service programs can be sustainable) is what irks me. Living in the US makes me feel like a large part of my taxes are nothing but throwing good money after bad (even though I know it's really not as bad as I think it is).
No argument from here about wastage. If I'm paying the rate appropriate for decent services, give me decent services please. Some of it may be as bad as we think it is (bureaucracies always have some degree of inefficiency), but a lot, thankfully, are managed by more level heads.
I encourage people to donate to their local volunteer fire and ambulance services for this very reason. Also, if your local police are having a fundraiser, you should consider helping. You can side-step the inefficiencies of government distribution (and the bickering) if you take an active role in directly funding these essential services.
Most of these should also be tax-deductible so you're just basically side-stepping the middle-man (the bureaucracy) and making sure the money is going where it's needed directly.
I mean, honestly, considering how many people are clustered together these days, we're just not equipped to deal with the chaos that will come about if there was no social infrastructure. These things run on tax money.
There's nothing inherently wrong with being libertarian (after all, the root "liberty" is in there). I'm just very uncomfortable with the casual disregard for all authority, order and in many cases, common sense, that some folks who claim to be libertarian tend to espouse. Last I checked being libertarian required a great deal of common sense, a sense of fairness and above all else, order and self-control.
> Not to burst your bubble but most of the taxes you pay go to fund the Iraq and Afghanistan war, and various handouts to select industries.
That's not really true. A large part of your taxes goes to the military, but that's not co-extensive with the Iraq and Afghanistan war. That money goes towards maintaining the largest most powerful military in the world, enabling the U.S. to continue to be the supreme world power. If you don't think that primacy is directly relevant to your quality of life as an American (a people who as a category consume a disproportionate share of the world's resources relative even to other highly developed countries), I'm not sure what to tell you.
I don't know if this adds to the conversation, but I'm surprised to see you say:
"Yes. This."
...to
"No. Taxes are a service fee paid as agreed to in your social contract (which you signed by participating in said society). If you disagree with this contract, you're free to move elsewhere that is a. Devoid of taxes (good luck) or b. Devoid of society."
...but then proceed to say:
" Paying the fee isn't the issue for me anymore. Rather, the uncivil political discourse and refusal to make reasonable compromises to deal with disagreements about how that money should be spent (and how government, defense, and social service programs can be sustainable) is what irks me."
...which I actually agree very much with.
The "If you disagree with this contract, you're free to move elsewhere" argument offends me greatly, my interpretation of that is that the author believes they hold the ultimate final wisdom on the subject, and you either take it, or you leave.
I fully agree that there should be some taxes, and different people should pay different amounts (from each according to his ability) not so much because it is "right", but because it is "wise", it is (I think) the best way to structure a society to maximize happiness (not the right word really). I believe it is best that those who are more able are forced to pay more (in absolute numbers, if not necessarily percentage, but maybe that too), but I also believe the people who are on the other side of that deal should also be made (somehow) to know how good they actually have it, and it wouldn't hurt them to maybe say "thanks" now and then.
Now, imho money in society is largely ending up in the pockets of people who in no way actually earned it, so some of the above doesn't apply. I don't think someone making minimum wage should be saying thanks to a Wall Street banker for example. I think money "should" be flowing to people who genuinely innovate to raise the standard living of his fellow man, and citizens of the world. I'm thinking innovations in manufacturing, distribution, medical & health advancements, some forms of software, etc. Things that make a real difference.
I also happen to feel/guess that the real, righteous innovators who are really improving the world, probably would be very ok with getting just "very rich" despite how much they've given the world, whereas many of the recipients of the big money flows today (who in very many cases have really done nothing beneficial for the world, often the opposite even), want to keep all of their money, and will do almost anything to keep it, things that they very well know are morally wrong, by most any definition.
The problem is, who is wise enough to make these decisions, of what is the right amount of taxation, what is the right amount of privatization vs socialization, etc. I think we need some social enlightenment, and I don't see that happening any time soon. We've had great experiments of different models in different countries throughout the world, I think we have plenty data for wise open minded people to make a very accurate judgement in some cases. But then, it is also extremely culturally driven, and with current immigration and reproduction rates around the world, I think the makeup of societies are now changing so quickly, that the "best" solution that would have worked in a particular region 20 or even 10 years ago, might now be nowhere close to the best solution. For example: I grew up in a small, close knit community, where everyone knew everyone. There were always some layabout people and families who were always sucking on the public teat, but that's just the way it was, and no one really got overly upset. But if multiple families like this start moving into my neighborhood from other countries, and they don't seem particularly interested in the community or my culture, and choose to associate only amongst themselves, while still helping themselves to the rich social programs that are largely a product of lifetimes of extremely hard work and sacrifice of my ancestors, well, I'm not so ok with that.
I'm not sure what my point is really. I think on one hand, our technology and highly automated manufacturing allows us to get 75% of everything else wrong and still have a high and extremely widespread standard of living. On the other hand, I think if we could get that other 75% down to around 25%, perhaps the wealth could be spread around more fairly (one class who's getting royally screwed is the current generation of workers in Chinese factories) without everyone getting bent out of shape, and we could perhaps have some leftover to work on some of the really important problems in the world, that can almost only be solved by a socialized effort.
I just have one big problem with the "service fee" thing. The law (in the West) is (mostly) a set of contracts between the government and individuals. Taxes are one of the main obligations of the individuals, and they're part of this contract.
There are of course other sides to the contract. Where I'm from one of the other sides is inflation-adjusted pensions. I work just like everybody else did, future and past. Yet I do not have the right to inflation adjusted pensions anymore.
Now that contract, when I read it at age 20, really did not seem to leave any leeway to cancel them, but of course the state is sovereign. No matter how (legally) solid a promise or contract, the state is under no obligation to execute it (not even for people who are current pensioners, and have very little power in the current system. The ones that trusted the government to hold up it's end of the bargain got screwed. Some got screwed, aged 70 or so, and became homeless. I knew one of those).
That event has opened my eyes. What I'm paying taxes for, ~40% goes to paying pension, both of which are getting canceled. Another 50%+ goes to national health insurance and unemployment insurance (I'm in Europe), and in Brussels it is obvious that this part of the system is collapsing, but is also begin used as "bread and circuses" for most of the inner-city population, leading to fast growth. People blame immigration for this, and while that's a significant chunk, the root of the problem is that low-paying jobs are a lot worse than unemployment to any rational person. They're much more likely to demand overtime and extra work than high-paying ones, and the commute costs money, and the whole thing is just so much more stressful than actually doing something.
So there's 2 factors here that I find most offensive about taxes. First, I'm being held to tax law, but the government is not being held to it's promises (like my pension). Second, the government has created a feedback loop that uses my taxes and makes people dependent, brought the whole thing close to the breaking point, and expects me to pay for it.
Screw them. This is not rational on any level. Sorry. I do not volunteer my time on one-sided contracts, where the other side has zero intention to fulfill it's end of the bargain. Whatever I can do to lower my taxes, I do. And I don't consider it morally dubious even. Whatever one can do to make this bread-circus system collapse faster should be done, for the longer it takes the bigger the suffering will be.
The problem is that the social contract is a lie. Fed policy of inflation is a kind of deliberate taxation. Social Security is a bankrupt fraud. We borrow a trillion dollars a year, a debt that will burden today's children who have no say in the matter. The complex tax code is a giant con game where insiders and the wealthy shift the burden to the middle class. And you're not free to leave the US if you are wealthy, there is a substantial financial penalty (confiscation).
It isn't all or nothing, we can have low, honest taxes and a decent society with a more vibrant private sphere.
Can you really defend US Federal taxes in 2013 when most of the money goes to fund dishonest wars and various social ponzi schemes?
Your point is valid in an idealized world where taxation is fair and spending transparent. But in today's world progressive taxation is simply a tool to extort complacency from the masses and allow the powerful to start costly wars using terms like "evil" and "evildoers" rather than having to make a rational cost/benefit analysis.
My original reply was to the assertion that taxes are theft, which it patently isn't. I agree a lot of it is going to means to dubious ends and that can only change during elections.
> Spending must be transparent. No argument here.
> Wars of aggression (already illegal) must stop.
> War on drugs, and other likewise stupid expenditures must stop
(slow, but getting there)
These will only change when politicians start representing the people that voted them into office. Remember that: Only the people that voted them into office. Not those who hold the majority sentiment. The two groups aren't necessarily the same.
> (which you signed by participating in said society)
This is what Plato has Socrates argue in Crito, but it is bullshit outside of perhaps a limited few scenarios (such as: if you are an older adult with the capacity to be politically aware, the means to remove yourself, and the emotional hardening or ideological emphasis necessary to abandon your friends and family.... in other words, if you are Socrates.) Those who actually have the ability to do as you implicitly suggest they should if they do not consent are a very small minority.
"If you don't like it, leave it" is the cry of those who are in privileged positions in society and think that those below them should suck it up and deal with it.
(Of course "leave" also becomes difficult for the extremely wealthy since, unlike in Athens at the time ("Any one who does not like us and the city, and who wants to emigrate to a colony or to any other city, may go where he likes, retaining his property."), we have "exit tax" for those people. These few people must be taxed in order to opt-out of being taxed.)
Let me add a c. then : "Re-negotiate the contract to more favorable terms at the ballot box". And this is the only truly effective mode of meaningful change in a Democracy. I just wish people would stop voting one or two issues which invariably lead to disappointment on many others.
That is perhaps the "correct" answer, though not particularly satisfying or convincing to those of use who have lost faith and confidence in the system.
I'll agree that taxes in theory are a service fee. However, the part that many with libertarian leanings (for example, me) get frustrated by is not the idea of paying for services (I like cops & firefighters & paved roads), but paying into a grossly inefficient system and seeing so much get squandered.
I feel communities would greatly benefit from more fundraisers for this very reason. The middle-man will always take a cut, but most of your donations should be deductible. At least this way, you're funneling part of Uncle Sam's cut to where it's truly needed.
We can deal with Uncle Sam's cut and how it's spent with the ballot box.
I would caution, however, too many people vote candidates into office on only one or two of their pet issues. I understand no one will find a candidate they agree with 100%, but there's a lot more to a person than just taxes, just guns or just environment etc... This has to change.
People need to look at what they're really getting themselves into by voting for the right people after thinking very carefully and objectively. And of course on more than one or two issues.
Straw men belong on a field where the dictator would have sent the dissidents to farm by force.
"Stealing" is "stealing". "Taxes" are not "stealing". "Taxes" are what is used to pay for the services used by and benefit the people. Money collected under whatever other label you give that is not used for these purposes is "stealing".
From my perspective I was giving a counterexample to challenge the claim that all theft is unlawful.
You're saying that if legal money collection benefits society it is "tax", but if it does not benefit society it is "stealing"? Sure, if you split the words that denote legal money collection into these two forms, then tax is not theft. I simply define tax as legal money collection.
I'm not anti-tax, btw, but neither do I subscribe to the view that just because a government passes a particular money collection law that it's a just law.
It shouldn't be the law just because government passes, but I like to think our government isn't so broken that laws are passed with complete disregard to majority consensus.
But I don't think it's hair-splitting to call the collection of funds for the benefit of society (and actually used for societal projects) taxes and those collected to stuff the coffers of politicians and their cronies as stealing.
In other governments, where order is kept at the end of a barrel rather than with a vote, I imagine stealing takes place quite flagrantly, but then the rest of the wouldn't call that a "tax" at all (secretly, those citizens would also call that stealing).
Well, ok, two things. First, it sounds like we basically agree that legal theft is possible. Second, even in the US there is corporate lobbying to influence government spending, which amounts to taxation without representation (i.e. theft), and moreover there is a revolving door between government and industry, particularly with the military which is where 50% of our tax money goes. At least, it is bad enough that Lawrence Lessig has moved on from fighting copyright concerns to fighting corruption in Washington.
Funny you quote Ben Franklin, because in his day, the taxation looked very very differently than it does now:
"The tax mechanisms used during first 150 years or so of U.S. tax history bears little resemblance to the current system of taxation. First, the U.S. Constitution restricted “direct” taxation by the federal government – meaning taxes directly on individuals. Instead, the federal government relied on indirect taxes including taxes on imports (tariffs) and excise taxes. Tariffs were the major source of U.S. government receipts from the beginning of the nation up to the early 1900s. For example, in 1800, custom duties comprised about 84% of government receipts." (Source: http://www.eoearth.org/article/History_of_taxation_in_the_Un...)
Government activity was also a tiny part of the economy: "Another important difference is the scale of government taxation and expenditures relative to the entire economy. Government spending is currently a major portion of the total U.S. economy – in 2002 government expenditures and investment at all levels comprised about 20% of total economic output. In the late 1800s government expenditures were responsible for only about 2% of national output (earlier data on national output are not available). " (Source: http://www.eoearth.org/article/History_of_taxation_in_the_Un...)
Another source of similar info:
"But lets start with what was levied initially:
1. Excise taxes: First levied July 4, 1789, they accounted for 80-95% of all federal government revenue. Tariffs were the main source of government revenue through the 1800s.
2. Property tax: One of the earliest taxes imposed. In 1634, property taxes were assessed by the colonies. In 1796, 14 of the 15 states collected property tax. Delaware levied tax on income from property, but not on the property itself." (Source: http://www.foxbusiness.com/personal-finance/2011/08/25/snaps...)
By looking at these taxes, seems like it would be a no-brainer to pay them. As a property owner, I will gladly pay to ensure I have security, safety and infrastructure around my property. Safe, clean areas with good schools tend to promote better property value growth. As a consumer, if I want something that is imported or otherwise taxed, I will probably still buy it. I may consume less of it due to the price. There has to be an exemption for essentials, but overall, if a Honda or BMW happens to cost 30% more because it's imported, whether I buy it or not will depend on whether it's 30% better than the alternative (if there is one).
What we have today is hardly what Ben Franklin was talking about. Today, those who consider themselves upper-middle to upper class are paying 10-22% (top 1% is around 28%). (Source: http://www.forbes.com/sites/timworstall/2012/07/15/the-real-...) For that, they don't get any type of real retirement guarantee, nor any health care guarantee, or even truly free education. Even the public schools cost money because the free services are bare minimum and do not include anything to do with sports or education outside of classrooms. In order to have any of those social safety nets kick in, those upper-middle class members have to hit financial ruin.
Also, funny math in the referenced Forbes article - 3 of the lowest quintile supposedly get money back that they did not earn... I haven't verified the math, but it's a bit disturbing that the tax system is being used as a means to directly redistribute wealth, and not actually provide services to all of society. Somehow in my mind, taking money from person A and directly giving it to person B strikes me as wrong. Taking money from person A and providing health care accessible to person A, B and C, does not result in the same emotional response for me, because person A actually gets to enjoy some of the benefit of this social good.
Read the relevant part again: "All Property, indeed, except the Savage's temporary Cabin, his Bow, his Matchcoat, and other little Acquisitions, absolutely necessary for his Subsistence, seems to me to be the Creature of public Convention. Hence the Public has the Right of Regulating Descents, and all other Conveyances of Property, and even of limiting the Quantity and the Uses of it. All the Property that is necessary to a Man, for the Conservation of the Individual and the Propagation of the Species, is his natural Right, which none can justly deprive him of: But all Property superfluous to such purposes is the Property of the Publick, who, by their Laws, have created it, and who may therefore by other Laws dispose of it, whenever the Welfare of the Publick shall demand such Disposition."
What Franklin is saying is that property in surplus of what a man could acquire in his savage state is the result of society and therefore society is entitled to direct its disposition as it sees fit. The only moral limit to the amount of taxation, according to him, is the point at which society takes away what the man would have had in his savage state (i.e. he is made worse off by the existence of society and its taxes). Taxing someone making hundreds of thousands of dollars at 28% is of course nowhere near that limit.
Indeed, the change in the economy since Franklin's time cuts in the opposite direction, under his reasoning. Today, people have far more property in surplus of the subsistence level than they did in Franklin's time. Taxing a middle-class farmer of Franklin's time 75% might have taken him below the subsistence level, and have been immoral according to Franklin, but that would not be the case today with a middle-class programmer.
Of course it's probably not, from a utilitarian standpoint, the best idea to tax everyone to the subsistence limit, in a world where people can vote with their feet and countries can compete on taxation levels, but under Franklin's reasoning there is nothing morally wrong with even very high levels of taxes, as long as no one is worse off by virtue of the existence of society than they would have been in the savage state.
The error in the reasoning of this excerpt is the assumption that the government can justly create any law that it wants, short of taking away a person's bare necessities. By this logic, slavery is fine as long as the slave has food, water, and shelter. The slave has no right to complain as long as he's better off than he would be in the most primitive state of nature.
The declaration of independence expresses a better view: we are endowed with liberty by our Creator and it is the role of government to protect that liberty. Under this view, government's actions can be judged.
A slave's participation in the system is not voluntary. Your participation in society is voluntary (i.e. complain about taxes before you get rich--don't complain about the bargain after you've seen how it plays out!)
Also: if you assume God exists, then there is a moral framework that's externally imposed which makes arguments like these moot. But whose God are we talking about that creates these endowed rights? And where in the Bible does it talk about taxes?
"Also, funny math in the referenced Forbes article - 3 of the lowest quintile supposedly get money back that they did not earn."
What you "earn" (in the sense of deserve) in a modern integrated economy with extensive division of labor is mostly a fictional number. Apple makes $0 without people to assemble iPhones and iMacs, and it also makes $0 without the designers in Cupertino designing the products. Given that both groups' labor is necessary (in the causation sense) for Apple to earn any money at all, what allocation of the proceeds is appropriate between the groups? We create a particular distribution on the front end through our legal system, then adjust it on the back end also through our legal system. It's all equally arbitrary.
Given that both groups' labor is necessary (in the causation sense) for Apple to earn any money at all, what allocation of the proceeds is appropriate between the groups?
This is a disingenuous question. The money taken from the designers in Cupertino is not given to the (mostly Chinese) workers who assemble the phones.
Instead, it is given to people who did not contribute at all to the production of the iPhone (retirees, other non-working Americans, etc).
Not at all arbitrary - if the person from whom the share is being taken gets to participate equally in the benefit it then provides, I don't have a problem with that (so long as the redistribute still affords person A to have a better standard of living). What I see as wrong, is when person A pays the bill, but does not get to enjoy any of the benefits.
For example, take Sweden or Canada, there is a baseline health care system. Every citizen participates. Some pay more than others, but everyone is protected. Not so in US - you have to fall well below middle class in order to get any real help.
Those bargains only exist in the context of an arbitrary legal framework for enforcing them. As soon as you make certain actions illegal and certain ones not (e.g. Burning your boss's house down is illegal, firing someone just when they find out they have cancer is not) you've descended into the realm of arbitrary. There is nothing fundamental about setting wages using a peculiar flavor of free bargsining in which people are not really free (and you're never free if physical coercion is off the table). It's just how we do it.
Rights are not arbitrary. Like the laws of physics, the gory details of what rights are may be hard to pin down exactly, but this doesn't mean that they don't exist. In the examples you gave, it's had to imagine a just society in which it would be OK to burn down another's house (violating physical property) or to be forced to hire someone or keep them employed (violating the right to contract.)
It is not arbituary, but it is mostly subjective. For example, here in Holland, an appearantly unjust country, you can not fire someone without cause after they've worked a steady year for you, in most but not all cases. This rule is the result of negotiations not between the individual employer and the employee, but between the brance of the economy, labour unions and the central government.
The problem with just having the employee and the employer come to a contract, is that the negotiation position is not on equal terms. And since the economy is here to serve us; not the other way around; we democratically elected this policy and have preferred it for almost half a century.
Your notion of rights, esspecially economic rights, as somehow inherent to reality as laws of nature, seems awfully short sighted. My neigbour is not free to have himself exploited, as it will affect my negotiation position as well.
And i honestly dont understand why so many Americans keep focusing on their rights to be exploited and abused in an economic sense. Of all inalienable rights i can think off, like autonomy of your own body (drugs? sex?) or freedom of speech (swearing?), that do not legally, socially or culturally apply to americans, the narrative limits itself to guns and slaves (exploitable workforce). The only two situations where it obviously does affect others, aand therefor the right can not be inherent.
Both physical property and right to contract are arbitrary. A hyena cannot sue in civil court if a lion violates his right of owning chattel property by divesting him of a carcass!
Well put, but the top income tax rate in the US is now nearly 40%. Plus there's 12.4% for Social Security (employer+employee but it is economically all your salary) and state income taxes. And if you invest anything after that, there's capital gains and dividend taxes.
SSI is forced retirement savings program. You get out an amount proportional to what you pay in. It makes sense from that perspective to have a cap on the amount of income taxed, because they have cap on the benefits you can receive.
Except that it is a was originally designed as a widows benefit.
It is not about getting what you put in, it is about a safety net for old poor people who have no income, whether or not you agree that we should do that, to me it is clear that is what the goal of SSI clearly is.
I think the parent was referring to effective tax rate. Tax rates are applied in graded steps, so you will only pay 40% on income over a certain amount.
Except that the truly rich tend to get most of their income from capital gains rather than wages and salaries, and there's a much lower rate for capital gains than for earned income. The "Buffet pays a lower tax rate than his secretary" problem.
Brittin told the PAC last year that “nobody” in Google’s UK office was selling advertising on its website. When he asked to give further evidence last week, he admitted “a lot of the aspects of selling” did take place in London but the deals were “closed” by staff of Google’s Irish subsidiary.
The distinction is crucial because if deals were finalised by London-based staff, Google could be deemed to have made profits on the contracts which would be taxable in Britain, rather than low-tax Ireland. “It uses a concocted scheme to avoid tax. It’s a smoke-screen to distort where the substance of its economic activity is really taking place,” Jones told The Sunday Times.
He said he attended meetings where Google’s London sales staff closed deals, including winning contracts from eBay, the online auction site, Kelkoo, a price comparison website, and Lloyds TSB. He showed The Sunday Times contracts, invoices and correspondence between Google and its customers in Britain. One 2004 contract had the address of Google’s London headquarters next to the heading. Clients would be sold deals by Google staff in London, who were in charge of sending out contracts and receiving signed documents back from clients. In addition, British clients paid money into British bank accounts for Google services.
I am normally enraged by a number of Google's business practices and am extremely hostile and critical of them when it comes to their evil and horrible customer service practices, among others, but this is about the stupidest criticism of Google that I've ever heard. This isn't even actually a criticism - EVERY individual and company works to minimize their own tax burden as much as they can. Google is not evil for not wanting to give even more of their cash to any government.
If Barney Jones wanted to report on what he viewed as illegal activity, why would he wait nearly a decade to come out about this? This is incredibly bizarre and stupid.
I'm quite tired of the populist rhetoric of "morality" vis-à-vis tax that the UK media and politicos seemingly wheel out every other day. The bottom line is that taxation is a legal issue, not a moral issue.
Lord Clyde said in Ayrshire Pullman Motor Services v Inland Revenue "No man in the country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or property as to enable the Inland Revenue to put the largest possible shovel in his stores. The Inland Revenue is not slow, and quite rightly, to take every advantage which is open to it under the Taxing Statutes for the purposes of depleting the taxpayer's pocket. And the taxpayer is in like manner entitled to be astute to prevent, so far as he honestly can, the depletion of his means by the Inland Revenue".
That is the law of the land to this day.
There is a moral obligation to obey the law, but not to pay a penny more in tax than the law demands. If there is a problem with the law then legislate to ameliorate the issue, but please spare me this talk of "morality".
Internationally, the laws need to be changed. All the major players are using Ireland, Bahamas, Cayman Islanda, et al, as avoidance schemes. The firms try to take advantage of every legal loophole, even if in morally grey areas, because their competitors are also all doing so.
Really, the major OECD players need to get together and figure out a way to stop the tax loophole arbitrage. Although the tax havens have no incentive to do so.
>Really, the major OECD players need to get together and figure out a way to stop the tax loophole arbitrage.
It's really a domestic political problem. The source of the problem is that you're attempting to tax something called "profit" in the context of an international corporation. Profit means revenues minus costs. The problem then becomes obvious: The corporation's executives will strive to report more of the international operation's costs in the subsidiary in the higher tax jurisdiction, and to report more of its revenues in the lower tax jurisdiction.
So, you say, make them report things accurately. But what does that even mean? If a company produces a product for internal use in one country and exports it to another, what is the "accurate" price to be reported as revenue to one subsidiary and cost to another? Is it the price that the item would cost at retail, or the price that it would cost if purchased in volume, or the cost of the raw materials used to produce it, or what?
No matter which you choose, companies will arrange their affairs so that it benefits them. If the price is set at the actual cost of production then subsidiaries in high tax jurisdictions will be found selling everything they produce through subsidiaries in lower tax jurisdictions and eliminating all of their profits that way (minimize taxable revenues). If the transfer price is allowed to include a nontrivial amount of profit then subsidiaries in high tax jurisdictions will be found buying everything they use at a premium through their foreign sister companies in lower tax jurisdictions and eliminating all their profits that way (maximize deductions).
The problem is that the entire concept of allocating profits by jurisdiction in an international supply chain owned entirely by a single entity is just totally unworkable. The profit belongs to the entire supply chain; in arms length negotiations the allocation of profit to each component would be determined by negotiating skill. And no matter what value you place on a transaction, corporations can rearrange their affairs to take advantage of that valuation, and it will be profitable for them to do so even if it costs $95,000,000 to save $100,000,000 in taxes.
The solution is to stop trying to allocate profits and just tax something else. Which is why it's a domestic political problem: People don't want to hear that. They want to imagine that corporations can pay their taxes for them and, as if by magic, this will get everyone else out of having to pay for the government services they want provided.
It's totally possible to tax international corporations, but you can't do it by trying to tax corporate profits. If you want to tax a corporation that makes use of government services and your jurisdiction's people when it produces value, tax real property or labor. If you want to tax them when they make money selling to your population, tax sales. If you want to tax investors, tax investment income.
Corporations aren't humans. If you ever did manage to extract tax revenue based on corporate profits, it would inevitably come out of the pockets of one of those groups in any event. Taxes have to be paid by somebody.
The problem with taxing people instead of profit is that it is easier for a person to move to a low-tax jurisdiction than is is for a company to move the place where it adds value.
I'm not convinced that allocating profits by jurisdiction is unworkable. You ask, "If a company produces a product for internal use in one country and exports it to another, what is the 'accurate' price to be reported as revenue to one subsidiary and cost to another?". My answer is, "The price an independent supplier would have charged for the same quantity". Now I agree there is some wiggle room here, but only up to a point. If the average profit margin in the widget industry is 10%, your widget subsidiary might be able to book a transfer profit of say 20%, but not 200%.
>The problem with taxing people instead of profit is that it is easier for a person to move to a low-tax jurisdiction than is is for a company to move the place where it adds value.
What makes you think that? Here's one example: California has some of the highest taxes in the U.S, but everyone in Silicon Valley and Hollywood making big money still lives there. Why don't all of those people leave and move to Texas or Nevada to take advantage of lower personal income and sales taxes?
It's far easier for the corporation to "move" because the corporation only exists on paper. It can incorporate and hold its trademarks and copyrights in Delaware or an offshore subsidiary even though its headquarters is in California, etc.
> If the average profit margin in the widget industry is 10%, your widget subsidiary might be able to book a transfer profit of say 20%, but not 200%.
But they don't need 200%. They only need 20%, which when applied systematically is enough to erase the 10% profit margin they might have made in the high tax jurisdiction.
There is also the matter of what an "independent supplier" would actually be charging. Suppose the international operation decided that it would like to close all of its offices in the UK and stop doing business there, but continue selling software licenses in bulk to third party UK distributors who come to do business with it at its headquarters in Ireland. In that relationship the international operation is an independent supplier, but they have all the power. The third party distributors have no other source for licenses, but the international corporation has a large variety of willing distributors, so it can force them to sell at razor-thin margins in the UK and claim all the profits for itself in Ireland. What you see them doing is largely what you would see if they were independent entities.
Yes, Hollywood and Silicon Valley executives are tied to California because that's where the jobs are. But people who rely only on investment income (ie. retired people and the very rich) can often be found moving jurisdiction to avoid tax.
A corporation may exist only on paper but the value that it creates comes from a mixture of social, human and physical capital - and that occurs at a particular place. Facebook could move its place of incorporation to Delaware overnight, but the place where it 'adds value' is rooted in California.
Regarding the widget manufacturer: Yes, in some cases a transfer profit of 20% will be sufficient to wipe out all reported profit in the high-tax jurisdiction. But how common would that be? If Apple were to able to inflate the cost of manufacturing an iPhone by 10% there would still be plenty of US profit left to tax. If Ford could inflate the cost of all the components it imports from low-tax jurisdictions (not high-tax ones like Japan) by 10% would it have a significant effect on reported profit?
You are right about the software licences - I made a similar point here:
https://news.ycombinator.com/item?id=5731680
If the software was developed in Ireland then the UK shouldn't be able to tax the profit.
>Yes, Hollywood and Silicon Valley executives are tied to California because that's where the jobs are.
That's where the jobs are because that's where the employees are and vice versa. There is a reason you don't see many software companies setting up shop in Des Monies and trying to attract engineers with the low cost of living.
>Facebook could move its place of incorporation to Delaware overnight, but the place where it 'adds value' is rooted in California.
That's what I'm saying. You should tax the things that "add value" (employees, real estate that implies use of local infrastructure, etc.) rather than trying to tax profit, because profit doesn't have a country.
The problem with the alternative is that just because your country contains something that "adds value" doesn't mean a corporate entity in your country can make any profit from it. Suppose your country has great engineers. If the engineers are the valuable commodity and the market is efficient then they'll get paid close to the value they provide to the company and leave little as profit for the corporation. You can have a company which is providing huge value to the economy but is having to pay its employees the lion's share of that revenue in order to retain them. That company won't have very high profit margins because if it kept more of the profits for itself its engineers would quit and join a competitor that pays better.
The only way that doesn't happen is if the company has something its competitors don't (strong trademarks, trade secrets, some unusually valuable copyrights or patents, etc.) But then the value of that non-geographically-dependent asset (which is all that keeps the company from having razor thin margins) can be whisked off to an entity in a low tax jurisdiction, leaving the entity within the higher tax jurisdiction in the position of having extremely small margins again while the profits accumulate in the entity associated with the movable asset.
>Regarding the widget manufacturer: Yes, in some cases a transfer profit of 20% will be sufficient to wipe out all reported profit in the high-tax jurisdiction. But how common would that be?
You're asking how common it is for a company to have a less than 10% profit margin? I would say that covers most companies. The primary exceptions (which Apples clearly falls into) are the companies that sell products covered by high value copyrights, patents, trademarks, etc. Which leads to what we've been discussing with software licenses.
The problem simply is that you can't have significantly higher taxes than the next country on anything that can be easily removed from your jurisdiction, or that is exactly what will happen. And the profits of international corporations fall into that category.
Ok we have a misunderstanding about the term, 'add value'. I was using it to mean profit but you are using it to mean costs. My gut feeling is that taxing costs instead of profit will lead to warped incentives, but I admit I cannot think of a good example just now.
> You're asking how common it is for a company to have a less than 10% profit margin?
No - I wasn't clear, sorry. I was thinking a company might typically have the following costs as a percentage of revenue: (a) domestic costs 40%; (b) imports from high-tax countries 25%; (c) imports from low-tax countries 25%. Increasing this last figure to 27.5% would not wipe out the company's profit margin.
> the value of that non-geographically-dependent asset ... can be whisked off to an entity in a low tax jurisdiction
A company's advantage over its rivals often geographically dependent. Toyota's famed culture of lean, just-in-time manufacturing allowed it to become the biggest carmaker in the world. That culture was a company asset rooted in Japan that could not be whisked to any tax haven.
As for intellectual property, is there absolutely no way to structure the tax code so that growth in the value of these assets can be taxed? What about a simple rule that says IP cannot be transferred across borders within the same company? That is, the value of a patent is tied to the country in which the R&D was done. The value of a book's copyright is tied to the country in which it was written. The value of a software licence is tied to the country in which the software was developed. Etc.
> The problem simply is that you can't have significantly higher taxes than the next country on anything that can be easily removed from your jurisdiction, or that is exactly what will happen. And the profits of international corporations fall into that category.
If that was the case then the corporation tax for most of the Fortune 500 would be zero. The current system, although imperfect, is still somewhat functional.
To add to this, most tax relies on a nexus between the country and the legal personality being taxed.
Taxes of profits are particularly weak when a company operates in multiple countries.
So instead you pick taxes which can't easily be avoided. The classics are property taxes, sales taxes, payroll taxes, tariffs (ugh) -- anything where there is an unavoidable, physically local transaction.
"a devout Christian and father of four," is this suppose to portray an image of NOW that he is no longer with Google and after working there "between 2002 and 2006," he wants to "do the right thing." PA CHA!
He's obviously doing it with his own intentions, whatever they may be. He worked there that long and now that he's no longer with them, just wants to be get PR.
Given my background in regards to Google (it's not positive), I'm not a fanboy of this "good," employee and am NOT AT ALL in favor of Google.
Perhaps the conviction of seeing it plastered all over the UK headlines in the past few weeks was too much for him? I'm not sure what being Christian has to do with it, why you're reacting to that, or why the journo even bothered mentioning it
Using the word "immoral" in this context is just silly. Google is a corporation, and legally avoiding taxes is the fiduciary responsibility of any corporation to its shareholders.
Corporate taxes are ridiculous to begin with, because the cost is paid by either employees or shareholders. Only people can pay taxes.
What's new is that the British government has decided to care.
See [1], search news for 'google tax', etc.
Edit: The Irish take is interesting [2]. The Cypriot crisis and Apple's decision to take out a huge loan rather than on-shore some offshore cash both provide further spice to the present arrangement.
The double Irish is legal for sales taking place in Ireland. The news article is alleging that the UK Google salespeople are making sales in the UK, in which case UK tax is due.
I think the key here is -> "It is able to record the revenues in Ireland because the UK company is deemed to drum up new business, with sales staff in Dublin executing all deals."
If the business was initiated in the UK, but executed in France, guess who'd get the tax money -> France. This doesn't seem particularly swarthy, and frankly doesn't really warrant an article or any sort of hubbub unless you're interested in being a Google hater. I'm fine with being a Google hater, I don't use Google search/ads/gmail/etc because I don't like their privacy practices/etc...
Anyways, what sort of services are we talking about here? If we're talking about Google ad network deals, you buy ads and they get displayed all over the world, you do not pay taxes everywhere the ads were shown.
If someone in England buys a product, in England, from someone in England, and uses English money, and that product is an ad and that ad is shown to people in England, then it seems reasonable that English taxes should be paid, even if the company uses a bizarre scheme to hand off the very last part of the chain to complete the deal in Ireland.
Google is welcome to move their office to Ireland if Google wants to use the Irish tax scheme.
Thats the thing; they bought this product from Ireland not from England and they in fact do have an office in Ireland.
Just because someone chatted with someone else in England about it doesn't make it an "english sale".
> Just because someone chatted with someone else in England about it doesn't make it an "english sale".
If almost all of the work was done in England then it's an English sale. The fact that Google contrives a bizarre situation where their English sales (between English staff and English customers delivered in England, not Ireland) have a tiny bit of work done in Ireland should be irrelevant.
I'm not sure how you can call it an Irish sale when the money changing hands is Sterling not Euro, between banks in England not Ireland, and arranged by staff and customers in England not Ireland.
> If almost all of the work was done in England then it's an English sale.
Not true at all. If my company (an american one) goes to the UK for a sales/marketing push, and we make sales, the sale is booked as a US sale. The currency and banks used to pay for the deal have no standing whatsoever. My company can even hold a UK bank account, we can accept payment in UKP, it still doesn't change the fact that the income is booked as a US transaction. The deciding factor is under what jurisdiction the contract is signed, in this case its Ireland because thats where Google chose to close the deal (its clearly stated in the article). It may be vexsome, but this is a direct result of bad tax policy.
One of the stupidest criticism I have read. Tax evasion and Tax planning are two different things. And "morality" and "taxation" can not be spelled in same sentence.
This is news now because there is a UK parliamentary committee hearing (analogous though not identical to a US congressional hearing) into corporate tax avoidance schemes, and Google is being accused of having misled the parliamentary committee in previous testimony before it:
I obviously have no knowledge of the specific matter, but in general it is a bad thing if MPs start accusing you of having lied to them, and it is not unusual for whistleblowers to come forward when stuff like that starts to hit the news.
A FORMER Google executive has blown the whistle on a massive and “immoral” tax avoidance scheme that has “cheated” British taxpayers out of hundreds of millions of pounds over the past decade.
Barney Jones, 34, who worked for the internet search giant between 2002 and 2006, has lifted the lid on an elaborate structure which diverts British profits through Ireland to the Bermuda tax haven.
Although Google’s London sales staff would negotiate and sign contracts with British customers, and cash was paid into a UK bank account, deals were technically booked through its Dublin office to minimise its liabilities here. Jones, a devout Christian and father of four, is ready to hand over a cache of more than 100,000 emails and documents to HM Revenue & Customs (HMRC), detailing the “concocted scheme”.
He has already provided testimony to the Commons public accounts committee (PAC) which led to the combative questioning.. [paywall]
It's immoral that governments take poeples money and use it for intents orthogonal to those original people intents, e.g. war, subsidies to monopolies such as the oil industry, corruption, etc.
Google on the other hand provides a great services for free and acessible to everyone. I would prefer my taxes to go to google; and if they would become government they would be much more efficient than any government out there.
By the way google if you want a toy country to try stuff, try Portugal. This goverment could use some help and they are some nice people who support the private initiative.
As a shareholder, I think taking advantage of tax loopholes is the company's job. However, If I was British, I might see this in a totally different light.
While I also consider these tax avoidance schemes immoral (and borderline illegal, but who am I to judge ...), I have to disagree with the notion that everyone (everyone else, because noone's getting the multinationals to behave anyway) should be paying their taxes in a straightforward manner and avoid all the little tricks for the Greater Good. I believe I have 2 good reasons:
1) in a democracy, people are ultimately responsible for laws and therefore for such loopholes. It is their responsibility to close them if they consider them wrong, not to avoid them out of sheer goodwill - they only put themselves at a disadvantage and reward those who benefit from loopholes (because these crooks will be richer in relation).
2) If only a handful of multinations exploit these loopholes, they will not be fixed. Those corporations can afford to invest millions in lobbying and bribery to keep their tax privileges. So there is only one appropriate reaction: everyone must try to benefit from these tax loopholes until it hurts governments so much that they are forced to act.
When you work for the accounts department of a security conscious company, which is chock-a-block full of smart computer-competent people, it should be pretty darn hard to smuggle out email. Especially 100,000 emails.
Assuming google uses gmail internally it would be as hard as connecting via imap and then copying your thunderbird files to a flash drive or taking home your laptop and copying them then.
The profit that Google makes on UK revenue should not be taxed by the United Kingdom - it should be taxed by the United States. Google's profit is due almost entirely to its fantastic computer algorithm, which was developed in the US. Tax should be based on the jurisdiction where the value was added, not where the sale took place.
Another way to look at it would be to imagine that Google headquarters auctioned off the rights to run Google UK to the highest bidder. Google headquarters would have such a strong bargaining position that the successful UK bidder would end up with very low profit margins.
But what annoys me are the loopholes that allow Google to transfer profit from the place where the value was created (the United States) to some other low-tax country.
I wonder, do corporations see themselves as essentially other countries? And if they do, does that maybe explain the urge to minimize as much as possible, even down to zero, the payment of taxes to an enemy/competitor?
Ethics and morality are exactly the same as legality.
Technically, I can lie to you. I just did, and it's legal, as I did not cause you harm in any tangible way.
It's legal but not moral. Many things are like that, and most are far less black and white or obvious. This is a difference you need to be very conscious and careful of if you intend to work... anywhere, ever.
Most of the companies you're likely to deal with -- whether it's in an employment situation or in a consumer transaction -- are so large that your interaction with them will be governed by policies, not by morality, and policies are set based on what's legal, practical, and profitable.
Because the players can't do anything about it. No matter how much we talk about morals, if, for example, Google were to not engage in the same tax avoidance schemes that all of its competitors do, then it'd be costing itself billions of dollars. Which is a reasonably substantial competitive disadvantage. That's money that can't go into R&D, maintenance, etc., whereas the companies that compete with Google do. And for what? A positive PR image?
It's certainly not #3: with 3 hours and 70 votes it would easily be ahead of #4 in the screenshot (4 hours and 66 votes). Instead it's #27.
#2 I don't see why you would flag the topic and not the political comments. Moreover we see plenty of topics where comments go political that don't get egregiously flagged down.
#1, I'll plead ignorance on any automated flame detection but I'm very skeptical that's what we're seeing. I'll stick with Occam's razor: time and again the articles this happens to are either critical of google, or favorable to MS or Apple.
It's certainly not #3: with 3 hours and 70 votes it would easily be ahead of #4 in the screenshot (4 hours and 66 votes). Instead it's #27.
#2 I don't see why you would flag the topic and not the political comments. Moreover we see plenty of topics where comments go political that don't get egregiously flagged down.
#1, I'll plead ignorance on any automated flame detection but I'm very skeptical that's what we're seeing. I'll stick with Occam's razor: time and again the articles this happens to are either critical of google, or favorable to MS or Apple.
Googles UK exec has been questioned by a parliamentary committee after receiving this evidance, this was reported widely in the UK (I also read an article in the guardian). The Times just has more info on the leaker.
Judge Learned Hand was the most important judge never to sit on the Supreme Court. Here's what he has to say:
"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes... Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands."