Rome Wasn't Built In a Day, But a $30.4B Microsoft Puerto Rico Tax Dodge Was (propublica.org) 111
theodp writes: ProPublica's Paul KIel has the remarkable tale of the IRS' 12-years-and-counting audit of Microsoft for a 2005 deal involving a Puerto Rico subsidiary (and related "Legal Entities") that was deemed worth nothing or a nominal amount on June 30th, 2005 but valued at $30.4 billion just one day later. Seen as an epic case of tax dodging by one of the largest companies in the world, the IRS opened the biggest audit by dollar amount in the history of the agency. In response to extensive written questions, Microsoft said it "follows the law and has always fully paid the taxes it owes." Kiel writes:Microsoft had shifted at least $39 billion in U.S. profits to Puerto Rico, where the company's tax consultants, KPMG, had persuaded the territory's government to give Microsoft a tax rate of nearly 0%. Microsoft had justified this transfer with a ludicrous-sounding deal: It had sold its most valuable possession -- its intellectual property -- to an 85-person factory it owned in a small Puerto Rican city. Over years of work, the IRS uncovered evidence that it believed laid the scheme bare. In one document, a Microsoft senior executive celebrated the company's "pure tax play." In another, KPMG plotted how to make the company Microsoft created to own the Puerto Rico factory -- and a portion of Microsoft's profits -- seem "real." Last week, U.S. District Court Judge Ricardo Martinez ruled Microsoft had to turn over disputed KPMG documents because the firm had been promoting a tax shelter. Martinez wrote, "the Court finds itself unable to escape the conclusion that a significant purpose, if not the sole purpose, of Microsoft's transactions was to avoid or evade federal income tax." It's an outcome that "serves the public interest," he wrote, given the difficulty of the IRS' task of discovering underreporting of corporate taxes. Barring an appeal, the ruling resolves the summons enforcement case and means the audit can now be completed by the IRS in the coming months.
civil forfeiture (Score:5, Insightful)
Re:civil forfeiture (Score:5, Insightful)
Corporations are people too!
Let them suffer like regular people do too!
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Re:civil forfeiture (Score:5, Informative)
There's a board of directors, right? They're responsible for what the company does.
Re:civil forfeiture (Score:4, Interesting)
Here's the thing...if companies are using the law, the VERY convoluted laws to avoid paying as much tax as possible legally, then you don't blame the company for using every means it legally has to reduce their tax consideration.
You change the tax laws!!!
Seriously, go change the laws....it barely needs to be more complex than:
You made X
You spent Y
You're profit is Z
You own A dollars based on your profit.
But seriously, you shouldn't blame ANY entity or individual or family in the US for using the full laws available to pay the minimum tax owed.
If you don't like the system, fix it.
Besides think how much money would be.saved by shedding the need for all the tax lawyers and consultants, think of the time saved figuring out your taxes, there's no reason that it should take more than a sheet of paper and an hour or so to figure out ones taxes.
Take away most all deductions and you could lower the tax rates all around.
Besides, tax revenues are supposed to be there to fund the government services we need...it shouldn't be used by the government to steer behavior, that is NOT their job.
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Well, it appears the audit goes on....it may not find any crime.
Here's the thing...if companies are using the law, the VERY convoluted laws to avoid paying as much tax as possible legally, then you don't blame the company for using every means it legally has to reduce their tax consideration.
I would argue that companies have a fiduciary obligation [investopedia.com] to their share holders to pay as little tax as legally possible.
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And you would be right.
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Are you a tax lawyer?
Have you actually had such a tax shelter tried in court?
If not, you have zero ability to judge it's legality.
Re:civil forfeiture (Score:5, Interesting)
But seriously, you shouldn't blame ANY entity or individual or family in the US for using the full laws available to pay the minimum tax owed.
Why not?
https://www.uscis.gov/citizens... [uscis.gov]
See the section "responsibilities".
Me? I'd say mega-corporations and mega-rich people have more responsibilities towards the country that made their success possible than ordinary folks do.
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Do you take every tax deduction you are allowed to take legally?
For that matter, do you forgo your tax deductions dan actually pay MORE than you have to?
There's a spot on the form for doing just that it makes you conscience clear.
If you do take deductions you are able to take, then, you can't really gripe about what MS or any other company is doing.
If they ARE doing it legally and the audit will find out, they haven't been found guilty of any tax fraud yet....then no one has a right
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See the section "responsibilities".
The responsibilities end only at the edge of the law. You have no responsibility to pay any more tax than the legal minimum amount required. It's a shitty move that large companies tax dodge,but you can't fault them for it. Rather you can fault the tax codes which allow this kind of profit manipulation. /Full disclosure: I claim every deduction I am legally allowed to on my taxes and don't pay a cent more than I am required to. If you want me to stop using a deduction then the government needs to remove it
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I did. From the website:
Pay income and other taxes honestly, and on time, to federal, state, and local authorities.
You may want to quote the part that you seem to think supports your contention that taxpayers are obligated to pay more than the lowest amount allowed by law.
At least, that seems to be what you are saying. If not, please clarify.
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How do you fix the system (Score:5, Insightful)
Bernie Sanders is trying to do it. So is AOC. Folks around here hate them though. Funny thing is they don't seem to like Trump & the GOP either. Everybody just complains and nobody wants to actually _do_ anything.
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when the money saved dodging taxes is used to buy off Congress and the presidency, pack the courts and build a revolving door? Bernie Sanders is trying to do it. So is AOC. Folks around here hate them though. Funny thing is they don't seem to like Trump & the GOP either. Everybody just complains and nobody wants to actually _do_ anything.
I think AOC is a laughing stock because she's just barely more coherent than Trump. One of my biggest complaints with virtue signalling and PC culture is that it's a distraction from economic issues. Forcing people to use new or incorrect pronouns costs nothing and helps distract from real issues that affect all people instead of ever smaller corner cases. Focusing on what helps 99% of people instead of much smaller groups makes far more sense and benefits almost all people. Focusing on [insert aggrieve
Can you list some specifics? (Score:3)
I also don't see any virtue signaling. She has very specific policy proposals (Medicare for All, Green New Deal, Tuition Free College). "Virtue Signaling" means saying you want to do something but not making any effort to do it. Obama virtue signaled all day. It does _not_ mean "saying things I don't like or personally agree with, especially about women, LGBTQs and minorities"...
As for why the drag queens ca
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I haven't heard many gaffes from her. She's not perfect, she's pretty new to public speaking. I also don't see any virtue signaling. She has very specific policy proposals (Medicare for All, Green New Deal, Tuition Free College). "Virtue Signaling" means saying you want to do something but not making any effort to do it. Obama virtue signaled all day. It does _not_ mean "saying things I don't like or personally agree with, especially about women, LGBTQs and minorities"...
AOC gaffes listed at the bottom. Agreed about Obama being useless.
As for why the drag queens care so much, we used to murder those people on a regular basis. I don't blame them for wanted to be treated like human beings. You might not realize it but you're dehumanizing them, and that's the first step to gulags and death camps. That slope is very, very slippery. The pronoun thing is just a distraction from the right wing to make you forget about economics. Let it go. Is having to call the occasional drag queen "She" worth giving up your entire economic future for?
I'd argue that when figuring out what to tackle first it makes more sense to start with things that benefit almost all people, such as economic issues for the 99%, rather than fringe issues that impact under 3%. With regards to pronouns, they are free to call themselves whatever they want. I'm free to use actual (ie not made up) words. Asking me to call a guy a girl is asking me to lie. You shouldn't have the power to compel me to lie.
I would normally agree (Score:2)
As for her Gaffes, the one from Fox is because there's so many Dems who act like Republicans. We call them "Clinton" Democrats or "New" Democrats and
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Suicide is not murder.
And suicide rates amongst the gay community has been higher than normal people for most of record keeping time. They are just a higher suicide prone category of folks.
This nothing new in the Trump era.....
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except we're talking about murder. Go look up the suicide rates of LGBTQ & Trans people. I know a guy who's gay brother was beaten almost to death. They thought he was dead until he showed up one day after waking from a coma 2 years after the beating. This isn't about getting dirty looks, it's about being beaten to death. That moves it way up the list.
So are we talking about murder or suicides? Prosecute murders, I don't think many people are saying otherwise. Suicides on the other hand are quite literally self inflicted and the LGBTABCDE group is very much over represented there. Indeed in terms of bad outcomes the alphabet soup crowd has crazy high STD rates, tons of suicides, lots of domestic violence, and many other bad traits. Of course if you point out facts you're called names because the truth hurts. It's an unhealthy lifestyle but we're not
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Her legislation like the Green New Deal is laden with social justice talking points and has less to do with environmentalism and more to do with trying to shove socialism down the throats of the American public. The Democrats don't like her and there's even been suggestions tha
The two job thing means less underemployment (Score:2)
Yes GND is lots of fuzzy language around it, all bills do. You're right it doesn't primarily have to do with the environment. It's a jobs bill. The Green part is just icing on the cake.
People like her because she speaks truth to power. Before the right wing attacked that phrase in order to turn you against your fellows in the working class it _meant_ something. Think about it for a bit, what the words in "tr
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You do realize that this tax dodge exists because Puerto Rico itself is dodging taxes? By putting off becoming a state and maintaining its status as a U.S. territory indefinitely, Puerto Rico residents pay no federal income tax [wikipedia.org] (with a few exceptions). Likewise, Puerto Rico corporations aren't liable for U.S. corporate taxes. That's why Trump was playing hardball with them when it
PR is trying to become a state (Score:2)
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Whether a tax avoidance scheme is legal or not is a matter for the courts, especially some of these dodges. Problem is that the IRS has had its budget so cut that it can't properly prosecute these cases so whether legal or not is in limbo.
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Well, it appears the audit goes on....it may not find any crime.
Here's the thing...if companies are using the law, the VERY convoluted laws to avoid paying as much tax as possible legally, then you don't blame the company for using every means it legally has to reduce their tax consideration.
You change the tax laws!!!
Seriously, go change the laws....it barely needs to be more complex than:
You made X
You spent Y
You're profit is Z
You own A dollars based on your profit.
But seriously, you shouldn't blame ANY entity or individual or family in the US for using the full laws available to pay the minimum tax owed.
If you don't like the system, fix it.
Besides think how much money would be.saved by shedding the need for all the tax lawyers and consultants, think of the time saved figuring out your taxes, there's no reason that it should take more than a sheet of paper and an hour or so to figure out ones taxes.
Take away most all deductions and you could lower the tax rates all around.
Besides, tax revenues are supposed to be there to fund the government services we need...it shouldn't be used by the government to steer behavior, that is NOT their job.
I generally agree with everything stated. We could pass a minimum corporate tax rate and say that regardless of what tax breaks, losses, etc were in a given year that a company must pay at the very least a 1%, 5%, or 10% tax rate. Now I don't know what the results would be to the economy. And I don't know what company behavior would be a result. Maybe businesses move as a result? But I know that it has been discussed in the past.
In the end, corporations have a legal and financial obligation to their sh
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A flat tax rate for all people, all income types (jobs, stocks, etc.)
A flat tax rate for all businesses.
NO deductions, anywhere, for anyone, period.
And I'd do away with the "non-profit organization" status too. They will be fine when it all stabilizes.
"How DARE you try to make things simpler and understandable?!" I'd bet the tax rates for people would be lower going forward. Doing taxes would no longer be a costly, pointless, annual headache (like switching the #$% clocks). Tax refunds wouldn't
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Seriously, go change the laws....it barely needs to be more complex than:
You made X
You spent Y
You're profit is Z
You own A dollars based on your profit.
Except once you go multi-jurisdiction, it *does* need to be more complicated. If every single jurisdiction taxed a company 10% of their global profits, they'd owe 10x+ their yearly profit in taxes. The entire tax dodge strategy they use is putting their profit in jurisdictions where your "A" is calculated as a very low percentage of Z.
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the trouble with that approach is that the US can change its tax laws all it likes, but it won't affect the laws set by Puerto Rico (or Panama, or whereever) who give Microsoft 0% tax in this case.
You could deny these places any trade with you, but that won't really work - would you turn off all trade with Ireland for doing roughly the same thing, or Romania for having such a shitty economy the exchange rate works massively in their favour.
I suppose that only lerave invading every country on the planet in o
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There's a board of directors, right? They're responsible for what the company does.
The BoD doesn't get involved in this sort of stuff. This is the company's management. BoD has a very different role.
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We pardoned ourselves.
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When I incorporated my business, my lawyer explained to me all of the many ways that I, personally, could be held criminally liable if I used my corporation to commit a crime.
Corporations are treated as separate legal entities for specific purposes. But they are created by, and run by, people. You can sue a corporation. You can seize it's assets. You can also dissolve it or revoke licenses. But if the corporation commits a crime then those individual people in charge face criminal prosecution.
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Corporations, like wet-ware people, can also be probated, fined, restricted, and killed. At times in USA history, Corporations were broken-up into parts, restricted from doing specific types of business and in different types of places and geographical areas, and run-out-of-business. Corporations have a lot to lose when dealing with the Federal Government.
That said, M$ more th
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Maybe tell their shareholders, since they're obviously not distributing unlawful dividends [itcontracting.com] on supposed profits that aren't reported as taxable income. If they were, the shareholders would be required to forfeit those such dividends.
Re:civil forfeiture (Score:4, Interesting)
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Killing one general will encourage the others, to paraphrase Napoleon
I'm thinking more of a Stalinist purge would be more effective. Something along the lines of the Great Purge of the Red Army, which got 3 of 5 Marshals, 13 of 15 army commanders, 8 of 9 admirals, 50 of 57 corps commanders, 154 out of 186 division commanders, and almost all the commissars at army and corps levels, with the total number of officers purged at over 37,000.
Basically, we need to clean house with a lot of these tax dodging companies.
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Given he's talking about the Stalinist purge, the kinder fate would have been execution.
Re:civil forfeiture (Score:4, Interesting)
Never knew it was so high. How many of those were fired vs executed?
Most, especially of the lower ranks I believe, were simply kicked out of the army. A lot of the higher ranking officers were executed (maybe around 7,000 total I think). A lot were sent to prison/gulags, but were recalled shortly after the USSR was invaded by Germany (and after Stalin killed even more officers for failing to stop the Germans in another purge). Ironically, some of the best performing officers in the Red Army were the purged officers; probably because when your alternatives is a Siberian gulag, Western Front combat wasn't actually all that bad.
So, it could be argued the purge actually worked, but only after initially failing.
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step 1: rent a few senators and an army of lobbiests
step 2: cash in on step 1 by purchasing a few tax haven laws
step 3: transfer your cash into your new tax haven
step 4: when the IRS comes knocking, point to steps 1-3, "it's legal, go away"
The problem isn't the IRS, and it isn't the companies. The companies are doing everything they can to make and keep money for their shareholders. That's their job, and it's actually a legal requ
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or even better - if these 85 people now own all of Microsoft's IP, let them release it to the world for free. A gift from the people of Puerto Rico.
What can microsoft do about it? They no longer own the IP after all :-)
Here we go again (Score:5, Insightful)
Get ready for another thread full of "It's a company's duty to do this - think of the shareholders!"
Companies also have a duty towards the country that gave them the opportunity to earn that money, towards the country that educated their workers, that built the roads that the workers drive on.
By paying taxes they could ensure that that system continues to improve for everybody.
Re:Here we go again (Score:5, Insightful)
Get ready for another thread full of "It's a company's duty to do this - think of the shareholders!"
Companies also have a duty towards the country that gave them the opportunity to earn that money, towards the country that educated their workers, that built the roads that the workers drive on.
By paying taxes they could ensure that that system continues to improve for everybody.
I think the argument needs to be shifted that companies don't have a duty to shareholders, but rather to stakeholders. That means the stockholders, employees, customers, and even the state providing services that company relies on. The actions a company takes should be considered taking into account all those affected by the decision, or you inevitably get shenanigans like laying off hundreds of people right before Christmas to boost Q4 numbers, boosting returns for shareholders in the short term but damaging the integrity and capability of the company in the long term.
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I fully agree with you. However, the system isn't setup that way. The system encourages everyone - not just corporations to *evade* tax. Probably because most taxpayers in most countries do not see tangible benefits of the tax they pay. This is largely a problem with tax - you don't know why it exists, typically. A good example is income tax...it's purpose is the arbitary "running of government".
I bet people would be much less inclined to evade a "medical services" tax, "road maintenance tax" etc. Transpare
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I don't agree, I think we all know why tax exists and what we get for it. But people given a choice of immediate gain vs. societal gain seem to prefer choosing themselves. Greed wins.
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I bet people would be much less inclined to evade a "medical services" tax, "road maintenance tax" etc. Transparency is the key, and it must exist at the grassroot level.
Around here, we have a half cent transportation sales tax at the county level. The county hammers the shit out of that description, putting it up all over on signs after a road construction project is finished and leaving it up for a year.
The residents of the county recently voted to renew the tax. We have good roads.
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The way to achieve this is to setup an employee-owned company, where the employees hold the shares. Some companies work like that and their articles of incorporation are setup to require it. The reason you have to do this is because one cannot serve multiple masters. Those parties you listed are all add odds with each other: the employees want more pay, and the stockholders want lower expenses, the customers want lower cost and more features and better support, the government wants more taxes but the sha
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Get ready for another thread full of "It's a company's duty to do this - think of the shareholders!"
Companies also have a duty towards the country that gave them the opportunity to earn that money, towards the country that educated their workers, that built the roads that the workers drive on.
By paying taxes they could ensure that that system continues to improve for everybody.
It's a company's duty to do this for the shareholders. It's also, despite msmash and ProPublica's hysteria-induced description, almost certainly legal.
Congress has the full power to write tax laws as it sees fit. The problem is that Congress doesn't just see tax policy as a source of revenue, it sees it as a carrot-and-stick means of policy, rewarding behaviors it likes, and punishing behaviors it doesn't. Those clauses that allowed Microsoft to do this likely also benefits Congressmen from Boston to Berkel
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If you don't like it, get Congress to change the tax code.
I would but congresspeople are benefiting from the existing code and they have to vote for the changes.
I'd vote for a different congress but every time I go to the polls there's only rich congressmen to choose from.
Re: Here we go again (Score:2)
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You are right on most things except the "residents keep voting to keep the status quo" part. There have been like 2 (maybe 3) referendums about status. Statehood won all of them. Unfortunately congress has to validate (sponsor?) the referendum or is not valid, so those are just symbolic votes. We should be paying federal taxes but that would mean we should get senators/house representatives. I'm sure many senators don't want to dilute their power adding more people in the mix. Specially morons like our poli
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I take issue with the word "duty." I would prefer "responsibility." You have a responsibility to follow the laws in the country in which you operate.
A business-friendly environment helps, and any self-respecting entrepreneur would want to do whatever is in their power to encourage such environments; environments where people want to live and do something productive, and can get the skills they need. It is responsible not only on a social level but on a business / profit level as well.
But duty ?
Businesses ar
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Call it that if you want but I googled "civic duty", it came up with this as first hit:
https://www.uscis.gov/citizens... [uscis.gov]
One of the duties/responsibilities listed there is:
* Pay income and other taxes honestly, and on time, to federal, state, and local authorities
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Companies also have a duty towards the country that gave them the opportunity to earn that money, towards the country that educated their workers, that built the roads that the workers drive on.
No they don't. No one has any duties or obligations, just laws and consequences. Believing in imaginary principles like duty, while not a bad character trait *at all*, is how bad laws get passed. Yes, if more people believed as you do, the world would be a much better place than it is. But it's a lost cause, instea
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Sure, companies in theory have a duty to society, but that doesn't work *in practice* when everyone in them is judged solely by profit the company generates.
Whenever something like this happens people start calling for blood: make an example of the bad actor. The problem isn't a bad actor, it's a bad *system*, and making an example of a single company has no practical effect, even on the guilty company, because politicians can't afford the collateral damage.
The only way to enforce the duties and responsib
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Oh bullshit. Pure, unadulterated rabble rousing nonsense. Corporate taxes are a scam and pain in the ass anyway. Just tax the people who profit from the company more. Taxes you pay that you don't have to are called 'charity' and what kind of abject moron thinks giving charity to the US government is better than spending on a more efficient, direct charity? If some billionaire said he pays more taxes than needed "because patriotism!" I'd look at him like he grew a second fucking head. Pay what you must, payi
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Companies also have a duty towards the country
No they don't. Companies have zero duties towards a country beyond the minimum codified in law. To think otherwise is living in a fantasy world.
Seems to me... (Score:2)
The biggest mistake Microsoft made here was trying to setup a tax haven within US jurisdiction.
That being said, I hate corporate tax dodgers. I hope they go for the jugular, but the cynic in me knows they always settle for far less than they should.
"I followed the law" (Score:2)
That's legalese for "I found a loophole".
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That's legalese for "I found a loophole".
And if the loophole was legal... which it almost certainly was... Microsoft isn't stupid... then it's not legalese it all. It's just a statement of fact.
At the end of all this, the IRS will try to take Microsoft to court, and they'll probably lose.
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At the end of all this, the IRS will try to take Microsoft to court, and they'll probably lose.
More likely Microsoft with tithe some amount to make it go away, but it will be pathetic and mostly reflect the expectation value of possible fine + court costs. And the IRS will agree to it.
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The IRS doesn't have enough of a budget to properly take MS to court and prosecute the case fully.So without a court saying otherwise, it is legal.
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In a free society, it is the letter of the law that determines what is punishable and what is not. Because no laws are perfect, that means you get loopholes that allow bad actors to escape punishment.
Take China as a counterexample. It has on its books many stringent-looking laws about things like pollution, but there is little enforcement done, sometimes there is no enforcement mechanism. Inevitably, violations of environmental laws are commonplace. But if anyone doing that violates *unwritten* rules, s
Imagine the bonus on that one! (Score:2)
We were taught to be good.. (Score:3)
...back in my day, which wasn't that far ago, we were taught to be good, to not lie, to not cheat.
Seems the rest of the world didn't get the memo, or being good stopped being a thing once the 90's came around.
Everywhere I look it's cheats, liars and thieves getting ahead.
Off with their heads!
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Off with their heads!
Just because you're too silly to use the tools given to you to prevent you doing extra work doesn't mean other's should lose their heads. Why not close the ability to cheat rather than vilifying those creative enough to use the available loopholes.
It reminds me of a chemistry course I did a long time ago. I couldn't for the life of me remember how to react chemicals with anything other than alcohol. So I used alcohol for every example. I got a C. I then complained to the head of the engineering school that
Tax turnover (Score:2)
You took $100 in, then you owe $5 (tax rates could be a lot lower if levied on turnover).
No allowances.
No carrying over losses.
No "for tax purposes" accounts.
No ponderous thousands of pages long set of rules to regulate and police.
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licensing your own IP from an entity in a tax haven
Wouldn't matter. A tax on turnover (revenue) would be the same. Fees, license payments and other costs would not be deductible. So it wouldn't matter to whom you paid them.
To be fair, the final tax rate would have to be much lower. Nothing like a 40% marginal rate. Maybe more like 5%.
You can't simply make IP fees non-deductible
Why not? You pay your (non deductible) fee, add whatever value you can, add 5% for the government and sell your product. If you aren't adding enough value to a product to cover that 5%, then you don't really have a viable busi
The creative accountant must be punished (Score:4, Informative)
Unless there is some real punishment for the egregiously bad conduct it will not stop. Some lawyers and accountants skate on thin eye constantly push the boundaries, and soon the expanded boundaries and loop holes become the "industry standard".
We need a fundamental change in governance of corporations. Corporations are NOT people. Corporations are artificial entities created to pass profits one way without passing the liabilities along with it.
Only unlimited liability corporations where the Board is liable, including criminal liability, for the actions of corporations can have rights like free speech and religious beliefs. A pure for profit liability filter should not be given equal rights like free speech, and then it be extended to money is speech.
A cryptocurrency will collapse if more than 50% of the mining is owned by a single miner. Democracy will collapse if the government is weaker than the strongest individual. No single human flesh and blood citizen is likely to become more powerful than the government. So we have lots of laws restricting the power of the government to protect the individual. But corporations, claiming to all the rights of the citizens can become more powerful than the government. At this point Democracy will collapse. It will become a oligarchy. We are dangerously close to that point now. Some think it is already over the brink.
Flat Tax (Score:1)
Go after KPMG as well (Score:3)
Given KPMG is involved, tax avoidance is a near certainty, although proving it may be problematic. A multi-national, KPMG has been (and continues to be) investigated in several countries for creating many legally questionable tax-avoidance schemes for the ultra-rich and corporations.
Should Microsoft be found guilty of tax avoidance, vigorously prosecute businesses KPMG, who created and advocated, the scheme.
Seems to me (Score:2)
The simple solution to all of this would be as follows:
"20 percent tax on the gross revenue of a company"
That way, they can't use Hollywood accounting to claim they made no money, and regardless of where they have their subsidiaries, they'd still get taxed on the gross.
But I'm sure not being a politician, ceo, or tax lawyer, I'm missing something...
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That would create very large price inceases for products with high volume, low margin sales.
Yea I feel like a lot of people don't get this. An across the board tax hike would be something they could pass on without losing any competitive advantage since their competitors would be in the same boat.
What we really need is to craft the laws to discourage companies (and some individuals with wealth bigger than most companies) from sitting on huge piles of cash. Yes, having reserves is good for a company in case of a downturn, but there needs to be some sane limits. I'd be perfectly OK with companies
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We should just scrap the tax system altogether, and just tax land, natural resources, pollution, and intellectual property protection.
A fairly simple solution to tax dodges... (Score:3)
A corporation should be taxed based out of the country in which the C-level executives operate. Apple wants to move its HQ to Ireland to avoid taxes? Bye, Tim Cook, I'll swing by and say hi the next time I visit Blarney Castle.
Sure, this solution is not immune to further, more complicated tax countermeasures, but the resulting tax dodges themselves could be analyzed to find appropriate nullifying restrictions.
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So close.. Even simpler is to just stop corporate income tax. It makes no sense. Corporations don't profit, they are just a group of people. Those people profit. Increase their taxes and end corporate income tax. Increase income taxes on the > $250k brackets by a small amount, and increase capital gains taxes (or just stop them, tax everything as income) and you will make back the money and probably a lot more in taxes and it would be much, much easier for everyone and harder to cheat.
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So close.. Even simpler is to just stop corporate income tax. It makes no sense. Corporations don't profit, they are just a group of people.
Apple has $210.6 billion cash on hand. If they were a country, their currency reserves would rank them as 13th highest forex holding. Higher than such states as Germany, the UK, and the US. And yet somehow "corporations don't profit"?
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Correct. How does them having $210.6B negate that fact?
They didn't just find that money in a bag out in the street. That was profit. Profit that should have had tax paid on it.
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Corporations don't profit, they are just a group of people.
It's not a question of corporate but a question of the use of taxpayer funded facilities. Calling a corporation a group of people is fine, but do you want to pay for everything twice simply because you work somewhere outside of your own home?
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A corporation should be taxed based out of the country in which the C-level executives operate.
Nope. A corporation should be taxed precisely where their transactions took place. Just because the irish give you a loop hole doesn't mean a French transaction should be taxed in the USA.
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Nope. A corporation should be taxed precisely where their transactions took place. Just because the irish give you a loop hole doesn't mean a French transaction should be taxed in the USA.
The problem with that approach is that it's extremely easy to dodge. See Microsoft's strategy for licensing its own name to itself as an example.
Puerto RIco is a US colony (Score:2)
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Puerto Rico governor fires emergency director after aid is found sitting in warehouse. [cbsnews.com] Puerto Rico Governor Wanda Vázquez Garced fired the islands emergency management director on Saturday, after a video showing aid sitting unused in a warehouse went viral on social media. Some of the aid has allegedly been sitting in the warehouse since Hurricane Maria struck in 2017.
https://www.yahoo.com/news/pue... [yahoo.com]
Solution: Tax Pre-Dividend Net Income (Score:1)
I don't agree with Elizabeth Warren on a lot of things, but her idea to tax corporations based on net income (profits) is at least a step in the right direction. If it's combined with a significant lowering of the corporate tax rate to get buy-in from centrists, it could actually significantly increase tax revenue collected from mega-corporations.
Corporations are beholden to their shareholders, who want to see high EPS and dividends. Net Income is a top-line item on EPS, so reporting $0 Pre-Dividend Net Inc
There's the taxes you owe (Score:1)
There's the taxes you owe, and what you legally are required to pay after going to great lengths to "optimize" your books.
Those of us who operate small businesses that aren't able to relocate assets to any part of the world pay a much different rate than Microsoft, Apple, and Amazon.
Was this on purpose? (Score:2)
was deemed worth nothing or a nominal amount on June 30th, 2005 but valued at $30.4 billion just one day later.
Maybe they were doing their taxes in Excel?
Paul Kiel, not Klel! (Score:2)
Get real (Score:2)
At least is more than a shell company (Score:2)
Fix the system (Score:5, Informative)
Did you know IKEA is (partly) a non-profit researching "interior design"? I was surprised to learn this, but it seems to be that way. They too have a very convoluted corporate structure: https://en.wikipedia.org/wiki/... [wikipedia.org] if you are interested.
When the tax laws are complex, the companies will also reorganize themselves to best match the system. For example, if you enable "licensing" as a cost, the company will of course try to maximize that cost to reduce taxable profits on paper. Especially when they also get to control the licensing entity, too. (Again as far as I know, one part of IKEA structure is just for licensing the logos and marks. So this is not only for software. Any company with a logo can to the same).
And the "solution" is not adding more rules to the system. The accountants in a billion dollar company will carve out exceptions by adhering to letter of the law, but making us upset with the results. The solution is a simpler system with clear guidelines for what is deductible (salary, rent, etc), and what is off limits (self-licensing of logos in the same corporate structure).