I would think that on the forum for a startup accelerator, people would be more finely tuned to what this means for startups. Guess who can not evade taxes through complicated international arrangements? Startups.
It is overall a terrible thing for the economy. It is an incentive for bigger companies to get even bigger, and it is horrendous for small companies that have to pay full taxes and carry the burden of a tremendously complicated tax system that meanwhile fails spectacularly at taxing their orders of magnitude bigger competition.
(I guess it tells you a lot about the political system that we are happy to invade big countries but apparently powerless at regulating small ones that have specialized as tax havens)
> Guess who can not evade taxes through complicated international arrangements? Startups.
Startups, almost by definition, are generally not profitable. Almost all revenue above costs will be more or less immediately reinvested into growth. Taxes for companies which are not profitable are very nominal.
The basic problem is that tax systems are inherently complicated, and big companies with operations in numerous countries have many legitimate reasons for not paying "full taxes." There are two simple, common-sense, principles:
1) Income earned in a particular country should be taxed there and not elsewhere;
2) Taxes should be incurred on net income, not gross income.
In the context of a multi-national, there is no simple way to implement these two simple principles. When Google earned a Euro for an ad shown in the U.K. from a server in Ireland using technology developed in Ireland and the U.S. how do you divy up the income and the expenses?
It seems like this is the Delaware Corporation of the 21st century. And I see a YC startup to help the little guy evade taxes completely legally in the making.
I would invest and use a product like this. I've always wondered why I look for ways to lower my tax bill when I'm doing my taxes instead of getting proactive guidance throughout the year on my expected tax liability and things I should do to minimize my tax exposure, etc.
While I don't support this double dutch or other kind of tax avoidance schemes, I can honestly say for about 25k USD you can get one of the top consulting firms (McKinsey, Deloitte, etc) to create a good tax avoiding scheme and for 5k or so more to implement all the documentation needed.
It isn't that big of a expense if you really want to try and avoid taxes as much as possible for your company.
source: I saw various of these reports for a few firms I consulted with
Well you could move to another country only taxes income from inside it's territory and start your internet startup there. They tend to be small countries where you will not derive much if any income from, so almost all of your profits will be literally tax free. One often cited example is Panama.
Is it illegal? If not, it sounds like a brilliant plan. I'm shocked that people who work with removing coding bugs on a daily basis are so quick to assume that a "bug" in the tax code is Google's fault.
Keeping your money when you owe it for a service is, yes. It's called "theft of services".
EDIT: Perhaps I should put it more clearly...
If you sell goods on Google Play, I believe there is a fee of 30%. Now, imagine I found a bug in the Google Play store that meant that, even though I sold millions of copies of my app, I actually paid 0% to the Play Store. Do you think that Google would just accept that I'd found a bug in their software and therefore I owed them nothing? Do you think I owe them nothing?
Google chose to participate in a market where the costs were clearly labelled up-front and they didn't even have to pay a penny unless they made a significant profit!
Why the hell should they get away with paying nothing for a service that other people pay a lot of money for?
So (unethical) hackers are also completely blameless, after all it is in fact the software itself that allows this unintended access. Are you willing to endorse that statement?
If not, then Google is to blame for taking advantage of tax loopholes.
* in the interest of greater acceptance, the committee solicits opinions of users for how to design the software
* some users need certain features, and the committee members are open to "suggestion"
* committee members have no issue with accepting suggestions without considering their impact
* committee members have no issue with accepting bribes in exchange for guarantees of certain features being implemented
* committee members actively solicit suggestions because they want money
* there are no repercussions for committee members taking bribes and blindly accepting feature requests, as a matter of fact it's official policy that they do so
Yeah, those "hackers" are definitely to blame here. They're playing the game by the rules and they're winning, and that makes you upset? Personally I'm not even surprised at all.
An analogous situation would be an NSA member sitting on a committee developing an encryption standard. The NSA member suggests a change that the committee members do not fully comprehend the implications of. They accept the standard and henceforth the NSA can crack the resulting cryptosystem. By your reasoning the NSA carries no moral fault here.
Man, the mental gymnastics people will go through to justify tax avoidance is astounding. Those with greater knowledge in an assumed non-adversarial system have a moral imperative to disseminate that knowledge to the others in the system. Otherwise taking advantage of the information imbalance and the other party's implied trust is unethical.
Just because something is legal does not make it right. Those who would outsource their moral thinking to laws are a sorry lot.
Morals and ethics have no say in determining whether to pay taxes -- if you pay too much then the government complains, if you don't pay enough then the government complains. Where exactly does right and wrong fit into this equation?
There are no mental gymnastics in determining how much taxes you have to pay, the only thing that matters is how much you pay.
>Morals and ethics have no say in determining whether to pay taxes
Morals/ethics do have a determination whether the concept of tax is ethical or not, which would then determine the ethics of avoiding said tax. If you take the position that tax is ethical (as a member of a society...) then it is at least on the surface unethical to avoid the intended tax rate (shifting burden, freeloading, etc).
It is impossible to undo the damage done by some forms of hacking. For example, if someone breaks into your email provider and publishes embarrassing emails about you in public, it would be impossible to undo the damage by any reasonable means. Tomorrow the lawmakers could pass a law stating that all tax not paid be returned to the government.
Also in a free market, governments should compete for companies to register their books in their respective countries and the competition between the governments should keep the tax rates fair.
Its not a "brilliant plan". Pretending that Bermuda "owns" your profits is borderline fraud. It may well be illegal too but no one has yet challenged it, though France may do.
Sorry but I don't make much money and I don't know how taxation really works but if people outside the US paid [CorporationName] and the income is being taxed outside the US (albeit at closer to 0%) why does [CorporationName] have to pay taxes in the US?
I think we have to use common sense here. I can see why we want to tax a corporation if they just set up a shell company and pay royalties to the shell companies from revenue generated within the US but if the income is earned outside the US, why do we care? Why do we tax income that was not earned in the US?
A simple (but very difficult) way to fix it would be to eliminate all tax incentives, reduce the tax rate, and peg tax to revenue and not to profit.
So if you had revenue of $100 and expenses of $110, you would still pay taxes on the $100 revenue (at a newly reduced rate). This would encourage people to try to improve efficiency and profit margin.
After all, I pay income taxes on all my income, not on the savings after I have spent my money. Why should companies get to pay taxes on "profit" and not on revenue?
> After all, I pay income taxes on all my income, not on the savings after I have spent my money.
Actually, you, like a corporation, pay taxes on income after deductible expenses, and you, unlike a corporation, even get the privilege of assuming a certain amount of deductible expenses without proving it.
OTOH, almost everything a corporation can do with money other than lock it in a vault is a deductible expense, so there is that.
> Why should companies get to pay taxes on "profit" and not on revenue?
In theory, I think, because corporations are legal fictions and the actual benefits that their shareholders, employees, etc. -- the non-fictional people involved -- derive from them are taxed as personal income or capital gains, and corporate tax serves as a fee on delaying those personal taxes by retaining profits in the corporation.
Taxing revenue instead of income would be an extreme incentive towards vertically integrated businesses, making all other choices uncompetitive.
For example, if a chocolate bar is sold by overseas manufacturer A to an importer B then to a wholesaler distributor C then to a small retail shop D then to you - then if taxes were paid on revenue, then that chocolate bar would be taxed 4 times, and each step would bump the price up by the tax rate in addition to the current markup; However, if a manufacturer A would buy all the elements in the chain and sell it directly to you, then it would pay 4 times less taxes, and it would be impossible for others to compete with that pricing difference.
Ideally a company would pay taxes for the services it uses. If you use a public road, you pay a small tax for using that. Unfortunately not very practical.
It's very practical. It's called sales tax. Gasoline sales taxes are supposed to be used to maintain roads.
In general, taxing income and profit is difficult to do fairly. It requires a really complex and invasive bureaucracy that scrutinizes everyone and every business. Sales tax, on the other hand, is easy to do fairly. You already have to regulate sales to enforce anti-fraud laws, food and drug laws, and other regulations.
People often say that sales tax is regressive, whereas income tax is progressive. But in practice, income tax is regressive, really falling only on the middle class. For example, multi-billionaire Warren Buffet pays a lower tax rate than his secretary. http://money.cnn.com/2013/03/04/news/economy/buffett-secreta...
> Why should companies get to pay taxes on "profit" and not on revenue?
Because then a company that makes losses (expenses exceed revenues) is still taxable, which isn't sensible. Taxes are not an expense, they are a tax on earned income.
Depending on where you live, you probably won't be paying taxes on your whole income: you might get tax breaks for anything from housing loans, to write-offs for travel to and from your business, etc. in the same way that a business gets to claim expenses against generating their revenue.
This is not about the US. Those of us who live in the rest of the world and pay taxes would also like companies like Google and Apple to pay tax in the countries they operate in.
> This is not about the US. Those of us who live in the rest of the world and pay taxes would also like companies like Google and Apple to pay tax in the countries they operate in.
Hang on a minute. Maybe I am a little naive but I don't understand what all this hub bub is all about. Are you saying that people in country X (not the US) pay Corporation A real money but Corporation A legally does not pay taxes in country X? If that's the case, I think the fault is with your tax code than with corporation A.
I am sorry but if I could get away with paying less in taxes, I absolutely would. There is no shame in trying to pay as little tax as one legally can.
The majority of these untaxed profits will end up getting taxed in the U.S. as wages, bonuses, capital gains, and dividends. The money doesn't disappear into some bucket of evil somewhere or get funneled out to a tycoon living on a Yacht in Sealand's territorial waters.
How does that work given Google doesn't pay dividends and most large corporations don't bring the money back into the United States?
In fact I believe it makes sense for the US corporation to borrow money and pay interest on it than to bring money in from offshore divisions. (As Apple did to pay dividends at shareholders behest)
I'm not going to pretend that equity price represents the fair value of the asset, but none the less, hoards of offshore cash, cash equivalents, and tradable assets do affect share prices. As the majority of Google shares are held by US persons, this money does re-enter the US as capital gains. The taxes may be deferred for a long time, but the money just doesn't disappear once it enters a tax haven.
Of course, if Larry, Sergey, or Eric at some point have kids or ex-spouses who are non-US persons, perhaps the majority of these assets won't re-enter the US in some form.
If the Congress doesn't like the practice, then it shouldn't grill Tim Cook but instead, say, pass laws so that this practice would be forbidden. Isn't that their job?
Shifting the burden to congress is absurd. Congress is a finite set of people with finite time to consider tax laws while lawyers for corporations far out number them in time and effort. Such an adversarial system is inherently in the favor of corporations. They should be responsible for following the intent of tax law.
Yeah, designing clear and well-written laws is a boring waste of time. Congress has much better things to do than that. We should just punish people arbitrarily based on "intent" and the shifting political winds.
Those loopholes are there because Google pays(lobbies) for them to be there. As far as I know, they've paid more in lobbying last year than Microsoft, Apple and Facebook combined.
Those loopholes will never be closed, Google and the like will make sure of that.
I still see the root problem being the government. Kill the ability for corporations to spend millions of dollars buying votes and the incentive for keeping the loop holes open would surely close.
I don't think it is "wrong thinking" on the parent comment's part not to blame the corporation for doing what it can to profit. Hell, if I could find a legal tax loophole I certainly would take it, too.
Because your definition seems to be taking advantage of something in a law, miswording or mistake, in a negative way, or even illegal, to avoid paying taxes that are rightfully due.
I define it as following the law as written to lower your tax burdens.
You imply that there's something inherently wrong with using "loopholes". I say there's something inherently wrong not using them, since it is the law.
You may attempt to make this about moral high ground and doing what's right, but that's your definition of the situation and you are welcome to your opinion. But the law says otherwise.
Especially since the company is basically legally required to use such methods to reduce their tax burdens, because otherwise they're likely to be sued by share holders or to whomever they are beholden to.
Multi-national corporations are playing a game of arbitrage with national tax laws.
If it were true that a corporation is legally obligated to reduce its tax burden... then why isn't every shareholder in America suing the company for not moving the headquarters to Dubai where corporation tax is ZERO percent?
> If it were true that a corporation is legally obligated to reduce its tax burden
I'm pretty sure the parent meant within reason. Moving a $300b tech company's headquarters from the heart of SV to a location halfway around the world is not reasonable.
I don't agree, because when you start dealing with regulations you see that 'loophole' as a term is often bandied around for minor things. Some may even be the intention of the regulation.
Please, come on. If only Google stops using tax optimization havens, Apple and Microsoft will get an edge simply because profits of main competitor decreased. The different guy gets the stick. This is exactly like DRM for digital media, think about that.
I am quite OK with Google or any other tech corp using these and other tax optimization techiniques.
Disclaimer: I am a former Googler in a third world country
What Google is doing is not illegal (immoral maybe). They have an obligation to their shareholder to maximise their profits through all legal means. If they were to turn around tomorrow and announce that they will no longer use the "Dutch Sandwich" and profit falls as a result do you think the shareholders would be happy?
Here we go again, the same old corporate mantra trotted out once more, about maximizing shareholder value, to excuse a company's unethical behaviour.
So why doesn't Google and every other company move to Dubai where corporation tax is zero percent? Why aren't shareholders demanding the company move to the lowest tax jurisdictions in the world?
Run down to your local university and audit a class in Federal Income Tax. It's actually a pretty well thought-out system. There are "loop holes" (e.g. for oil and gas companies), but when it comes to taxing multi-nationals there are real theoretical challenges.
I'm pretty sure Google's lobbying is focused on issues such as Internet Regulation, Software patents, and antitrust. You'll need to provide some evidence that Google is lobbying for tax shelters.
I'm pretty sure Google's lobbying is focused on issues such as Internet Regulation, Software patents, and antitrust. You'll need to provide some evidence that Google is lobbying for tax shelters.
So you're "pretty sure" but we need to provide evidence. I have some evidence: Google (along with others) saves BILLIONS a year by these tax schemes so you can bet your last dollar they lobby for them. Don't expect CNN commercials but extremely well funded industry groups, or lobbyists contacting already bought senators and congressmen. It's a return on investment that George Soros can't even dream about.
If Google paid 5% tax, imagine what a 35% or even 10% rate would have done to their earnings. In light of this, you need to provide proof they don't lobby to keep these tax loopholes :-)
Please think before you write. Lobbying is legal, as it is the bread and butter of lawmakers. So I never accused them of anything illegal when it comes to tax loopholes.
I used quotes because I'm borrowing an analogy from police investigations. You provided "motive", ie. "Google has a good reason to pay lobbyists for tax loopholes: money." But you did not provide evidence of said "crime", ie. "You have not shown direct evidence that they pay for lobbying for the purpose of tax loopholes -- rather, that they pay for lobbying (ostensibly for other purposes like net neutrality)."
You said that the burden of proof lies not with the person making the claim, but with someone else to disprove.
The burden of proof lies with someone who is making a claim, and is not upon anyone else to disprove. The inability, or disinclination, to disprove a claim does not render that claim valid, nor give it any credence whatsoever. However it is important to note that we can never be certain of anything, and so we must assign value to any claim based on the available evidence, and to dismiss something on the basis that it hasn't been proven beyond all doubt is also fallacious reasoning.
They haven't saved money until they've spent it. They've deferred some taxes (not all, they're still charging things like VAT, and any taxes in countries where they have offices), but if they want to spend it on salaries or acquisitions, they have to repatriate it and pay taxes. They may be hoping for another "tax holiday". But putting foreign income in storage somewhere where it won't instantly incur taxes isn't really that crazy. Especially if they plan to later spend it in another foreign country (in which case in your dream would they'd tax it three times in three different countries)
Have there been any laws introduced or even rumored to be introduced to change transfer pricing of assets among international corporations? From my research, there hasn't been so what exactly would they be lobbying for?
Pretty sure the loopholes predate Google by a long time. All it is is transfer pricing, something that multinationals have been doing since there have been multinationals.
I usually would refrain from ancknowleging clearly ignorant and trollish comments, but yours is too stupid to resist.
First the laws in question that enable profit shifting for digital firms were enacted pre-internet (which means pre-Google by the way).
As for your evidence-free assertion about lobbying, let's assume it's true, Google lobbies more than those corps combined, does that mean that these three you mention, who employ similar tax reduction techniques are proactivly lobbying to pay more taxes?! And are we to believe that these tech companies you mention are the only ones who "lobby" on tax issues or otherwise?!
Perhaps accusing Google specifically is a bit stretched too far but it's true all cash-rich corporations including Google and Apple with billions tied up overseas are lobbying congress to be able to bring the cash back to USA without paying standard tax rate on it.
That is true, and there might be a decent argument for it (bringing the cash to invest in the US).
But the comment I replied to was implying that Google lobbying alone was responsible for all that is wrong in the world, and even the valiant efforts of Apple, Microsoft, and Facebook couldn't stop it.
It's not legalized bribery, it's mandatory bribery. You can't win an election without campaign funds.
We have a system that literally mandates bribery. It's nuts. First step: campaign finance reform. There was a nifty proposal that got posted to HN a while ago, but it fell off the front page in minutes.
The idea is to give partial public funding to campaigns through $100 tax rebates to individual donors. The bill appears to be the usual "campaign finance refrom + next year's loophole" junk, but it's teeth sink in (loopholes slam shut) when campaigns want to take advantage of individual rebated contributions. It's actual reform dressed in fake PR-reform's clothing, trying to fly in under the radar. I'd love to see it get a chance.
Fun thing about the free market: when the bad guys win, they take the place of the good guys. Evil will always triumph because good is dumb. So no matter what, the market will always be populated with >90% evil.
Hence, government's job is to limit how much damage evil can do.
Well, that's the thing with corporations. They might be run by people who otherwise have a moral compass, but a corporation's responsibility is abstracted and shared such that in many cases no one person feels a great amount of guilt for actions taken by the corporation. Moral qualms are often suppressed in the pursuit of increasing profits.
That's self-serving bullshit. A corporation is a collection of people. They share no less moral responsibility for their collective actions than would an individual.
Self-serving? Am I or anyone I know on the board of a corporation making morally reprehensible decisions? (Hint: no)
My point about shared/abstracted responsibility wasn't meant to defend or absolve anyone personally, but if you ever ask yourself how [CEO or board member of your favorite villainous corporation] sleeps at night, that was an attempt to explain it in broad terms. If responsibility is seen as shared, humans seem to have an increased psychological ability to internally deflect blame from themselves, in addition to the perception in some cases that they personally will not be punished or fined, rather the abstract corporation will. This in turn reduces the disincentive for behavior that they might not otherwise engage in.
If you'd prefer to believe instead that the problem is that people are running said corporations are simply evil to the core, feel free, but what do you plan to do about that? I tend to think any attempt at a solution should start with reducing the effect of corporate money on legislation and other areas of politics.
> Don't blame them if it's legal. Let the politicians close the loopholes.
That's the same line Eric Schmidt used and what he's really saying is "I defy you to change this as our lobbying power will ensure it's never closed. We already own the politicians so don't bother."
Don't blame them if lobbying is legal. Let the politicians implement campaign finance reform, but first support a constitutional amendment so that it is even legislatively possible after the recent Supreme Court rulings.
Not serious =). A much more realistic short term strategy is to give Google bad PR over this to the point that they stop, then they will start lobbying against it if their competitors are still getting to take advantage of the loophole.
I would think it would take an incredible amount of bad PR for them to stop doing this willingly. The PR would have to be bad enough for them to be able show they are losing money over time using this method.
Bad PR also occasionally gets congress investigating things and poking around, etc. Many times companies "voluntarily" make changes when that is the case. OP's solution of don't blame the player just blame the game won't get us anywhere any time soon.
That article claims that Google regularly returns result pages full of ads, and shows a screenshot of a search for [what is bitcoin] as evidence: http://i.imgur.com/eBtzYic.png
Obviously a non-commercial query like this should return few (if any) ads, so I tried to reproduce the author's results. Here is a screenshot taken of searching for [what is bitcoin] in a fresh Incognito window: http://i.imgur.com/KfY3gvs.png . There are no ads, and the search results a reasonable.
I thought the vastly different result could maybe be a result of searching on google.com vs google.co.uk, but changing the domain did not generate any ads either: http://i.imgur.com/5gcOvtJ.png
Does anyone on HN see a page full of ads when they search for [what is bitcoin]?
Maybe because in incognito mode you are not tracked, so you can not have contextual ads. Apparently, the service do not try to serve non-contextual-ads at all.
Actually, there is evidence that Google is evading taxes. Whether it would stand up in court or not is another thing, but it looked bad when the MPs griled Google at a public hearing recently.
They are pretending that UK sales are taking place in Ireland, a lower tax jurisdiction, and then in Ireland they are saying they must pay Royalty payments to Bermuda, an even lower tax jurisdiction.
The FT reports that UK sales represent 10% of global sales, so the UK generates $4.9 billion of revenue but Google only pays $70 million corporation tax on that, an effective tax rate of 0.3%!!!
Actually, there is evidence of people accusing Google of evading taxes but until they are found guilty of it, they are not evading taxes. Since you yourself admit you have no idea if the accusation would stand up in court then you cannot say that they are in fact evading taxes.
The MP can grandstand in front of an audience grilling Google in a public hearing every day, it means nothing. If the MP is so sure they are breaking the law, then charge them and take them to court over it. Otherwise, it's just posturing for people who like the drama of accusing large companies of keeping the little guy down by using special versions of the law that supposedly only they have access to.
Some people see a bad company, I see a bad law. A company following a bad law does not necessarily make for a bad company.
Bad wording. If the software vendor did in fact allow access to a third party for nefarious reasons, then you're darn tootin' I'm going to blame them for it. Plus I'm going to blame the hacker for the nefarious things he does with my personal information.
Loopholes do not circumvent tax laws in any way, if the method is allowed within the wording of the law then it is perfectly legal. By your logic any time I follow the law to reduce my tax burden I am in effect circumventing the intent of the tax law, which somehow makes me immoral.
I guess the difference is that if people don't like it or can't do it themselves it's a "loophole" and somehow wrong.
I think you're missing the point. Every hack ever created is allowed by the software itself. The software logic allows the "loophole" which the hacker is able to exploit. The issue about tax laws is exactly analogous.
I suppose I'm seeing a difference between saying "software vendor" versus "software" in this case. I would guess it also depends on how one uses the term "allow". Typically I see that in this as defined as intentionally letting the hacker do as they wish with no attempt to prevent it. I can see that possibly what you may mean is that their potentially bad code gave an opening to the hacker to do as they wished.
Either way, they are still getting some of that blame. Whatever blame they don't get goes to the hacker. I fail to see an issue with this.
So, as to your tax analogy, I see it much the same way in terms of language. You see the loophole as a means to exploit the tax law, I'm assuming to imply they are doing something they should not be doing. But the word exploit has positive as well as negative meanings. You say they saw a loophole in the tax law and they exploited it in a negative way meaning it was unethical, immoral, and/or illegal. I say they saw a business opportunity and exploited it for the advantage of their company and shareholders, which is totally legal.
Which one of us is right? Don't know. Someone has to complain to proper channels and let a court of law determine the outcome. But considering that most laws go with the notion of innocent until proven guilty, we can only go with that the tax methods used are legal. Questionable? Yes, but legal.
> But the word exploit has positive as well as negative meanings.
This is the first I've heard anyone claiming that the word exploit can have a positive meaning.
>You say they saw a loophole in the tax law and they exploited it in a negative way meaning it was unethical, immoral, and/or illegal. I say they saw a business opportunity and exploited it for the advantage of their company and shareholders, which is totally legal.
How you characterize the action isn't important. What is important is that exploiting logic in a law for personal gain and exploiting logic in software for personal gain is exactly analogous. The "hacker" in both cases is equally morally culpable as in each case their exploit was an unintended consequence.
exploit: (noun) a striking or notable deed; feat; spirited or heroic act: the exploits of Alexander the Great.
exploit: (verb)
1. to utilize, especially for profit; turn to practical account: to exploit a business opportunity.
2. to use selfishly for one's own ends: employers who exploit their workers.
3. to advance or further through exploitation; promote: He exploited his new movie through a series of guest appearances.
You'll notice that only one of those four is distinctly negative in nature. Two of them are distinctly positive. The final one can be seen either way depending on context.
Therefore, I totally disagree that "exploiting" tax laws for personal benefit can always be seen as a immoral, unethical, and/or illegal act.
Your hacker is exploiting things for personal gain that is likely already considered illegal. Someone labeled as a hacker can exploit software for their own personal gain in a manner that is not illegal, but you don't seem to be using that context.
The two do not necessarily match in context because the "exploiting" of the tax laws you are complaining about has not been deemed illegal. This "exploiting" of tax law may have unintended consequences but that's the fault of the people who wrote the law, not the ones who willingly follow it.
Well, you are certainly correct about exploit having neutral/positive meanings. But either way its a complete red herring.
I still feel you're intentionally evading the point here. The salient point is about the intention of the laws and the morality of circumventing intention. Circumventing the intent of the (justly applied) rules of a system is decidedly negative. This is why hacking is wrong (not because its illegal... really, everyone please stop citing laws as if they are the ultimate arbiter of truth) and this is why tax avoidance is wrong.
Well, every person / company of considerable means practices "tax avoidance," which basically means legal structuring of activities in such a way that they produce fewer tax obligations.
For example, waiting over a year to sell stocks so you pay long term rather than short term capital gains.
This is contrasted by "tax evasion," which is the illegal version of the same thing.
I know you're going to say, what Google is doing here is obviously wrong, not the same thing at all; and you're right, but a court has to draw the line somewhere, and it's very, very difficult to do so. Google has a variety of extremely highly paid professionals telling them they are on the correct side of that line, and so does every other large company, which is why so many of them employ these strategies.
In fact, I wonder how much more "moral" they could get without incurring legal action from shareholders over not taking advantage of permissible methods of tax avoidance!
Just read that article. Does techcrunch have short term memory loss? Google had this for a while in their engine, but removed it because it didn't work well. For reference, there were up and down arrows next to the results(believe they were arrows), which allowed results to be ranked higher on an individual basis. This trained the algorithm to be custom tailored for the use and probably was also fed into the overall ranking.
They removed it, because it didn't prove to be valuable when compared to other metrics. Odd TC didn't include this information when writing this piece. Seems fairly relevant.
This trained the algorithm to be custom tailored for the use and probably was also fed into the overall ranking.
They removed it, because it didn't prove to be valuable when compared to other metrics. Odd TC didn't include this information when writing this piece. Seems fairly relevant.
EVERYTHING above fold was ads, not sure what you're talking about. Ads and probably most people didn't realize that they were ads. Google, no doubt A/B tested the text and colors to fool the users.
Closing the loopholes (aka raising taxes) would only drive business out of America. Google provides thousands of jobs to Americans, and raising taxes on them and other big companies will drive more work out of the US.
non-sense, I'm honestly surprised to see this argument on HN. the value USA provides to high-tech companies is concentration of talent and expertise you won't find anywhere else in the world.
I think you are speaking of the US in it's current state, where the loopholes and lower taxes exist. My point is that businesses are encouraged by financial incentives. If you raise taxes you are incentivizing the company to move jobs elsewhere. Have we not seen this play out with the high cost of labor in manufacturing settings? The same will apply if you tax these companies at exorbitant rates. Long term, you will damage the US jobs market.
Yes, businesses are encouraged by financial incentives and that's why Apple, Google, Facebook and countless of other IT giants and startups are based in Silicon Valley - the most expensive place to hire employees.
Meanwhile corporate taxes and personal income taxes are at record low and it still didn't stop all manufacturing jobs to be outsourced to China.
See your logical fallacy? Sometime "basic econ class" will teach you... well... just the basics.
How does that square with the fact that some of the fastest growing years in the past 100 years were years when the top corporate tax rate was 50% and the personal tax rate exceeded 70%?
Do you know what the effective tax rates were during those years? There was no "alternative minimum tax" to limit the abuse of deductions, which I believe hearing were rampant.
(This isn't to say you are wrong, at all; just that the actual tax businesses are really required to pay must be considered, not the claimed values on the sticker sheet.)
You can close the loopholes and lower taxes, leaving a neutral revenue effect. That still leaves a net gain through less expensive tax enforcement and compliance, along with an attractive corporate tax rate that suddenly becomes very competitive internationally.
If we closed all corporate tax loopholes, you could lower the corporate tax rate down to closer to the 22% range (if my memory serves me).
It is overall a terrible thing for the economy. It is an incentive for bigger companies to get even bigger, and it is horrendous for small companies that have to pay full taxes and carry the burden of a tremendously complicated tax system that meanwhile fails spectacularly at taxing their orders of magnitude bigger competition.
(I guess it tells you a lot about the political system that we are happy to invade big countries but apparently powerless at regulating small ones that have specialized as tax havens)