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Outrage At Microsoft Offshoring Tax In the UK, Google Caught Avoiding US Taxes

Unknown Lamer posted about 2 years ago | from the finding-common-interests dept.

Microsoft 768

Master Of Ninja writes "After the ongoing row about companies not paying a fair share of tax in the United Kingdom, and with companies such as Starbucks, Amazon and Google being in the headlines, focus has now turned to Microsoft. Whilst the tax arrangements are strictly legal, there has been outrage on how companies are avoiding paying their fair share of tax generated in the country." And over here in the U.S., dstates sent in news of Google getting caught doing something similar: "Bloomberg reports that Google is using Bermuda shell companies to avoid paying billions of dollars in taxes worldwide. By routing payments and recording profits in zero-tax havens, multinational companies have been avoiding double digit corporate taxes in the U.S. and Europe. Congressional hearings were held in July on the destructive consequences of off-shoring profits. Why aren't the U.S. and Europe exerting more diplomatic pressure on these tax havens that are effectively stealing from the U.S. and European treasuries by allowing profits that did not result from activities in Bermuda or the Cayman Islands to be recorded as occurring there?"

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What's good for the goose... (5, Insightful)

Press2ToContinue (2424598) | about 2 years ago | (#42247769)

"Why aren't the US and Europe exerting more diplomatic pressure on these tax havens...?"

Because where else would US politicians offshore their income? http://www.vanityfair.com/politics/2012/08/investigating-mitt-romney-offshore-accounts [vanityfair.com]

Re:What's good for the goose... (-1, Offtopic)

night_flyer (453866) | about 2 years ago | (#42247787)

Romney lost

Re:What's good for the goose... (2, Insightful)

faedle (114018) | about 2 years ago | (#42247831)

Hate to tell you this, but Obama isn't exactly a 99%er either.

Re:What's good for the goose... (5, Informative)

stox (131684) | about 2 years ago | (#42247971)

He was until relatively recently, unlike others who were born with silver spoons in their mouths.

I think he remembers his apartment dwelling days quite clearly.

Re:What's good for the goose... (3, Informative)

Anonymous Coward | about 2 years ago | (#42248121)

He doesn't have the educational history of someone with poor parents, or even of someone with just average parents. He spent just 1 year of grade school in a public institution, all other years being private schooled. He spent grades 5-12 in Punahou school, where tuition costs more than minimum wage pays before tax each year.

Re:What's good for the goose... (1)

publiclurker (952615) | about 2 years ago | (#42247945)

He was a governor.

Re:What's good for the goose... (5, Insightful)

Dyinobal (1427207) | about 2 years ago | (#42247795)

Pretty much this, anytime someone talks about getting politicians to raise taxes on the top 2% they are talking about getting politicians to raise taxes on themselves. Just look at the income of anyone in any law making or policy making decision in the government and it is no wonder that the middle class and poor have a higher tax rate than the wealthy elite.

Re:What's good for the goose... (5, Insightful)

Anonymous Coward | about 2 years ago | (#42248151)

Don't worry, they'll pass a pay raise for themselves to offset the extra burden. Just like with Obamacare & Medicare/Medicaid. Those are good enough for the common folk, but they've the Rolls Royce of medical plans for themselves. The kind of plans some of receive from our employers that they now want to tax as income (at upwards of $5000/year in some cases).

This isn't Democrats or Republicans. It's Democrats AND Republicans. The entire lot of them are a bunch of selfish, hypocritical, thieves.

Re:What's good for the goose... (5, Informative)

Anonymous Coward | about 2 years ago | (#42248203)

Perhaps you missed Obama filling his cabinet originally. He had to go through 50 people to get 20 from the DNC that had ACTUALLY paid taxes. Daschle failed to pay taxes, a woman named Hillary (not Clinton) was rejected for failure to pay taxes, Tim Geitner was still confirmed even though he didn't pay taxes. Go into Congress and you can find more, like Charles Rangle who didn't pay taxes. There was even a stink about John Kerry mooring his boat in Rhode Island to avoid state taxes from Mass.

Your point is invalid because its the DNC that raises taxes and its the DNC politicians that constantly fail to pay taxes.

Re:What's good for the goose... (2)

SwedishPenguin (1035756) | about 2 years ago | (#42247821)

They do have some other "incentives" as well. Campaigns aren't free and friends in high places can be invaluable..

Re:What's good for the goose... (-1)

Anonymous Coward | about 2 years ago | (#42247825)

Obama is different how?

Re:What's good for the goose... (5, Insightful)

man_of_mr_e (217855) | about 2 years ago | (#42247845)

Actually, the US has no business exerting any pressure on other sovereign nations regarding what they do in their legal system, with perhaps exceptions for human trafficking, human rights abuses, and other such things.

The US should simply make it illegal for these US companies to do this. If they flaunt the law, then they should be punished for it. No need to fuck with other countries laws.

Re:What's good for the goose... (0)

Anonymous Coward | about 2 years ago | (#42247963)

Couldn't agree more, but with the sickening greed of the american people supported by there government, they'll certainly be sending troops to "liberate" these countries of there right to decide how to manage themselves, i mean, defend the american people by removing weapons of mass destruction, or do i mean liberate the people of bermuda of an oppressive government and help promote democracy

Re:What's good for the goose... (0)

Anonymous Coward | about 2 years ago | (#42248257)

Bush has been out of office for four years now. Time to drop the grudge and move on.

Re:What's good for the goose... (0)

Anonymous Coward | about 2 years ago | (#42248035)

the problem is there doesn't appear to be any great way of making this sort of thing illegal without also seriously crippling companies that operate in more than one country. If you have a US based that contracts to do some construction work in Canada, and they ship their construction equipment up to Canada to do the work, should the Canadian subsidiary be taxed on the "income" that receiving all this construction equipment represents? Should the parent corp be taxed when the projects done and all the equipment gets shipped back? If not, then how do you draw a clean line between something like this and what Google is doing. It turns out it is a hard problem.

Re:What's good for the goose... (0)

Anonymous Coward | about 2 years ago | (#42248081)

... and if you answer yes, they should be taxed. Then you create serious barriers to competition visavis domestic competitors. Maybe you are OK with that, but it will cost you in higher prices and lower efficiency everywhere.

Re:What's good for the goose... (5, Informative)

TheGavster (774657) | about 2 years ago | (#42248191)

The crux of these loopholes seems to be that by and large, corporate taxes are levied on net profit, not gross revenue. A company will make $10B in the US, then license something from a Bahamanian subsidiary for $10B, resulting in a profit for the US component of $0. If they had to pay on the total revenue, losing money to themselves would only increase exposure (since the US and Bahamanian divisions would both pay tax on the same $10B).

In the example of a US-based construction firm that made some money through a Canadian subsidiary, Canada would get the tax on that part of the work and the US on their domestic revenues.

The problem with this taxation model is that it would be a heavy weight on young companies; businesses generally run losses for the first several years of operation, even without paying taxes.

Obviously this is my layman's view of the way corporate income tax works; I assume that there is a certain complexity to the way that revenue and profit are calculated for tax purposes, and that there are frictional costs associated with various maneuvers.

This was required by law. Really. (5, Insightful)

Ungrounded Lightning (62228) | about 2 years ago | (#42248019)

Because where else would US politicians offshore their income? http://www.vanityfair.com/politics/2012/08/investigating-mitt-romney-offshore-accounts [vanityfair.com]

I'm NO friend of Mitt Romney - to put it mildly. But let's not blame him for something that's not his doing.

1) Because Romney was running for president, US law REQUIRES he put his money in a blind trust.

2) Also under US law the trustee has a "fiduciary duty" to do his reasonable best to protect and grow Romney's money for him. That includes seeing to it that is not taxed substantially more than the law requires. If he can save, say, 40% of the trust's earnings from being taxed away by using a LEGAL tax haven in Bermuda, and trustees of such trusts are expected to know that, he is REQUIRED BY LAW to do so.

So let's not have cheap shots against politicians and financial managers who are only doing what the law REQUIRES them to do.

There are plenty of things politicians have done that we can LEGITIMATELY go after them about - which have zapped us to the tune of trillions of dollars - at $3,175.40 from EACH citizen for EACH trillion. Let's not the dilute the discussion, and give them something to use to discredit their critics, by flaming them over drops in the bucket that AREN'T THEIR FAULT.

Re:This was required by law. Really. (5, Insightful)

Nerdfest (867930) | about 2 years ago | (#42248101)

All of this crap is legal, that's why they call it tax 'avoidance'. It's not right, or fair, but it is legal.

Correction: Only the second part is required. (4, Informative)

Ungrounded Lightning (62228) | about 2 years ago | (#42248105)

Did a little checking: Actually a presidential candidate is not REQUIRED to put their money in a blind trust.

In principle Romney could have kept control and ordered his accountants to not use a tax haven.

The downside is that he'd be nuts to do so. In addition to the loss of money from such deliberate mismanagement, he'd be leaving himself open to legitimate attacks on any OTHER decision he made about the money, along withaccusations of conflict-of-interest when he makes political decisions. (Avoiding both conflicts of interest and the appearance of them is the whole point of blind trusts.)

Firsty (-1)

Anonymous Coward | about 2 years ago | (#42247775)

Finally, First!

Trolldot manufactured outrage (-1)

Anonymous Coward | about 2 years ago | (#42247791)

It is in the interest of Trolldot here to have some outrage to drive up the numbers, so they have declared that "Outrage" is now in effect. Everybody outrage!

compete instead of complain (1, Insightful)

magarity (164372) | about 2 years ago | (#42247813)

So... lower corporate tax rates to the point where it's not worth the bother of jumping through these hoops.

Re:compete instead of complain (5, Insightful)

SwedishPenguin (1035756) | about 2 years ago | (#42247863)

If only this could apply to regular people - Hey some people are shoplifting the food from the market, let's just lower the price to a point where it's not worth bother... But I guess this only applies to the well-to-do..

Re:compete instead of complain (0)

Anonymous Coward | about 2 years ago | (#42247937)

If only this could apply to regular people

Sounds like a plan!

Re:compete instead of complain (1)

Anonymous Coward | about 2 years ago | (#42247975)

It's funny you mention that, because in a competitive capitalist market price approaches cost. Therefore, people get that lowest price for their labor and do not need to steal as much. In non-capitalist systems, where prices are elevated, people DO have to use unethical means to get food ( for example, in Soviet Russia, hoarding, sneaking, stealing food etc etc)

Re:compete instead of complain (4, Insightful)

Smallpond (221300) | about 2 years ago | (#42248219)

It's funny you mention that, because in a competitive capitalist market price approaches cost. Therefore, people get that lowest price for their labor and do not need to steal as much. In non-capitalist systems, where prices are elevated, people DO have to use unethical means to get food ( for example, in Soviet Russia, hoarding, sneaking, stealing food etc etc)

Incorrect. This is only true in free markets. In markets where cartels and price fixing are allowed, and information about pricing can be hidden, then prices can be artificially held well above cost.

Re:compete instead of complain (1)

KalvinB (205500) | about 2 years ago | (#42248023)

More like, Store A is charging $20 for a loaf of bread, I'll go to store B where I can get it for $5.

Google isn't stealing money. The government is.

The irony is in the politicians these companies choose to support knowing those politicians want to jack up taxes on them. They like the populism of that thought, but not so much the consequences.

Re:compete instead of complain (3)

benjamindees (441808) | about 2 years ago | (#42248107)

Didn't you hear? Keeping your own money is stealing now.

Re:compete instead of complain (5, Insightful)

dondelelcaro (81997) | about 2 years ago | (#42248123)

More like, Store A is charging $20 for a loaf of bread, I'll go to store B where I can get it for $5.

Lets at least get the metaphors slightly more accurate.

Store A is charging $20 for a loaf of bread, but provides an awesome atmosphere, chairs, clean eating space, nice employees, free coffee, and massages while you eat your loaf of bread. Store B sells the same bread for $5, but you can't eat your bread there. So you buy your bread from Store B, and then expect Store A to let you stay in Store A to eat your bread.

Companies pay taxes to pay for the externalities that they take advantage of while doing business in a country.

Mod parent up! (1)

SwedishPenguin (1035756) | about 2 years ago | (#42248141)

Mod parent up! That's a very good metaphor.

Re:compete instead of complain (1)

Bartles (1198017) | about 2 years ago | (#42248231)

What if I don't want to eat in the store? If the $20 store = (tax environment + social services), there would be no alternative $5 store. Your analogy stinks.

Re:compete instead of complain (0)

Anonymous Coward | about 2 years ago | (#42248089)

Funny how a company like Google, whose employees were one of the largest contributors to the Obama campaign and one would assume support higher taxes given that is the Democrat's platform, is found to be doing everything it can to avoid the very taxes they voted for.

To quote Glenn Reynolds, "I'll believe there is a crisis when they start acting like there is a crisis."

Hypocrisy is the only word that is applicable.

Re:compete instead of complain (1)

SwedishPenguin (1035756) | about 2 years ago | (#42248185)

I believe you're confusing Google employees with Google the corporation. Google employees (unfortunately) do not control the company, its owners do.

Re:compete instead of complain (4, Insightful)

circletimessquare (444983) | about 2 years ago | (#42247887)

a place like bermuda isn't a valid country that you compete with on tax rates. bermuda's tax laws are designed to parasitically leach off the fruits of another country's labors

the idea that you think this is about fair competition is a joke, a lie, or a delusion

Re:compete instead of complain (1)

bloodhawk (813939) | about 2 years ago | (#42248025)

a place like bermuda isn't a valid country that you compete with on tax rates. bermuda's tax laws are designed to parasitically leach off the fruits of another country's labors

the idea that you think this is about fair competition is a joke, a lie, or a delusion

^this, the only way to combat this behaviour is modifications to tax laws in the countries where the profits are really being earned, they need to work out ways to register those profits for tax purposes, be that through tariffs, tax laws that prevent offshoring or sales embargos on said companies that use these havens. Most companies don't even want to use these tax havens and would be quite open to being forced to do the right thing, but to remain on equal footings and maximise shareholder value they really are obliged to take all legal means to maximise returns.

Re:compete instead of complain (5, Insightful)

fustakrakich (1673220) | about 2 years ago | (#42248031)

That's bullshit. Bermuda's tax laws have nothing to do with it. It is American tax law that makes the leeching so profitable.

Re:compete instead of complain (0)

ahabswhale (1189519) | about 2 years ago | (#42248117)

No, it's not. And their tax laws have everything to do with it. Their tax laws are setup such that only local companies pay taxes. Companies like Google pay nothing. Any other brilliant arguments, dipshit?

Re:compete instead of complain (2)

fustakrakich (1673220) | about 2 years ago | (#42248271)

:-) That makes no sense, but given the nature of your reply, I doubt that's your objective. If Google wants to keep their American corporate charter, they should pay American taxes on their income, regardless of its origin. Otherwise let them incorporate in Bermuda, then they can pay American tariffs.

I'm gonna give you every inch of my love...

Re:compete instead of complain (1)

Anonymous Coward | about 2 years ago | (#42247951)

Exactly! I've never understood why people complain about corporate tax (or lack thereof) nor do I understand why it exists in the first place. Do people even understand that eventually to get profit out of a corporation, someone eventually has to take it as income or a dividend? Personal tax rates are higher than corporate, so the ideal situation for the tax collectors is for the company to pay/bonus everything out and pay no tax at all. If the money is dividended out, the individual typically only pays the difference on the tax the company already paid and what the individual would have ordinarily paid. If the company doesn't pay out profits and somehow managaes to avoid paying any tax through loopholes or whatever, they are either banking it so that one day it's eventually paid out to individuals (and therefore taxed) or they are spending it, most commonly on growth and hiring. Geez, where is the problem here and what is the obsession with corporate tax?

Re:compete instead of complain (0, Flamebait)

BlueStrat (756137) | about 2 years ago | (#42248003)

So... lower corporate tax rates to the point where it's not worth the bother of jumping through these hoops.

But...but...that could lead to US economic and industrial growth with more and better-paying jobs and result in far fewer people dependent on government!

That would decimate the Liberal/Progressive-Democrat power- and voter-base that is dependent on maintaining the Marxist class-warfare memes! They say they are for reducing poverty, but wherever and whenever they've had the opportunities and control to do so, somehow, the poor end up still poor and joined by more poor (see: Detroit).

They can't actually go and solve the problems...they would lose their voter-base.

Strat

Re:compete instead of complain (0)

Anonymous Coward | about 2 years ago | (#42248233)

So... lower corporate tax rates to the point where it's not worth the bother of jumping through these hoops.

But...but...that could lead to US economic and industrial growth with more and better-paying jobs and result in far fewer people dependent on government!

That would decimate the Liberal/Progressive-Democrat power- and voter-base that is dependent on maintaining the Marxist class-warfare memes! They say they are for reducing poverty, but wherever and whenever they've had the opportunities and control to do so, somehow, the poor end up still poor and joined by more poor (see: Detroit).

They can't actually go and solve the problems...they would lose their voter-base.

Strat

Moderated "0 - Flamebait"

[Jack Nicholson as Colonel Jessup] They can't HANDLE the truth!!

Re:compete instead of complain (0)

Anonymous Coward | about 2 years ago | (#42248051)

Yes, let's reward their behavior.

Re:compete instead of complain (1)

jonsmirl (114798) | about 2 years ago | (#42248157)

I agree, these taxes aren't really lost. They are instead paid by the shareholders via capital gains and dividend taxes. If you force the corporations to pay it you'll just see an offsetting decline in personal taxes collected. There's no magic here that will create billions in new tax revenue, best you can do is shift around where it is being paid.

Corporations and not living entities, they are just some paperwork that organizes a group of shareholders to work together. But most people don't understand this and want to tax the corporations. It would be much simpler to eliminate the corporate income tax and pick up the same tax revenue by taxing the individual shareholders. Nobody is eliminating any taxation in this model, it is simply a change in the point where the tax is collected.

Re:compete instead of complain (3, Interesting)

SwedishPenguin (1035756) | about 2 years ago | (#42248213)

Owners can live anywhere in the world. Corporations should pay taxes where the profit is generated to help pay for the external costs that made those profits possible.

Re:compete instead of complain (0)

Tough Love (215404) | about 2 years ago | (#42248215)

The problem would be easily solved by regulation, including clear cut accounting rules governing attribution of sales revenue by jurisdiction, coupled with enforcement teeth such as revoking business licenses of evaders and assessing taxes on corporate parents. The will to address this widespread evasion, which has been well known since before the turn of the centry, is lacking for reasons that you might fairly regard with suspicion.

I'm .. I'm stunned! (2, Interesting)

ackthpt (218170) | about 2 years ago | (#42247837)

No, actually I'm not. Not in the least. It's the way of things now, even when your motto is "Do no evil" or "What evil would you like to get into today?" Wall Street expects certain targets to be hit and the way to do that is cut corners and use loopholes.

Re:I'm .. I'm stunned! (1)

shentino (1139071) | about 2 years ago | (#42247931)

Unfair advantages are precisely why cheating is frowned on in the first place.

If it goes unpunished it still remains an advantage even if it's unfair.

That's what happens when you have an unregulated market where the only law that stands is the law of the jungle.

Re:I'm .. I'm stunned! (5, Insightful)

multi io (640409) | about 2 years ago | (#42247957)

As a publicly traded company, you risk being sued by your shareholders if you do NOT use such tax arrangements as soon as you learn about the possibility. So putting the blame on Google/MS isn't exactly rational.

Re:I'm .. I'm stunned! (3, Insightful)

Nyder (754090) | about 2 years ago | (#42248045)

No, actually I'm not. Not in the least. It's the way of things now, even when your motto is "Do no evil" or "What evil would you like to get into today?" Wall Street expects certain targets to be hit and the way to do that is cut corners and use loopholes.

Considering how the tax money is spent it's probably more evil paying taxes then avoiding them...

Business as usual? (0)

Anonymous Coward | about 2 years ago | (#42247855)

Hasn't this sort of thing been going on for quite a while with large companies? Heck, even smaller companies. It's always in the best interest of the business to keep as much of their profits as possible, and since it's only slightly trivial to buy a politician, loopholes will exist for the foreseeable future.

How odd that you would seek to keep something (1, Interesting)

SuperKendall (25149) | about 2 years ago | (#42247861)

Here's a thought; if you want companies to pay more taxes then make taxes reasonably low enough that companies find it more bothersome to play legal shell games than simply pay a tax.

In the end all the talk of taxing "the rich" or "greedy multi-national corporations" or some other bugaboo is absurd on the face of it, because you are seeking to attack the very people that have the legal and financial resources to simply shift money elsewhere where governments are less greedy themselves. In the end by heavily taxing people or groups with lots of money you simply get less from them than you would have otherwise. It sure sounds great on TV news bytes though!

Re:How odd that you would seek to keep something (2)

c0lo (1497653) | about 2 years ago | (#42247907)

Here's a thought; if you want companies to pay more taxes then make taxes reasonably low enough that companies find it more bothersome to play legal shell games than simply pay a tax.

Well... opening a shell company in a tax heaven and paying 3-4 accounting critters to take care of recording profits in zero-tax places is going to cost the company probably... say... half a million/year? Are you sure you want corporate taxes lowered that much in US/UK?

Re:How odd that you would seek to keep something (1)

Anonymous Coward | about 2 years ago | (#42247991)

Absolute garbage.

You want to reward their devious behaviors. Like paying a ransom, it only makes the criminals think "well that worked out perfectly, lets do it some more"

Look, this just isn't fair. (0)

Anonymous Coward | about 2 years ago | (#42247871)

Microsoft is an American company.

We should get first crack at stopping their tax evasion here.

Re:Look, this just isn't fair. (1)

c0lo (1497653) | about 2 years ago | (#42248057)

Microsoft is an American company.

Being an American corporation, it is their officers' duty to use any means legally available to maximize the profit. This include, without being limited to:
a. tax avoidance - (tax evasion is illegal. "Tax avoidance" using the loopholes but still within the boundaries of the applicable laws is not)
b. cost externalization
c. risk externalization

And, just in case you didn't know: in US, corporations can legally run for Congress [nytimes.com] ; for the present, the fact they are lobbying instead has to do with their public image; but one cannot exclude a time when one/some corporation(s) are economically strong enough to actually give a fsck about the short term impact on US market and actually get into a body that can repeal a good chunk of legislation that's "upsetting" for them.

Re:Look, this just isn't fair. (1)

whoever57 (658626) | about 2 years ago | (#42248209)

Being an American corporation, it is their officers' duty to use any means legally available to maximize the profit

Yes, but... management has a lot of discretion over the best method to maximise profits. There is no requirement to maximise short term profits, so management can easily say that paying taxes improves the good will that the company enjoys and thus will maximise profits over the long term.

The reason companies tend to obsess over quarterly profits is because management is measured (and profits from) short term measurements of stock price.

Instead of getting upset... (0)

Anonymous Coward | about 2 years ago | (#42247875)

What I'd like to know is why the whiners don't try it themselves? There are plenty of ways to legally lower your own taxes. Look into them instead of bitching about the people who are smart enough to actually do it.

Re:Instead of getting upset... (2)

shentino (1139071) | about 2 years ago | (#42247947)

Try that suggestion when the whiners actually CAN.

As much as you hate to admit it the elite DO have special privileges not available to the unwashed masses.

Re:Instead of getting upset... (1)

benjamindees (441808) | about 2 years ago | (#42248149)

So, stop paying taxes, then. Surely you can come up with a more productive way of rectifying this imbalance than by acting like a crab in a bucket.

Re:Instead of getting upset... (1)

shentino (1139071) | about 2 years ago | (#42248239)

One such power includes having the government's force of arms to do your dirty work for you.

Or have you forgotten that tax evasion is a federal felony?

Re:Instead of getting upset... (0)

Anonymous Coward | about 2 years ago | (#42248167)

Like what, exactly?

Or... (2)

The Grim Reefer (1162755) | about 2 years ago | (#42247885)

Maybe the corporate taxes should be set at a more favorable rate. 20% of something is still more than 35% of nothing. (or whatever the current tax rate is.). Additionally we could simplify the tax code so these companies don't need to spend millions on their accounting and tax lawyers. Unfortunately we'd probably have to shoot all of the politicians first as this is where many of them came from, and are paid in campaign contributions to do.

Corporations should be justified (0)

Anonymous Coward | about 2 years ago | (#42247889)

Corporations are not people with concience and moral values. They are sociopathic bureaucracies.

Corporations should have to present their business plans to the government of the day and demonstrate their net value to society, at least every five years. Those that cannot do so should be disolved. Those appointed by the government to determine if corporations will continue to enjoy their licenses should be barred from receiving anything of value from corporations, other than by way of arms length transactions at fair market value, in the 25 years preceding their considering and making such decisions and in perpetuity thereafter.

Until this happens, there will be no end of corporate greed and abuse.

Re:Corporations should be justified (3, Insightful)

Stormwatch (703920) | about 2 years ago | (#42248073)

Trouble is, governments can be sociopathic bureaucracies just the same.

Re:Corporations should be justified (1)

Quiet_Desperation (858215) | about 2 years ago | (#42248195)

So you want one set of sociopaths to approve the other set of sociopaths. Awesome. Oh, wait, that's pretty much the system in both directions already. Oops.

I just don't understand this trust in government in anyone out of their mid teen years.

And no, ideologues, that doesn't mean I wuv the po wittle corporations.

I know this is crazy, but. . . (5, Insightful)

mosb1000 (710161) | about 2 years ago | (#42247891)

I know this is crazy, but maybe the problem is the taxes. It doesn't make any sense at all tax corporate profits when you could just as easily tax the income shareholders make from the profits, or capital gains in the event a corporation doesn't post dividends.

Re:I know this is crazy, but. . . (5, Insightful)

stanjo74 (922718) | about 2 years ago | (#42248027)

Exactly. Money left in the corporation can only be used for 2 things - reinvest in the business or pay employees/shareholders. If you reinvest, that's a good things - exactly what the US needs; if you pay out, income tax on the individuals should catch that.

Problem is that capital gains are taxed very low compared to wages, so the company has incentives to keep cash on the books to appreciate the stock without reinvestment risk, thus creating wealth for shareholders at low income tax rates. You will never see the money reinvested or increase of wages at the company.

Re:I know this is crazy, but. . . (5, Insightful)

mosb1000 (710161) | about 2 years ago | (#42248113)

Yet another tax policy that makes no sense at all. There is no reason capital gains and dividends shouldn't be taxed as regular income, they justify it today by saying "corporations pay taxes so taxing these things as income is double taxation." It's all just a stupid shell game. They make up a bunch of bizarre, self-reinforcing justifications for a convoluted tax scheme, then move their money through all they loopholes they've built so that is perfectly legal. It's nonsense.

Re:I know this is crazy, but. . . (0)

Anonymous Coward | about 2 years ago | (#42248217)

Even worse, most "reinvestment" that corporations do is buying up competitors and (hopefully) complimentary companies, reducing competition, and making market prices higher in the long run.

Capital Gains and Dividend Income are taxed at the same rates, so there is no tax penalty to distribution of dividends.

What distributiong Dividends does do is twofold - it keeps the stock price lower due to lower cash reserves; and it keeps the company "smaller" because there is less ready-cash availble for acquisitions. And since most Corporate Management Teams operation to maximize their prestige, and measure it by stock valuation and market capitalization and gross annual revenues. So you won't see your local CEOs pushing for this anytime soon . . ..

VAT? (1, Interesting)

Anonymous Coward | about 2 years ago | (#42247899)

Maybe more countries should move to a VAT system. That way, it doesn't matter what they make. If the product is sold in the nation, it gets taxed, period. No ifs, ands, or buts.

Applicable quote from Judge Learned Hand (3, Informative)

Anonymous Coward | about 2 years ago | (#42247901)

"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."

Re:Applicable quote from Judge Learned Hand (5, Insightful)

jxander (2605655) | about 2 years ago | (#42248009)

Problem is that the rich make the laws. So they adjust the rules to benefit themselves unfairly.

Hey there poor person, why don't you have your investments setup in IRAs and 401(k)s? You should get into the consulting business and write a few books. Capital gains taxes are rather agreeable. What's that you say, you can't afford food? Well, if you'd taken my advise ...

Re:Applicable quote from Judge Learned Hand (0)

Anonymous Coward | about 2 years ago | (#42248243)

Exactly. The problem isn't that the rich, politicians, and big businesses use the law to their advantage, it's that they change the rules to create the advantage. I can, and will, lower my tax burden by the rule of law, but no one in government is going to change the rules to lower that burden or increase my kick back.

At least googles only screwing the USA (0)

Anonymous Coward | about 2 years ago | (#42247919)

since there economy is going to collapse all the money they'd pay would vanish into ether or worse, be put towards 'defence spending'

Change the tax structure (4, Insightful)

RelliK (4466) | about 2 years ago | (#42247925)

The reason these loopholes work is that multinational corporations can allocated their costs to high-tax countries and profits to low-tax countries. For example, a US operation "licenses" some software from a subsidiary in Cayman Islands or pays for "consulting services" that end up eating up all of the profits. Through these tricks a US corporation ends up with near-zero taxable income, while all the profits are transferred to tax havens.

The solution is to tax ALL profits, regardless of which country they were supposedly "earned" in. That way, transferring profits to Bermuda or Luxembourg will have no effect.

Re:Change the tax structure (1)

nedlohs (1335013) | about 2 years ago | (#42248075)

The US already does that for personal income tax, but surely you can see the issues:

And you will happily pay personal income tax to the USA and the UK and France and Germany and Japan, right? When they declare you owe them for whatever reason?

Or are you expecting France to not change Microsoft any taxes on the profits it makes in France and just let the US collect all that tax?

Can't steal what they never had (2, Insightful)

Rogerborg (306625) | about 2 years ago | (#42247939)

That's the argument we use for file "sharing", so let's not turn it on its head for tax. You want to earn it, make the argument for it.

There is no inherent merit to paying taxes. They are a necessary evil to fund useful public works, and should be kept to an absolute minimum. When States becomes bloated, inward looking, ever swelling monsters that squeeze the pips until they squeak, tax avoision becomes an act of moral rebellion.

Brits in particular tithe up to 75% of our "income" to the State, when you factor in income tax, national insurance, council tax, water and sewerage rates, VAT, insurance tax, parking fees, and fuel and customs duty on everything imported or moved around. And that "income" is what employers can afford to pay us after they pay all of their protection money to the biggest racket in town.

So good on Microsoft and Google and Amazon and all the other companies who are throwing two fingers up at the grasping State. Let it wither and die, as long as it rots from the head down.

Re:Can't steal what they never had (0)

Anonymous Coward | about 2 years ago | (#42248065)

This tax 'avoision' you speak of... is it legal or illegal?

Re:Can't steal what they never had (2, Interesting)

Anonymous Coward | about 2 years ago | (#42248103)

That's the argument we use for file "sharing", so let's not turn it on its head for tax. You want to earn it, make the argument for it.

There is nobody in this country who got rich on his own – nobody. ... You moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn't have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did. Now look, you built a factory and it turned into something terrific, or a great idea. God bless – keep a big hunk of it. But part of the underlying social contract is, you take a hunk of that and pay forward for the next kid who comes along.

Re:Can't steal what they never had (0)

Anonymous Coward | about 2 years ago | (#42248237)

Thanks for the tip Obama.

Just because the government monopolises various essential services by force and then steals our money to pay for it, doesn't mean they deserve credit for people getting rich. By your logic, if I steal $10000 off you and buy you a $5000 so you can get to work, I deserve credit for feeding your family and should be justified in stealling more from you in the future.

Or where you being saircastic?

make 'em pay taxes (2)

k6mfw (1182893) | about 2 years ago | (#42247955)

Someone's gotta pay for global military to be sure air bandits, pirates, and dubious govts don't steal corporate commerce as it moves around the world. And these companies have plenty of cash to pay taxes. Though not sure how deal with dubious governments....

"double digit corporate taxes" (2)

hobarrera (2008506) | about 2 years ago | (#42248005)

They may be evading sums as large as $99!!!

Re:"double digit corporate taxes" (0)

Anonymous Coward | about 2 years ago | (#42248159)

that number is in percentage dingbat, I know you are trying to be funny, but you came off as retarded

"Outrage" WTF? (2)

miltonw (892065) | about 2 years ago | (#42248029)

This is a very, very bogus report. "Outrage"? Come on! Is it legal? Yes. Is there some kind of "moral requirement" that we all maximize the taxes we have to pay or suffer "outrage"? Don't we all look for all the deductions we can legally get away with? WTF is all the bogus "outrage" at perfectly normal, legal behavior?

Whether you love or hate taxes... (1, Interesting)

Omnifarious (11933) | about 2 years ago | (#42248059)

You should find this behavior reprehensible.

This is not a tax avoidance strategy available to people with incomes below a a couple of hundred thousand dollars, which is almost all of you. We have a massive debt, and infrastructure we currently (rightly or wrongly) rely on the government for. Someone has to pay those things. If large corporations and high-income individuals aren't, that means we're forced to pick up their burden simply because we can't afford the same tax avoidance strategies.

So, regardless of how you feel about taxes being theft or whatever, this should be outrageous and unconscionable.

Outraged??? (0)

Anonymous Coward | about 2 years ago | (#42248077)

If Apple does it, it's okay because they are maximizing their shareholders' profit. But how can we let Microsoft or Google get away with it? I AM OUTRAGED AT THIS MORALLY CORRUPT CORPORATIONS!!

Tax Games (3, Insightful)

LordLucless (582312) | about 2 years ago | (#42248087)

This isn't a problem with the companies in question - it's a problem with the game. As soon as a company has a presence in more than one country, the company needs to start making decisions about taxation. It's not an option not to make these decisions - one way or another, they have to be made. There is no option for them to simply "not play the game". They must.

And once they start playing, they find themselves in a crazy maze of exceptions, loopholes, provisos and special cases. If you want to cut down tax avoidance (not evasion) then you need to simplify the taxation system to the point where these loopholes don't exist. Of course, that'll never happen, because politicians for the last century have been busily creating loopholes in order to favour their particular patrons, and closing those loopholes would result in screams from said patrons.

The problem the politicians see isn't that these loopholes exist, it's that companies are using them who haven't paid politicians for the privilege.

If you write it, they will use it (2)

Chemisor (97276) | about 2 years ago | (#42248091)

If you don't want companies to use loopholes in the tax code to legally avoid taxes, don't put loopholes in the tax code. Let's all remember that those loopholes and deductions were all heartily lobbied and bargained for. If you didn't want them passed, why didn't you send funds to your representative in order to vote against them?

Good for them. (2, Insightful)

jcr (53032) | about 2 years ago | (#42248097)

So, these companies employ competent accountants, tax attorneys and financial managers to preserve their shareholders' earnings. That's exactly what they're supposed to do.: It's called meeting their fiduciary duty.

-jcr

"Stealing"? (1, Insightful)

Darkness404 (1287218) | about 2 years ago | (#42248119)

"Stealing" from the treasury! What a load of BS. Google/Microsoft are no more "stealing" from the treasury than you are because you haven't gone out and bought me something.

Why do we think corps pay taxes? (1)

Anonymous Coward | about 2 years ago | (#42248129)

No economist thinks that corporations pay taxes, tho they may argue whether employees or customers bear the larger burden. Corporations choose between alternative projects based on the after-tax ROI. If they do not get the required return, they don't do the project or adopt a tax-reduction strategy.

I'm reallygetting tired of these bullshit articles (2)

sribe (304414) | about 2 years ago | (#42248165)

Whilst the tax arrangements are strictly legal, there has been outrage on how companies are avoiding paying their fair share of tax generated in the country.

So, if the country's tax laws do not require these companies to pay their "fair share", then how exactly does one define their "fair share"??? Exactly how much more should they pay than what they are legally obligated to??? How large of an over payment would satisfy these critics???

I've seemed to notice... (4, Insightful)

argStyopa (232550) | about 2 years ago | (#42248169)

...more and more implicit or explicit class warfare crap in the news. I suspect it's not coincidence.

"...Whilst the tax arrangements are strictly legal..." - THAT is where blame for these corporations ends, period. Do you deliberately pay more for milk than you need to? Do you volunteer some extra taxes because the government is in a bind? Of course not. These corporations do what they do to save money however they can - and as long as they stay within the bounds of the rule/laws, disparaging them is pointing in ENTIRELY the wrong direction.

Look instead at the incompetent government that WROTE THE RULES, morons.

Hey, I "get it". I'd cheerfully decimate the companies that bundled their crap investments, the 'rating' agencies that rated them AAA, and the bond traders that cheerfully swallowed instead of spitting. Then I remember: they were all largely conducting LEGAL business according to the rules and laws set forth by ... our incompetent government.

THEY would have suffered the natural result of their actions in the market, but then they were PROTECTED from their results (gotta make sure they get their bonuses, ya?) from...our incompetent government.

Want to know why I'm a libertarian conservative? Because in 45 years I've become convinced that while often it is well-meaning, almost all government is incompetent, and therefore the least possible government is best. Which is better, semi-anarchy where one is free to build ones own future as best one can, or some sort of perpetual serfdom to the landed classes that see us only as rubes to exploit, cows to milk, or votes to pander to?

Fair share? (0)

Anonymous Coward | about 2 years ago | (#42248177)

Who gets to what a "fair" share is? Politicians who will always want to spend more money?

Taxing the wrong thing (1)

the eric conspiracy (20178) | about 2 years ago | (#42248193)

Really it is the shareholders and owners that should be taxed, not the corporations.

There are all sorts of problems with taxing corporations, one of which this article touches on. There are plenty of others. One of them is that taxation of corporations encourages them to get involved in the political process. Another is that it encourages them to make decisions based on which venue will give them the best "deal".

In the US anyway I think that taxation of corporations should be eliminated. Taxes should be raised on individuals (shareholders and owners) to compensate.

With this in place the idea of corporations as citizens would be weakened considerably.

Ideally this would be combined with a Constitutional amendment reversing the effect of the Citizen's United decision.

Levy taxes on the returning proceeds. (0)

Anonymous Coward | about 2 years ago | (#42248221)

It's worth considering that the best point of attack might be to tax the repatriated funds to offset the difference. "Overseas profits" have to be repatriated before they can be disbursed to shareholders.

Re:Levy taxes on the returning proceeds. (1)

PPH (736903) | about 2 years ago | (#42248261)

The shareholders are overseas.
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