ok failing bad with this post. I'll refer to these comments instead, which express the same idea:
> That or their smaller competition will have a harder time dodging it than they will.
also, we should raise the corporate tax rate. and income tax rates on high earners. and try to fix the hideously broken state of affairs that result in these individuals having far less tax burden than they ought in far too many cases.
Possibly. But that also depends on how corporate taxes are implemented.
I have no clue what his aspirations are, I don't follow this type of news very much at all, I just remembered that he stepped down and now suddenly he thinks companies should pay more (or in Amazon's case, some) tax.
I am not a tax lawyer— is there anything stopping Mr. Bezos from simply voluntarily paying more in taxes than he owes? Or even just Amazon turning down the tax breaks for e.g. locating a distribution center or office center in a new jurisdiction? Support of a policy would seem to go a lot further if he was already voluntarily attempting to achieve its goals (presumably funding more public services). Without that effort, it seems more like a desire to subject everyone else to a policy that he feels he can weather.
>is there anything stopping Mr. Bezos from simply voluntarily paying more in taxes than he owes?
This is about taxes Amazon owes, not Bezos. Bezos already is giving vast fortunes away through his charities.
And yes there are two things that stop Amazon from giving away free money. 1. A fiduciary duty to their shareholders, 2. competition.
Bezos is completely right to state that, if people want to see more contribution from large firms, have it done through proper legislation and taxation.
Bezos is also giving away around $2 billion a year away for Blue Origin.
As a space fan, the top two richest men funding space companies makes me so happy!
On one hand: Good for him. I hear he also does a lot of charity work.
On the other hand: Wait wasn't it Amazon who cheated on taxes like no other company (compared in size)?
After the union shenanigans, his biasedness in the elections or well deserved PR desasters such as the contest for a new headquarter (what a surprise it went where it can influence policy most), I'm a bit allergic to being nudged to see his moves as all too altruistic.
Increasing corporate taxes raises the burden across the board, for competitors and possible future ones. Meanwhile Amazon can afford to have its accounting adjusted to mitigate the impact more efficiently than any competitor could.
> On the other hand: Wait wasn't it Amazon who cheated on taxes like no other company (compared in size)?
It's because Amazon has low profit margins compared to other companies its size - AWS is profitable but the retail business isn't very much, and investors don't want them to make more money because they like free shipping too much. The remainder is lost to R&D credits.
If people want Amazon to pay more taxes, then Washington state should have an income tax. Pretty straightforward.
I know I shouldn’t mix the individual with the public company he founded and I don’t want to be that person that says he only does it because the tax incentives. He is a person after all and I’m sure he deals with more social pressure as a result of his status and like all people has issues that strike a cord internally. Still there is something deeply troubling about people acquiring so much wealth that put them in that situation in the first place when he wouldn’t be there without his workers and yet significant numbers of them are on food stamps paid for by taxpayers...when his company paid $0 taxes.
I really wish people would stop seeing large companies paying low taxes as cheating and "loop holes". It is neither and it makes us blind to the cause of the problem.
The politicians we vote in deliberately create laws that allow large companies to pay little to no tax. It is not an accident or a sneaky corporation that outwitted a dumb politician, it is by design.
Deliberate allowances are created but big companies can hire legions of lawyers to reduce their tax burden, to find all sorts of minutia & excuses & readings of words to take advantage of every subclause they can. The aggregate effect feels enormously poisonous, totally toxic. Mega corporations can adapt far faster than anyone or anything else, including those charged with governing & regulating.
Good governance is hard. And megacorps are an advanced persistent threat that goes to great lengths to claim exceptions for itself.
I hugely agree with your sentiment. But I think this case still stands. As opposed to the human "resources" that do the work, which management feels it must direct & organize & lead & regulate, the financial department often speaks the same business school language, is already aligned to the board-level/business-school goals of raking in barrels & barrels of money.
It's also largely a question of what change is required? I've seen a parent company move itself to become a subsidiary of a holding company which is now landed in another nation. It had almost no effect on the day to day. It was paper work.
Megacorps are filled with paperwork. But that doesn't necessarily mean they are bad at it, slow at it.
Usually those are in there to be found and used. Your energy would be better spent being upset with the politicians for putting it in there than the lawyers for finding it.
there's a lot of sense to this, but I still continue to believe a lot of very good incentives & governance exist, that help small & medium folk, that intend well. I'm not in favor of giving up & u regulating; when systems benefits are dominated by the big, it's time to re-regulate, try to alter the ellegible beneficiaries.
It certainly wasn't "designed" for geographically flexible entities such as Amazon that didn't even exist 30 years ago.
When ever a new kind of entity fits in loop holes that weren't open one technological advance earlier it has any interest to lobby politicians to keep that niche/grey-area open. That can and should be called cheating.
Writing a letter to your representative arguing for lower taxes: cool. Making large contributions to their campaign fund, paying them tens of thousands of dollars for a 30 minute speech at your conference etc: not cool.
Just because it's hard to put into words doesn't make it not cheating. The fact is society evolves and it takes time to discover the negatives of a lot of business models. People who exploits such models already have the benefit of our non-retroactive judicial system.
There are certainly forms of lobbying that are not bribery. Conflating the two is a false equivalency. Lobbying, in general, is the process of informing politicians about certain topics important to an interest group or set of individuals / constituents. When lobbyists bribe (which is illegal) or more realistically: when lobbyists conditionally contribute campaign donations, those actions are the moral hazard.
The problem with lobbying in general is that it's a one-sided information stream: politicians are generally uninformed about a topic and only get the information from the wealthy side (ie. the one able to pay a lobbyist). No need to bribe in general, just overwhelm the poor politicians with "facts" and they have no choice but to walk in line.
To play the devil's advocate: without lobbying, politicians instead get that information from whoever happens to have the resources control the narrative through astroturfing and media manipulation.
Lobbying is at least transparent in its intentions.
Great, now it's "informing". So please tell me, why does this "informing" with some real action afterwards happens only when "informing" side is wealthy? The answer is - because politicians expect tangible, personal real life benefits after such action. Maybe not now, maybe years later, but every one of them does. That's basically bribery with extra steps, it always was and always will be so.
Many of us like it when the EFF, ACLU, Nature Conservancy, or <insert your favorite cause> group lobbies.
We do not consider that bribery, yet when a group we dislike does the same thing, we’re supposed to see all lobbying as bribery or just that of opposing groups?
Lobbying is a red herring. If it were really so powerful, companies would spend more money like it when lobbying for competing interests. Amazon spends in the order of millions on lobbying and in the order of billions on marketing.
Isn't 'marketing' just 'lobbying' to the general public? It's all a bunch or propoganda and unscrupulous behavior made possible by abusing amassed wealth. I suppose being lobbied has more perks like nice dinners and free drinks...
I think its as much a case of technology, both product and ease of manipulating companies structures has moved past the traditional taxation rules per country.
We need to start approaching more taxation rules at a trading/travel block level. E.g. G12 say minimum 25% corporate tax or any product/service that involves non-complainant countries has a X% duty type thing.... or something down that concept route.
I think the real rich person law they politicians have supported and can influence is capital gains tax. Capital gains at a certain point is income. There's a reason CEO's take a $1 salary, they are clearly not living on that.
I think a lot of it is not by design. Writing laws is hard, especially tax laws. Companies have incredible resources to find loopholes they can use. If they get patched they'll just find another one. The problem is that you'd prefer easy laws that anyone can follow, but those will always have loopholes. The more provisions you add to close loopholes, the harder it'll be for small companies and individuals to remain compliant.
I don't think any of us here could come up with a tax code that cannot be exploited. And of course large companies will exploit any loophole, all of us do when filing our taxes.
Maybe the problem is the existence of such powerful companies. Once you have them, it's very hard for politicians to stay on top of them.
To be clear, I'm not saying that there's no corruption or politicians favoring large companies. But most loopholes used by companies tend to stem from good intentions. It's like in IT security, there are backdoors but most bugs still have a benign origin.
From what I've seen, tax loopholes exist mainly because of incompetence.
The Section 482-7 regs were written by the IRS to control how intellectual property is shifted offshore. The valuation methods outlined in the article were questionable. I read the regs multiple times to understand them and made an Excel valuation model to follow their rules.
Don't think the IRS realized they created terrible, ridiculous theoretical models. Don't think it was intentional either. Just a few people that didn't understand the implications and congress that signed the code into law without being able to understand it. Tax code for valuing IP is highly complex.
The US government writes terrible tax code in my opinion, mainly because they're just not very good. They're not as good as top private sector tax lawyers.
I empathize with the "You make the tax laws @SenWarren; we just follow them. If you don't like the laws you've created, by all means, change them" sentiment. Multinational corporations have to comply with tax laws from multiple countries that are arbitrary and complex.
I think in theory corporate taxes don't add any burden, because they only apply to profits and not to overall income like personal taxes do. You could theoretically have a 99% corporate tax and corporations that don't make a profit like Uber would continue completely unaffected. (Although the only reason they have the money they need to operate is because their investors expect to be paid by future profits, and if you taxed all profit away investors would not be willing to buy equity, so really they would be affected.)
It seems to me that money can be used for two things: productive uses and unproductive uses. Unproductive uses can be taxed as much as we want - as a society we don't really care that much if people can't do unproductive things with their money like pay for foot massages and things like that. (Well, people who want to pay for unproductive things like foot massages and videogames care, but I think it's okay to take away some potential foot massages via taxation to pay for important public goods.) But we should take care when taxing productive things, because we're taking away opportunities from our future. If a masseuse wants to invest in some kind of robo-massager that will let them give twice as good foot massages for half the price, that's just a better use of everyone's time and money than continuing to do it the old way and not something we probably want to discourage.
Seen through that lens, a wealth tax (or better, a consumption tax like a VAT) makes more sense than a corporate tax to me. Imagine a chash-rich opportunity-poor corporation that has only one thing to do with its excess cash: invest it building new widget factories for 3% return on investment. And let's say there's a cash-strapped opportunity-rich second company that can build new factories for a 10% return on investment. What we would want to happen is for the owners of the first company to withdraw the excess cash, so they can invest it in the second company which has much better things to do with it.
With a corporate tax, that process is interrupted, because the first company can invest in itself tax-free but must pay taxes to return money to investors so they can put it to better use.
My thinking is that a wealth tax taxes nearly the same thing as a corporate tax, without this flaw. You can't really tax a "corporation", fundamentally everything is owned by someone so if you tax a corporation you really tax the owners of the corporation. Here's how that plays out: The price of a share of a company is usually modelled as the expected future earnings from posession of that share, discounted for time. So if you expect a company to pay dividends of $0.1/share/year forever and have a discount rate of 5%, you should be willing to pay $2.00/share. If a corporate tax of 50% reduces that to $0.05/share/year (since half the profits have been taxed so the dividends are half as large), the price will drop to $1/share. A wealth tax taxes the value of the shares directly, instead of messily taxing the profits and affecting the share price indirectly. But a wealth tax doesn't have the weird switching-over issue I mentioned earlier, so money would no longer be trapped in unproductive areas (or worse, trapped overseas waiting for a change in US corporate tax policy).
A VAT would be even better because it would incentivize people to keep their money in productive uses by taxing only unproductive uses (VAT doesn't apply to stocks or business expeneses or things of that nature). But that's kind of tangential.
Maybe a professional economist can correct me on this but that's my thinking.
> "With a corporate tax, that process is interrupted..."
there is no process interruption here. a tax on profit doesn't prevent corporations from investing in the highest npv projects available to it because capital expenditures and r&d investments occur before that taxation, and moreover the interest expense is deducted as well.
despite all the hand-wringing over corporate taxation, this maxim holds true in most cases. taxation has little effect on the investments a company chooses (or alternatively, the variance of choices gets lost in the error bars). they will still tend to choose the highest npv projects, even if that's negative.
I think you misunderstood the parent. They're discussing the case where a corporation has no high NPV projects available to it, and the best thing to do would be for it to return money to investors. They can then spend it on other companies which do have those opportunities.
In that case, it has to take that money as profits instead of reinvesting, and so is taxed.
that's more theoretical than practical. in many cases companies can work around that limitation to make such investments without (all of) those tax implications. money is typically returned to investors because the board and the executives want it to diversify themselves away, not because there are no npv positive projects to invest in. and there are plenty of ways to spend on protecting existing income streams, which is what we see companies doing regularly. there are lots of principle-agent problems and moral hazards in this realm that cloud the practical from the theoretical.
Couldn't the same also be said at the human scale? Workers have to eat, sleep, often put back some money and gain some assets to grow and be more productive for their families and loved ones. Workers may use some of their money for rest and recreation but so do all companies have some degree of frivolity. This meme that gets passed around of corporations "fostering innovation and job creation" is a corporate apologist cop-out.
I don't see the parallel to Gates. Bill Gates wasn't always popular because many people hated Microsoft at the time. I don't think there was ever concern that he treated workers wrongly or abused the tax system to get rich. I don't buy that Gates set up the foundation just to improve his image. He is really invested in these topics.
For Bezos that could very well be true. Interestingly enough Amazon used to have a really positive public image until about 1-2 years ago. If he had quit any earlier, maybe his image would be much better now.
Unfortunately not only that, but ruthlessness is a main characteristic of most of his business practice. This peace is obviously yet another attempt at further increasing the size of his moat around his corporations. On top of that never forget he also has a substantial stake in mass news media itself.
He’s actually more known for how little charity he does, relative to his wealth and his peers. As soon as he got divorced his ex-wife gave away billions which hints that he was blocking a lot of that.
I’ve heard the Charity excuse a few times, and hope people look deeper.
Be it Billy Gates, Bezos, or one of the many Midwestern Financial Gurus—-their use of 901c3‘s are basically tax dodges.
Gates foundation gives back less than 1% of the wife’s fund to the nation that birthed him, and provided a comfy launching pad for that privileged life. (I get you need to help developing nations, but America is dying. I have never seen so many homeless.)
I don’t know Bezos charities, but if it’s related to his companies commercials in media, those are carefully selected to brainwash the masses. How much money did they spend so we knew their employees had soap to wash their hands this past year? And I guess Amazon warehouse workers chuckle fund was receiving hand sanitizer that looked like vodka bottles.
I see how Amazon is now worried about climate change now with his promise of electric vehicles, so he must be worried about something? Maybe he’s running short of tax write offs, and heavily federally subsided electric vehicles make sense fiscally? Not even taking into account the millions he will save on a depreciating asset? In a way, we are buying his gift to carbon neutrality? (I would bet in five years—he will take the Uber approach to deliveries more than he does now, even requiring workers to furnish their own electric vans). I could see the boys laughing over this at the catered hootenanny. It feels good to be a gangster bllly—huh?
I only know of a few charities that truly give back. Most of the big ones we all know through media are overfunded. I once heard there is a very popular children’s hospital who could operate for the next twenty years without another cent, even when taking into account inflation/tech costs.
I used to look up nonprofits on WayStar. They have now made looking at the free 1040’s complicated.
(Does anyone know of a truly selfless charity? I’ve always given Salvation Army a long rope. They have been feeding America’s hungry forever, and I know people who eat there.)
I do agree that charity is often overplayed and many billionaires give away so little that they barely notice. But Bill Gates definitely is an exception. Of course they don't spend all their money in a few years, that wouldn't allow them to continue their work afterwards.
But the whole life of Bill and Melinda is about their work in the foundation. It's not a side gig for good press, they don't do anything else. I can understand criticism where billionaires have a charity next to their business. But there's no other business left for Bill.
But to be fair, Bill Gates is probably the only prominent example of a billionaire who quit the industry completely and dedicated his whole life towards charity.
> But to be fair, Bill Gates is probably the only prominent example of a billionaire who quit the industry completely and dedicated his whole life towards charity.
James Simons has more or less done this for the past 15 years.
> Gates foundation gives back less than 1% of the wife’s fund to the nation that birthed him, and provided a comfy launching pad for that privileged life. (I get you need to help developing nations, but America is dying. I have never seen so many homeless.)
Alternatively, why should Gates spend charity money on America if that money would go have a greater impact on helping people and improving lives elsewhere?
> Be it Billy Gates, Bezos, or one of the many Midwestern Financial Gurus—-their use of 901c3‘s are basically tax dodges.
Do you mean 501c3? How are these a tax dodge? How does someone end up financially better off than just keeping and investing their wealth if they choose to donate it or deploy it in a donor advised fund?
> Gates foundation gives back less than 1% of the wife’s fund to the nation that birthed him, and provided a comfy launching pad for that privileged life. (I get you need to help developing nations, but America is dying. I have never seen so many homeless.)
If you think America is dying, boy do I have news for you about the state of most of the world. I also deploy most of my personal donations outside America, through GiveWell and Watsi (and more targeted donations independently).
America has a lot of problems. I live in NYC and can empathize with the dissonance of seeing the homeless sleeping in the cold on Madison Ave. I don't want to diminutize that, and this is something I also care about.
But the blunt fact of the matter is that America is far better off than the countries Gates focuses on. It's not even a fair comparison in terms of poverty and healthcare. Gates deploys his wealth primarily in regions that have never or only rarely "birthed" billionaires like Gates, in your words.
It is uniquely selfish to criticize billionaires for hoarding their wealth while also insisting they focus their charity on one of the richest countries in the world by median.
> but America is dying. I have never seen so many homeless
My mom grew up in a village where some had to resort to cannibalism to survive. My grandfather was eaten after being beheaded by communists. I am blessed to be an American.
Corporations and executives don't have strong opinions on anything. Its all easier when a) you understand that and b) you don't have strong opinions on anything either.
Because as an executive it's not your place to have a strong opinion. You're hired by the owners (i.e. shareholders in case of public companies) to make money, not to voice your opinions. There's a strong case that ethical behavior is not only the right thing but leads to long term success so of course you should act ethically. But the success of the company outweighs personal opinions. Even if you as a CEO think high taxes are fair, if low taxes benefit the company this is what you'll have to advocate. That's just the reality of working for others.
I was informing to make them as relatable as they are to me. I also don’t have strong opinions on anything and am content with this reality. As in, I don’t find this controversial and I know why corporations act how they do and didn’t need it explained ( others may have needed that though). The data changes and so too does the reaction, more people should be less worried about irony or perceived hypocrisy.
> Wait wasn't it Amazon who cheated on taxes like no other company
The problem is they aren't cheating. They are hiring a lot of lawyers to find every single LEGAL mechanism in the book to allow them to pay no taxes.
I'm not saying I agree with it. But the problem here isn't with Amazon it's with the US tax code, which has been molded over decades of politicians and lobbyists to allow for this.
I was going to ask this question: why aren't big corporations paying more taxes NOW?
Because in my country basically the governments hire law firms to write out legislation, and then those same law firms sell these types of services to circumvent the laws they draft.
So the feeling I get it's not much a taxes problem, but the public institutions are managed by lawyers, and are optimized by lawyers that leave enough margin so they can thrive.
> why aren't big corporations paying more taxes NOW?
And why should they ?? To quote Steve Eisman "incentives trump ethics every single time".
Here's a tax strategy that will greatly simplify all government efforts: any corporation with a market cap of 100bn+ is obliged to sign a privately negotiated deal with the gov to agree on a annual tax rate for the next X years. The minimum is set at 20% with no exceptions and can go up to 50% depending on the estimated negative social impact of the corporation. There are no write offs, no loopholes. Every year the tax bottomline is checked and enforced.
There is also a tax distribution enforced so that only a few can get the 20% one at any time. The goal of this to force a "bidding war" between them to get the lowest tax and the only way to do that is to reduce their negative impact to a bear minimum or stop existing altogether. Incentives.
Once that is set in place work on reducing the tax code complexity for everyone and everything below 100bn. Currently most if not all tax regimes try to shoehorn all entities under the sun under similar rules and then provide various kinds of tax write offs that create incentives to dodge tax and provides the biggest players with a massive advantage as they can hire specialists to focus on every single possible loophole to avoid paying anything.
Bezos has taken a page straight out of Big Tobacco's regulatory capture handbook.
In 1997, as part of the Tobacco Master Settlement Agreement, the 4 major tobacco companies agreed to sweeping restrictions on cigarette advertising. This ensured that it was almost impossible for a new player to enter the market, because they had no way to create brand awareness.
The same fellow who pitted cities and states against one another in a bidding war to obtain billions in tax credits for HQ2...and ultimately because the deals were so good he already reneged on the number of jobs promised by creating 2 new HQs resulting in 1/2 the jobs and investment while double dipping on the tax credits.
Bernie said it best a single Amazon Prime membership is more than Amazon paid in taxes in 2017 and 2018 combined.
> and ultimately because the deals were so good he already reneged on the number of jobs promised by creating 2 new HQs resulting in 1/2 the jobs and investment while double dipping on the tax credits.
They lost the NY tax credits because they were so cartoonishly aggressive that AOC got the whole thing canceled by tweeting about it. Then they built it anyway without any credits.
HQ is really just a name. You can call your smallest office the HQ if your CEO sits there, it has nothing to do with the number of employees. What's interesting to the government is where taxes are paid. But for large companies that got little to do with where workers are located.
Imagine if you ran a business. Meaning you purchased or leased a property, signed contracts and you are competing in the free market.
Then along comes a competitor and your local government gives them $1B+ in grants (consisting of the taxes you pay) they use to buy a property and they get $1B+ in tax credits.
You may think highly of yourself and your business but you can’t outcompete that and they will drive you out of business using in part your taxes to do it. If you don’t call that anti-business it’s at least anti-competitive.
We're talking about competing businesses not workers.
And funny enough, more jobs at Amazon also means less worker supply for competing businesses. So even that is anti-competitive in a roundabout way. (Even though, yes, high worker demand is good for the economy in general).
Yes, but competition between business can be good for consumers and employees. So not sure if your comment about "so bad for business" is all that clear cut.
And whether or not Amazon creates HQ2 to NYC, does that impact their competitiveness with local NYC businesses? I doubt it.
Competition is good, Amazon's practices are bad for competition.
Inviting Amazon to NYC with tax incentives is similar to planting a great white shark in a small lake, injecting the local fish with sedatives and the shark with a mix of steroids and stimulants.
Corporate taxes are weird. All that money just goes into investing into the business. You should just tax the money as it goes out to investors and employees
In fact that’s the idea of the tax system: tax the people according to their capacity. Corporate taxes were introduced as a means to pay some money in advance in their joirney to tax the people.
That’s why in many countries the cascading of corporate tax plus dividends/savings tax is close to the marginal income tax rate of high income people.
In other words, the initial goal was to essentially tax people’s income but corporate tax was introduced as a measure to prevent some of the wealthier people from not paying any income tax at all.
Amazon is in the category of companies that do business primarily in the US, and do not depend on global supply chains to bring its product to market (though they retail some). They are not competing with foreign companies to the extent that many manufacturers are. If you tax a US company that manufactures something easily manufactured in a lower-taxing country, you better not tax them at a higher rate than their competition, or you will eliminate them, and their jobs, and their stockholders equity.
Sure, tax his competition out of business. Great idea. He’ll keep paying nothing. Mom and pop shops don’t have foreign data centers to push profits into.
As we demand corporations pay their fair share, the government needs to also show us that they can make effective use of the money. Will the Biden admin address the obscenely bloated discretionary military spending? https://imgur.com/a/Z0uiOcu
Of course he wants to increase corp taxes, this will make life incredibly difficult for his competition or new upstarts to challenge Amazon. He has already planned for this and how it will kill his competition.
Amazon can afford to find the loopholes but hes right that most of his competitors can't.
That is a good point. There are so many loopholes left open that the typical large corporation pays far less than the existing rates. Small companies that can't play fancy games with offshore tax rates are the ones that get hurt.
This means higher taxes for small companies, like local stores, who don't have the lawyers to avoid them; and still no taxes for Amazon, which simply doesn't pay them.
What he doesn't mention is that an increase in corporate taxes will mostly impact SMBs and not giant "Big Tech" companies that have all kinds of ways of avoiding them and employ hundreds of people in their finance and accounting departments who are tasked with minimizing taxes. It's your ma&pop stores that will take the brunt of it.
In the same way that the new "Stimulus package" now requires that payment processors report any transaction over $600 on a 1099-K Tax Form, it's always the little guy that is mostly affected by the changes in tax law because little guys have no lobbyists and don't have an easy access to lawyers to fight the IRS.
This doesn’t work at all, many companies don’t have lawyers of their own but keep big law firms on retainer. And companies could just offload more onto JD-advantage employees/ law student interns anyways since they’re not “lawyers”
They have both in-house counsels and work with external law firms. A reason for doing this is to avoid liability.
Some big companies retain multiple law firms and ask the same advice a couple of times. If an overworked attorney who barely gets any sleep ever misses a point or drafts his/her advice vaguely in a way that would enable their evil plans, they rely on that single opinion. If there are any problems they don't assume any liability, because hey they got a legal opinion from a respectable law firm. Nobody needs to know/can prove they obtained multiple opinions on the same matter because of legal privilege.
In return, big law gets paid a lot of $$$, because of the risk of providing such opinions under considerable pressure and trickstery.
Having a legal opinion supporting an aggressive tax position that is eventually overturned doesn’t get you out of liability for that position. The appearance of food faith efforts to comply with the complex tax code may reduce penalties assessed.
Sure, my comment wasn't tax code specific. There is always risk involved, but it's much less. If you need to do it anyway, better pressure a lawyer into giving you a legal opinion. The company will pay pay the fine but who can blame you for acting on it.
In a big corp, I think most employees are concerned with saving the day. If the management pressures them to cut corners most will. What better way is there to pass the blame?
Such rules only act as an incentive to find new loopholes and waist money using them.
A large company can spend 99% of what they save in taxes to find out how to save it and its a net gain.
The solution would be to have absolute minimalist tax rules which are so simple that there wont be loopholes. Then also make judges apply common sense and smash every attempted loophole until everyone stops wasting money to find one.
The issue with this is that tax code is often used as a proxy to fix all sorts of social problems that lead to inequality. We give tax breaks to subsets of populations who really need them. We also push policy through tax incentives, for example solar related deductions.
I think we'd be better off fixing the deduction of such problems, but just pointing out that part of the reason taxes are so complicated are to enable this. Another reason is to create corporate tax loopholes...
Subsidizing anything should never be done trough tax breaks anyway. It just hides tax spending. Also this was about corporate taxes not private taxes. If a corporation "really needs a tax cut" its probably just unsustainable and if not it should find investors to bring the money voluntary not force spend the peoples money.
Yes the loopholes are intentional but it only helps very few individuals and a whole industry of layer, while corporations aren't actually in the business of finding tax loopholes they are indirectly forced to participate anyway because their competitor does. People blame the companies for evading taxes but they are not the problem they have to play along because everything else would be hard to explain to the shareholders.
Imagine if you are a business owner and your company slowly grows to amazon size. At what point would a sane person like to pay people to evade taxes? You would never want to do that instead of building a team of tax specialist or outsource that you could expand in real business. Your local small business owner and Jeff Bezos both have no interest in that.
The traditional solution is to lower taxes and simplify the tax code.
Large corporations have an effective tax rate below the nominal one due to antics with exceptions — while smaller businesses get hit harder. What’s called “progressive” often ends up regressive due to the imbalance in ability to do finance trickery. Rich people will always find or create exploits in the law, so those “high taxes on mega corps and billionaires!” hit the middle class and medium sized businesses: they’re who bear the brunt of taxes, in the US.
You get out of doing that unnecessary damage by removing the game: no whatever exceptions, just a flat rate everyone pays.
What’s called “regressive” is actually progressive in that it lightens the tax burden on the middle class and medium businesses, while making the richest pay a fair share. (Also, simpler codes are harder to cheat.)
Discussing the tax burden of the poorest is a misdirection used by politicians: the poorest in the US receive more benefits than they pay, so it’s a question of how that burden is split between the middle class and the upper class.
It's not that simple. As far as I know, corporate taxes are already flat. (If they weren't, corporations could easily split into several smaller ones to keep their profits below some threshold.)
The big issue is with "just a flat rate that everyone pays". What do you pay that rate over? Big corporations manage to pay that rate over nothing. Generally those corporate taxes are paid over profits, so corporations avoid taking profits in countries that tax them. They sit on their money, pay it out as bonuses to executives, and take their profits in tax havens.
The issue isn't the tax rate, it's the loop holes. It's that the amount that's taxed is easily manipulated. Instead of easily manipulatable profits, the tax should be levied on something less easily manipulatable. Like revenue. Of course that already happens: VAT taxes, only because you pay them on all products, they are effectively paid by consumers, not corporations.
But how about allowing corporations to deduct their local external costs from their revenue? Not easily manipulatable foreign external costs, but simply the costs made in the same market as where the revenues come from? Then you're effectively still taxing profit, but tied to the local market, cutting tax havens and internal trickery out of the picture. A company on the other side of the world selling in your country but not making any costs there; no labour, manufacturing, rent, etc; would pay tax over their entire revenue, whereas a local shop that has does have all those costs, and therefore cannot help but invest in the local economy, gets to deduct those costs and pay less taxes.
I think that could do a lot to even out the imbalance and make the playing field a lot fairer.
> If they weren't, corporations could easily split into several smaller ones to keep their profits below some threshold
I think we need to address this somehow. Perhaps by counting size by which actual people control and/or own the companies rather than the current arbitrary legal structure.
Part of the problem with corporations is definitely that they're a massive concentration of money and power, with no person being responsible for it. If every company was just a small business of one or a handful of people working together, instead of this artificial legal construct that concentrates power and assets with no liability, these things would be a lot easier. But then you also can't do the massive investments that corporations do.
How does international trade work under such a system? Does my iPhone get taxed as 100% profit with no allowance for cost-of-goods-sold?
If a country doesn’t make automobiles or refrigerators, are those taxed as if they were pure profit for the retailer? It’s not like a local retailer is going to manufacture even refrigerators, let alone cars or phones.
Countries could decide they have enough in common in terms of taxes and trade that they calculate this over all those countries combined, as long as they exclude tax havens and other countries that seem to take a parasitic advantage of the markets of other countries.
I did read your comment. Did you read mine? There's nothing violent about my agreement. I agree with some points, disagree with others, which I explain further. There's nothing strawman about that.
The first three paragraphs straw man my argument and misrepresent my position as saying flat taxes were the solution and it’s more complicated — when that’s exactly what I said. Literally, my entire comment is about loopholes and unintended consequences to tax policy... except the very first line, which seems to be all you read.
You had one more paragraph with some random technical considerations agreeing with me.
Then you concluded.
You literally just repeated my point, but started with “it’s more complicated than that” — which is phrased as a disagreement with my point.
That’s a straw man (misrepresenting my suggestion as being a flat rate, even though my entire comment was about loopholes — like yours) and violent agreement (phrased as disagreement when repeating the same thing).
This is one of the primary reasons I promote using the simplest possible tax and incentive structures. The simpler it is, the easier it is to avoid creating loopholes.
Besides, paying tax should be a much easier process for the small fish.
One proposed reform was to give corporations an obligation to explain the difference between their profits declared to the IRS (as low as they can get away with) and their profits declared to their shareholders (accurate, because they want people to buy their shares).
Both declarations are available to the IRS; if you force corporations to declare how they "bridge the gap", while it would let them practice tax evasion, it would make it easier to assess what form that evasion takes; and it would make fraud much harder.
Tax individual wealth and remove income taxes for corporations. Not capital gains, but wealth as in Switzerland or The Netherlands. Income taxes for corporations all disappear when the corporation reaches a given size after which the state only captures capital gains taxes from shareholders and employment and other taxes. The only companies that end up paying income tax are the small ones. So just tax wealth of individuals and remove all the shenanigans in between.
> Income taxes for corporations all disappear when the corporation reaches a given size
Could you explain why this is the case?
> So just tax wealth of individuals
Individuals can play the same games. Jeff Bezos could move most of his wealth into funds, foundations or companies and be poor on paper while still keeping the de-facto control of all assets. Or they could shift their wealth overseas, into tax havens or into less transparent areas like crypto.
If we could close most loopholes taxing the wealth of the individuals might work.
I’m talking all loopholes, even giving money to a 501c3. Billy’s nonprofit gives back less than 1% to the country that coddled him. Plus—I feel a lot of nonprofits are just tax dodges.
Want to manufacture overseas? Fine, but move to that country, and don’t come back.
I got carried away again. I would like to basically see tax loopholes closed, or only allowed the first few years of a business life.
>> Income taxes for corporations all disappear when the corporation reaches a given size
> Could you explain why this is the case?
Just to comment on this real quick, this has multiple reasons. Basically, the larger your company is, the more funds you have to spend on lawyers and experts, as well as offshoring. Also, depending on the country you're in and the specific tax laws, it might be easier to fulfill incentives for nullifying the corporate tax (IIRC reinvesting and creating jobs is how Amazon nullifies a good chunk of their taxes, right?). That is not to say, we should completely axe corporate tax imo, because some of those incentives are really good. You want corporations in your country to reinvest and create jobs, because that's overall a really good thing for the job market.
The thing about Bezos' wealth is that a huge chunk (maybe even the majority) of it is already in the form of assets. That's not as easily moved overseas (though to my limited understanding it isn't impossible) without hurting his own company, and at that point it might be profitable to just pay a wealth or asset tax or something like that. Obviously that would need to be designed REALLY well, but there's a good chance that that's how we can tax exactly what we want to tax, without hurting small businesses and without hurting the lower class.
I guess one of the major realization to be made that this is mostly a real-estate problem and taxing wealth is not going to help. Most of the wealth held by wealthy individuals is just on paper. If you put a high tax on wealth, most of this value is going to be erased overnight.
The problem is real-estate as this is what people need. If people could buy property they would not be interested in stocks or crypto and they would not care for rich people getting richer. They would be busy in their pools or backyards.
And fixing real-estate is not done by having more taxes, penalizing vacant homes, or grabbing your inheritance. It's simple: Build more housing.
Increasing the tax rate isn't what matters; the structure needs reform. For example getting rid of income tax and replacing it with revenue taxes, which are more difficult to circumvent.
That just benefits vertical integration. Amazon would pay less taxes in Amazon basics than third party goods. What you really want is a VAT. You're only taxed on the value add of your product. It's widely regarded as the most efficient tax and the US is one of the only countries that doesn't use it.
VAT does capture B2B transactions. That's what makes it different from a sales tax. I'm pretty sure that you already have to pay VAT when buying online ads.
Intentionally so, because taxing B2B revenue is effectively a financial penalty for not being a huge vertically-integrated megacorp. It means that any goods which have more than one company involved in their production are taxed at a higher rate than ones where every step is done in-house. This is not generally a desirable tax incentive.
Is it? In the US, at least, sales tax is taken on top of listed prices (it's uncommon for an establishment to list "tax included" prices), so essentially a customer is paying for the product and then paying the government on top of it.
Unless your thought is that businesses would charge more if there was no sales tax. I don't really buy that, though; businesses list pre-tax prices specifically to avoid sticker shock.
Avoiding taxes for corporations most often involves pouring money into projects, which in turn creates jobs, which in turn puts money into peoples hands. Of course this is not an issue for big companies that have the capital to do this.
This is arguably a more efficient transfer capital rather than raising taxes and then dealing with bipartisan political entities in the most efficient use.
Id also point out that the new tax policy also raises wealth tax by a significant amount. Also, its probably better to deal with wealth tax on a state by state basis, since this in turn forces the development of generally low tax areas since its favorable for people to move there (like all the companies setting up shop in Austin right now, which in turn raised the wealth of anyone there who owns a house by close to 100k at this point)
Always the conflict is: how can such a huge company make so much money and pay so little in taxes? Always the answer is: they didn't make profit because they reinvested or otherwise spent the money. (Correct me of I'm wrong)
How about a policy of mandatory 10% profit for companies over 1B in revenue? That would produce some nice antimonopoly effects too.
Uh, in that case we'll have to disagree. I think corporations in general do a better job of spending money than the government, but I don't have hard evidence for that view.
> I think corporations in general do a better job of spending money than the government
Agreed. To add perspective, I don't believe corporations will give a crap about the people (extreme example, Amazon) like we believe our respective governments should. I'd rather have bad spending on keeping people alive than no spending at all.
In my experience, corporations are great at finding ways to get "innovation grants" and "R&D tax incentives" for things that involve no real research or innovation.
Instead of actually promoting innovation, they tend to become a subsidy for the tech industry.
As far as I know, it was Nasa that put a man on the moon, not some coorporation. Also: the internet was invented by the government. What nice things have corporations given you?
NASA was the program manager for the Apollo program. You don’t think NASA actually built the rockets or the various modules, do you?
NASA doled out public money to prime contractors for various pieces of the program (North American, Grumman, Rocketdyne, Douglas, IBM...) and the primes subcontracted various pieces as they always do.
This is not to understate the tremendous engineering effort of organizing such a huge program, but it’s not like this achievement was done by a bunch of government workers alone.
What's the data here? Didn't "the government" create the internet, tons of medical research, the interstate highway system, etc?
Meanwhile Joe Schmoe bought yet another iPad (which wouldn't exist without the government inventing much of computer tech) to go in a landfill in two years. But at least he funded Apple's ability to make a brand new, basically identical model, next year.
How do we measure who has a "good" track record on spending money?
That's not to say I don't believe in government spending. I don't know that there is a much better solution, and any conglomeration of humans is going to have roughly equal capacity for doing the right thing and doing the wrong thing, hopefully weighted more towards the "right" thing with solid leadership...
I don't think that supports your premise. That's like a company report showing where it wasn't spending its money optimally. All institutions, public and private, waste money in some way.
-Not the OP, but my impression is s/he implied that the big corporations performed tax shenanigans to ensure their taxable profit ended up very near zero - say, buying expensive services from subsidiaries in tax havens &c.
Say I run a company out of the US called 'Paraná' (Seeing as the other big river is already taken), turning $1B/year profit.
I promptly spend the profit buying consulting services from 'Paraná Consulting and Tax Shenanigans LLC' based out of a Panama mailbox for $1.05B, for instance - then I even run my US business at a loss.
(I don't know anything about US or international tax codes, but the above basically sums up the methods described in X stories I've read about tax planning over the years.)
Define tax haven countries. The UK is a tax haven for a lot of Russians, Switzerland is a tax haven for anyone not American, the UAE is a tax haven that the US does 18B in trade with, and that invests roughly 25B annually in the US directly, Singapore is a tax haven that the US actually has a surplus with. So yeah, it's not simple.
Would you also ban trade with tax haven states? There are states that have no income tax, low worker protections that offer lower costs, or did not choose to pay government employees 40 years ago with unfunded retirement benefits.
UK, Netherlands and others countries have their own tax havens like Cayman Island, Curacao Island. Are you really going to ban trade with such big financial powerhouses?
You need a big enough bloc to make the decision together. Ideally the US + the EU + UK/EEA countries. But then yes, if countries outside the bloc decide not to comply then that's on them.
Hmm. Let's see how they do it in practise: funnel all money to another entity for 'licensing' their own brand. Net effect: no profit == no tax. Benefits for society: zero. Sure you don't want to change that?
How does the other entity get out of taxes? If the answer is offshore tax havens, I agree that they're a problem, but domestic tax policy isn't the greatest lever for fixing this. But in general, just moving your money around doesn't let you entirely evade taxes.
In that example they found that the 'licensing fee' was a royalty meaning there is a 30% withholding depending on double tax treaties and rates between the two locations. Which for a zero tax foreign licensor would mean a 30% local tax on however much you send overseas.
I wonder how much the company saved on avoiding taxes in that way, until it didn't work any more. (Didn't see any numbers, having had a look at the linked page)
I wonder if there's any table of all different methods companies use, to avoid taxes, and how much they typically save, and what could be ways to stop it
Maybe could be helpful for lawmakers
> required to pay 30% withholding tax
That's quite a lot is it? Compared to company taxes. Seems like a strong incentive to stop cheating
Company taxes are also 30% over here typically, flat rate. It is quite a lot I think, for small businesses at least. They don't have economies of scale or fancy setups and owners will pay a tax on profits then income taxes for themselves (I think dividends can work around this with franking credits), it can hurt margins, not to mention compliance overheads for GST etc.
I'm growing increasingly weary about the cult of "reinvestment", which is also visible in some new corporate tax complications in my country. As sibling comments point out, this "reinvestment" can be phony IP purchases in tax havens. On the other hand, even if reinvestment is genuine, there's a question whether further concentration of capital and power in that one corporation is good for society. People say: wow, Amazon got people stuff delivered during lockdown. Truth is, even in a region where e-commerce and delivery markets are far more fragmented, it somehow happened.
Pay the damn wages and dividends, I'd say. The former will go into consumption, the latter will go probably into other companies, especially if we discourage less productive uses of capital (like real estate). And also getting taxes from these is more straightforward. Maybe they don't even have to be that high percentage-wise, if there is less possibility of avoidance.
If the goal is to increase wages, then government should lower the supply of labor and increase the demand for labor. Provide minimum x weeks of vacation, parental leave, maximum 8 hours per day until overtime rates kick in, free higher education, etc.
As for forcing companies to pay dividends, I’d rather the government not be able to tell me what to do with my company’s funds. If the government wants control of the funds, they should raise the tax rates.
My comment was more about popular mindset than specific policy solutions. I was trying to say that maybe reinvestment is not always an unquestionably good/best thing.
> As for forcing companies to pay dividends, I’d rather the government not be able to tell me what to do with my company’s funds
I don't want to digress too much, but limited liability corporation and more complex structures with shareholders are creations of the government. You used to have to obtain a specific charter from the sovereign for each one of them. So unless you're an individual doing business with unlimited liability, it's debatable whether government (or the lawgiver, to be more specific) shouldn't get to make the rules for you.
The government can make rules, but I don’t see why it has to do with how a company chooses to spend money. If the government wants more funds, then increase the taxes. Government can remove deductions for business expenses, raise tax rates, etc. But there’s no reason for government to tell a company what to do with its excess cash.
The corporation is a creation of the state. The state has obligations to humans, not to corporations. If the lives of humans to whom the state is obligated would be improved by any number of onerous requirements imposed on corporations, the state certainly should impose those onerous requirements.
Of course, the idea that states are created for the benefit of humans is bullshit, but it's nice to dream of something better...
> If the lives of humans to whom the state is obligated would be improved by any number of onerous requirements imposed on corporations, the state certainly should impose those onerous requirements.
I agree with this. Which is why I wrote the state can choose to increase taxes. I have yet to be shown how requiring a company to pay dividends accomplishes the goal of improving the lives of humans.
Dividends are taxable, and they're often paid to entities that are unable to structure "profits" as carefully as the largest corporations can. So, in this discussion in which everyone (even Jeff B!) seems to agree that more taxes should be collected, dividend requirements would be a way to do that.
Of course, that's too tame. We'd be better off eliminating the most common forms of incorporation, or severely curtailing them e.g. maximum revenue limits. All the things that corporations can do, individuals, partnerships, mutual-benefit firms, etc. can also do, except often more carefully.
> Always the answer is: they didn't make profit because they reinvested or otherwise spent the money. (Correct me of I'm wrong)
Generally the answer is: they "spent" the money on "intellectual property" licensed to them by a subsidiary in Ireland (patents, brand name, software license) where that subsidiary pays zero takes through some accounting trickery[0] and moves that money offshore to Bermuda or Caymans. So the main company makes zero profit in markets outside Ireland because coincidentally licensing expenses exactly equal the gross profits of the company - and thus pays zero taxes anywhere ever.
[0] formerly the "double Irish" international tax loophole, nowadays there's a different "Irish patent box"
Ok so what about us legit companies that actually reinvested our profits in new hires and other expenses? We'll just pay more because some companies are avoiding taxes? If you want to close a loophole, then close a loophole... if you raise taxes... well, they can still use the loophole.
Yes, yes and yes. People are sometimes surprise why people who has a lot of money seem to be left-leaning and support things like higher taxation. First, it is never a concern for them. If they need, they offshore their money or pay lawyers who know tricks or start some foundation to pass money through it.
Something that people from middle class are not able to afford.
The other reason is that making difficult for members of middle class to accumulate wealth secures their own business, they are effectively killing the growth of potential competitors.
In the longer perspective this is very dangerous, it creates oligarchy, which, in turn, has all the incentives to restrict free market, free speech and democracy.
Middle class is important for the society since those are people who have time to engage themselves into public affairs, they don't have to spend all their time trying to earn money. In addition middle class is much more numerous than 1% of the wealthiest. As a result they give work to a lot of people who are down the social ladder. Both Mark Zuckerberg and some Mr. Jones, who owns a grocery shop employ a single babysitter, need a single plumber to fix their pipes, are able to eat the same amount of food, etc. So thousands of Jones are given job to much more people than single Mark Zuckerberg (obviously I am talking about Zuckerberg as a person, not his company).
That's why from the social perspective it is important to have as many Mr. Jones as possible. They give work to a lot of people, they drag them up. That's why taxing heavily middle class is a terrible idea and all the "tax the rich" regulations in the end mean "tax those who cannot escape taxation".
If you eliminate deductions, you end up with a gross receipts tax rather than an income/profit tax system.
There’s nothing at all simple about switching from one to the other. (Grocery stores in particular would be extremely hard-hit and a lot of us rely on them to survive. The wheels would come off quickly if not carefully thought though.)
Grocery chains that were more vertically integrated would handily outcompete independent grocers who had more intermediate steps in their supply chain, each of which was taxed on their B2B revenue.
Whole Foods could conceivably become the equivalent of a discount grocery by virtue of such integration, after Amazon bought up farms and distribution channels.
This is also why a VAT is theoretically better than a sales tax, in my opinion: it removes the incentive to vertically integrate to avoid the transaction tax....
I find comments like this confusing. It seems that you agree with leftists that equality is important value.
But then you say:
> all the "tax the rich" regulations in the end mean "tax those who cannot escape taxation"
Why is avoiding taxes different than any other moral problem? Why cannot you say, "putting conmen in prison" in the end means "smart conmen will avoid prison". It's this moral defeatism that gets me.
Sure, there will be people who do immoral deeds and avoid being caught, but how are we better off by not trying to catch anyone?
It's even in the open, that the large corporations pay little taxes, everybody is a witness to that. You (as a society) can change that system if you want.
I can't speak for the other person, but I think I have a similar perspective. I don't like big corporations, I think many smaller businesses are better. For one, if only a couple companies exist then you don't have many choices. For another, working as, what previous generations might've called a wage slave, feels very soul crushing. I think society would be freer and people would be happier working for smaller companies that they owned and had bigger impacts in. On top of all that, a few big companies means concentrated power and that means a few rich folks can leverage their power to political ends to get more riches and more power etc.
"Tax the rich" sounds kind of like a good idea at first but then you take into account the point about how the rich have lawyers, lobbyists, and accountants. Rich people and companies already figure out how to subvert tax laws. Why wouldn't they figure out how to subvert the new laws they are clamoring for too?
Put another way, is Bezos supporting this law because he wants to be worth less?
I'd prefer we solve things more directly. Break up big business via anti-trust. Stop businesses from buying one another. Rather than raising taxes let's just simplify the tax code so it's automatic and there is minimal ambiguity or flexibility for creative tax accounting. Let's bring legal cases on all the questionable tax strategies big companies are engaging in. Raising taxes to hope we catch the big guys doesn't seem like a smart plan to me. It seems more likely they'll dodge the increase and smaller companies will get hit with it.
>"I'd prefer we solve things more directly. Break up big business via anti-trust."
In theory I am all for it but on the other hand what would be the allowed size? I can hardly imagine mom and pop shop producing Lithium Ion cells, starting foundry etc, etc. This measure could put country to severe disadvantage against any other that does not implement same measures.
To be more practical and keep competitive edge internationally I'd just milk big companies by way of taxes and make sure there are no loopholes and perks like foreign earning exceptions etc. And outlaw political corporate lobbying.
> I'd prefer we solve things more directly. Break up big business via anti-trust. Stop businesses from buying one another. Rather than raising taxes let's just simplify the tax code so it's automatic and there is minimal ambiguity or flexibility for creative tax accounting.
Well, I don't see how it's feasible or desirable to do things more directly. You're saying BigCos are a problem, and you want to disincentivize their formation, then picking them on one-by-one basis will actually require more expertise and more effort, compared to having laws (e.g. tax laws) that apply broadly, and then enforce these laws.
We have laws precisely so that we wouldn't have to decide every case individually, and that the rules are clear to everyone, so they can avoid possible (and arbitrary) punishment.
I also think that as long as you want to tax all corporations the same, there will always be an inherent advantage in being big. That's why many people suggest progressive taxation in various forms to disincentivize such empire-building.
> Raising taxes to hope we catch the big guys doesn't seem like a smart plan to me.
This is a straw man - nobody is arguing just for raising taxes and then not enforcing those laws, we would love to enforce these laws of course. But having them is the first step to enforcement, I don't think your approach (enforce something without support from laws) is more viable, even legally. It requires more regulatory expertise, which you argue we are lacking compared to corporations.
Also nobody is really arguing against tax code simplification, but it only can get you so far.
A couple big companies versus hundreds of small companies in a given industry is a strong feature of leftist driven governance, whether it comes from republicans or democrats. For the little guy they are definitely not.
Big governments love a couple big businesses because it’s much easier to infiltrate, influence, control and ultimately procur wealth with that small group of businesses rather than attempting to influence 100’s or even 1000’s of smaller and independent companies.
So the next time you see 3 domestic car companies, and 3 airplane makers, and 4 toilet paper makers, 3 oil companies, etc. Understand they want it that way because of control and $$$$.
You've read something into the post that isn't there. It isn't taking a position on equality. Poster might or might not support it as a value.
Notice that there isn't an argument that Zuckerberg should have less money. There is an argument that Mr Jones should have more. As far as anyone on the left is concerned that would decrease equality (the obvious way to achieve it is less transfer payments from the middle class to the poor).
> the obvious way to achieve it is less transfer payments from the middle class to the poor
This is an oft-touted talking point, but not actually correct. If you add up all the numbers, most social welfare in the West proportionally goes to pensions and healthcare. Poverty relief is usually a smaller budget than corporate welfare. This article (0) shows the distribution for the US.
Additionally, part of US social welfare specifically enables companies like Walmart to get away with not paying their employees a living wage, so is de facto corporate - not social - welfare. In short: thinking of it in terms of "the poor are the problem" only helps hide the wealth transfer from the middle class to the upper class.
There is no way for the middle class to have more money while keeping the wealth for the upper class constant, because the system already trickles up middle class wealth. At some point, we should be expecting companies to pay their dues and change rules to make them: corporation tax, liveable wages, overtime compensation, emissions, pollution, workplace safety and perhaps even off time caused by burnout.
If welfare didn't exist, corporations would be forced to pay those wages directly.
UBI solves all these issues nicely. People get to spend the money in the way that works best for them. Because they aren't 100% tied to the corporations, the worst, lowest paying jobs gain leverage when negotiating.
While not the best solution, it is far better than current welfare. Even Milton Friedman supported UBI in this context.
> all the "tax the rich" regulations in the end mean "tax those who cannot escape taxation"
I think they are usually talking about avoidance (legal), not evasion (illegal). while some avoidance schemes do toe the line of outright evasion, I (perhaps naively) don't believe ultra-rich people routinely employ illegal tax strategies.
personally, I'm okay with the fact that some people will inevitably break the law and not get caught, as long as it's not pervasive. if nothing else, they will have to live with the anxiety that the music might stop for them at any moment.
what I'm not okay with are the "tax the rich" initiatives that look good when condensed to a set of talking points, but in reality are just a tax hike for the upper-middle that will be easily (and fully legally) avoided by the wealthiest people. convince me you have a solution for that before you come for even more of the wages I actually work for.
Your post really resonates well with me. I wondered many times in my life, how do you effectively tax actual rich people without squashing the middle class?
I think the aim should be less about making the rich poor and more about making the poor rich. Programs that encourage entrepreneurship, safety nets, lower taxes, etc. I think we should also consider reducing immigration and free trade to benefit labor in country.
> I think the aim should be less about making the rich poor and more about making the poor rich
I agree in principle, but reducing immigration and restricting free trade aren't policies that make the poor rich; they're policies that benefit those in possession of scarce resources at a cost to the rest of society.
Take steel tariffs for instance. They benefit the steelworkers, at the cost of every domestic industry that consumes steel. The entire economy pays to support an otherwise unprofitable industry.
Reducing immigration won't magically increase the supply of skilled workers. There aren't masses of unskilled poor who aren't going to college due to immigration putting downwards pressure on skilled wages. They aren't going to college because they lack the resources and opportunity.
I’m pro trade and pro immigration, but the argument on the other side is if you open up both, labor in the US now has to compete on a global arena rather than being somewhat protected via isolationist policies.
I think it's a trade-off. Tariffs and the like will make us less efficient as a whole, but will shift money back towards labor. Right now I think we're tilted too far towards efficiency which is leading to wealth accreting in the hands of a wealthy fortunate few owning massively successful companies.
> How do you effectively tax actual rich people without squashing the middle class?
Here's some ideas:
1. Tax stock buybacks similar to dividends. Or eliminate them entirely. This leads to...
2. Let unearned income tax brackets go up to the same % levels as earned income, only for different income levels. For example, if $400k in earned income is 38%, then maybe $2m in unearned income should also be 38%. Right now long term cap gains tops out at 15%, which is bullshit.
3. Since wealthy people borrow against their assets to spend, instead of selling assets and incurring taxes, place limits on interest deductions when doing this. There are already similar limits in place for mortgage interest deductions.
> In addition middle class is much more numerous than 1% of the wealthiest. Both Mark Zuckerberg and some Mr. Jones, who owns a grocery shop employ a single babysitter, need a single plumber to fix their pipes, are able to eat the same amount of food, etc. That's why from the social perspective it is important to have as many Mr. Jones as possible.
This seems like a false narrative to me.
For example, the policies Biden is putting forward tax household income at those above $400,000 annually and above, which is firmly in the 1%. This isn't your plumber or single babysitter.
In addition, they are discussing a minimum corporate tax rate and closing loopholes so that corporations and individuals can't pay 0% in income taxes, which is what many are paying now.
More importantly, these numbers like "400k" tend to not be inflation adjusted (e.g. the cutoffs for the net investment tax and the additional medicare tax are not, cutoffs for phaseouts of the child tax credit are not, etc). And income percentiles grow faster than inflation. Looking at that same data table, it looks like the percentile boundaries grew 6%+ year over year from 2019 to 2020. If that's not a fluke caused by the pandemic in some way, then in 10 years you expect something like 1.79x growth in the cutoff numbers, which would put $400k at about the "top 8%" level at that point.
Is it possible that your idea of what level is "firmly in the 1%" is just a few years out of date?
I shouldn't have even included the "top 1%". That's an unfortunate flash point for veering any policy discussions off the rails.
Take the raw numbers. Yearly household income of $400,000 is not gong to affect the baby sitter or local contract plumber. I stand by my assertion that the OPs comment was attempting to distort the narrative.
Yes this may need to be adjusted for inflation down the road, like anything else.
Fwiw, I think you were misunderstanding part of the comment you replied to. It was not saying that the babysitter or contract plumber make $400k but that the local grocery shop owner might, and that both that shop owner and someone truly rich add comparable amounts to the economy in terms of service consumption.
I suspect that both of those claims are dubious, by the way. Someone with more wealth is in fact likely to employ more plumbers (due to having more toilets) and babysitters-per-child (full-time nannies, tutors, etc). And given how low-margin grocery stores are, I don't know that I'd expect a grocery shop owner to end up with $400k+ taxable income....
> Yes this may need to be adjusted for inflation down the road, like anything else.
My main point about the inflation bit is that it's disingenuous to introduce a new tax with a claim that it "does not affect the middle class" when you know with near-certainty that in 10 years or less it absolutely will. In fact you are banking on that to make the numbers you depend on actually work out.
Almost all proposals to "tax the rich" that do not come with automatic inflation adjustments built in are just proposals to tax the middle class in disguise.
I'm pretty sure Bezos doesn't like this idea all that much, but it's the price of getting on board with Biden's infrastructure plan.
He probably views it as an investment. Amazon has a keener interest than most in ensuring road maintenance is done properly and if that means a small increase to his tax bill he's probably ok with it.
He also desperately needs to score some progressive points. His reputation is getting trashed rn. I'm sure that factored in to his decision.
I'm skeptical of the notion that he wants this to keep competitors down.
The guy who says “your margin is my opportunity” doesn’t want to influence taxes on the margins of others to keep competitors down? Instead he cares about road maintenance funded specifically through corporate tax hikes?
Why wouldn’t he just advocate for road maintenance?
Edit: whoops, I didn’t read his actual statement. Tricked by CNN! Still, I’m a little skeptical of ascribing motivations to people like Bezos that aren’t in line with his past actions, but instead are in line with my personal politics, which is why I’m skeptical.
At the weekend I calculated that Amazon's UK division pays 77x more corporation tax than my company. Which sounds fine, until I realize my company is probably worth 1000000x less than Amazon's UK division ;-)
The 1099k thing for payment processors has been required for years. It means that companies like MasterCard and PayPal and square need to report transactions, not small businesses. The payment processors fought hard against it and lost.
I'm sorry but putting a floor on corporate taxes is a good idea as long as all parties abide by the same rules. You don't seem to understand that the USA has some of the highest in the world so it would actually help SMBs here. There should be an out for when countries don't keep up their part of the bargain. They should pay a heavy price such as punitive tariffs for X number of years.
I keep hearing this, but how would that work? The US has what, a 250 million strong middle class with the highest purchasing power of any country over 20 million?
Would companies actually back out if this tax increase would somehow be coupled with a threat of blocking their business in the US? For sure they wouldn't.
So Jeff Bezos is trying to earn back some good will. Bezos/Amazon is horrible to employees, and now we have a distraction that makes him look good. Such nonsense should never be news.
In short: this is a stark example of a distracting puff piece that exists only to fool the public.
I already wrote it somewhere else but can you really compare Bezos and Gates? Microsoft wasn't really popular back then (many people here will have hated it) but Gates was never really unpopular as a person. His treatment of workers was also not a reason for his public image.
I don’t begrudge Amazon or any other company for paying as few taxes as is legally possible. I also am not in favor of unions as they are currently implemented in US law, where workers are forced to join unions and labor competition is reduced. I also think much of the media coverage of Amazon is unfairly biased against them. However, even to me, this moment where Bezos is supporting increased taxes seems highly suspicious. I simply don’t trust Bezos’s motives to suddenly support such policy.
One possibility is that he sees it as an inevitability so he might as well support it and reap some goodwill with politicians. Another possibility is that infrastructure spending (which increased taxes would fund) benefits his business disproportionately. Another possibility is that this wouldn’t hurt Amazon much but would be the final blow for struggling small and medium size businesses that can’t compete with the juggernaut tech giants. Most likely it’ll take the form of Amazon avoiding taxes by (legally) claiming credits and deferrals where possible, while smaller businesses without the same massive capital, tax avoidance opportunities, and armies of accountants/lawyers will pay the new increased tax rates here and now.
What we really need is updated anti trust laws and stringent enforcement. Where companies can’t be split up easily due to products dependent on network effects, we should regulate them like a public utility. We need to ensure healthy competitive markets.
Its all very well and good to state "we pay every penny we owe,", when you use creative accounting to get around "owing" in the first place.
These loopholes, exemptions, "grants", etc need to be closed - THAT is fixing the problem - not increasing taxation for those that act honestly.
That said, why are corporations taxed less than individuals when they are otherwise considered a legal person (but with increased indemnity!)? Thats should be addressed too, IMHO.
How would you prevent billionaires from moving to a tax haven, though? That is the big loophole that both billionaires and large corporations benefit from, that others don't have access to.
For example you can calculate how many percent of their revenue a company made in a given country and then how much tax they paid there and demand them to pay the difference.
A country as large as the US has plentiful ways to ensure tax compliance by citizens. It's small countries that are forced to remain competitive. People won't flee the US by the millions just because you raise taxes.
There are many good arguments in this thread, but ultimately he’s part of the new game of centralisation of power globally, which involves international political institutions and giant corporations. “You rub my back, I rub yours and we both win.”
398 comments
[ 3.1 ms ] story [ 262 ms ] threadok failing bad with this post. I'll refer to these comments instead, which express the same idea:
> That or their smaller competition will have a harder time dodging it than they will.
also, we should raise the corporate tax rate. and income tax rates on high earners. and try to fix the hideously broken state of affairs that result in these individuals having far less tax burden than they ought in far too many cases.
$20 says he’s suddenly in favour of corporate taxes because he fears the alternative: wealth taxes.
And isn't Bezos trying to rub shoulders with politicians?
I have no clue what his aspirations are, I don't follow this type of news very much at all, I just remembered that he stepped down and now suddenly he thinks companies should pay more (or in Amazon's case, some) tax.
This is about taxes Amazon owes, not Bezos. Bezos already is giving vast fortunes away through his charities.
And yes there are two things that stop Amazon from giving away free money. 1. A fiduciary duty to their shareholders, 2. competition.
Bezos is completely right to state that, if people want to see more contribution from large firms, have it done through proper legislation and taxation.
On the other hand: Wait wasn't it Amazon who cheated on taxes like no other company (compared in size)?
After the union shenanigans, his biasedness in the elections or well deserved PR desasters such as the contest for a new headquarter (what a surprise it went where it can influence policy most), I'm a bit allergic to being nudged to see his moves as all too altruistic.
Increasing corporate taxes raises the burden across the board, for competitors and possible future ones. Meanwhile Amazon can afford to have its accounting adjusted to mitigate the impact more efficiently than any competitor could.
It cements his position.
It's because Amazon has low profit margins compared to other companies its size - AWS is profitable but the retail business isn't very much, and investors don't want them to make more money because they like free shipping too much. The remainder is lost to R&D credits.
If people want Amazon to pay more taxes, then Washington state should have an income tax. Pretty straightforward.
I know I shouldn’t mix the individual with the public company he founded and I don’t want to be that person that says he only does it because the tax incentives. He is a person after all and I’m sure he deals with more social pressure as a result of his status and like all people has issues that strike a cord internally. Still there is something deeply troubling about people acquiring so much wealth that put them in that situation in the first place when he wouldn’t be there without his workers and yet significant numbers of them are on food stamps paid for by taxpayers...when his company paid $0 taxes.
The politicians we vote in deliberately create laws that allow large companies to pay little to no tax. It is not an accident or a sneaky corporation that outwitted a dumb politician, it is by design.
Good governance is hard. And megacorps are an advanced persistent threat that goes to great lengths to claim exceptions for itself.
i really don't think this is true, many big companies are hopelessly bureaucratic
It's also largely a question of what change is required? I've seen a parent company move itself to become a subsidiary of a holding company which is now landed in another nation. It had almost no effect on the day to day. It was paper work.
Megacorps are filled with paperwork. But that doesn't necessarily mean they are bad at it, slow at it.
Usually those are in there to be found and used. Your energy would be better spent being upset with the politicians for putting it in there than the lawyers for finding it.
My point is that it would be more productive to focus on fixing the system than just getting angry at companies for "cheating".
> it is by design
It certainly wasn't "designed" for geographically flexible entities such as Amazon that didn't even exist 30 years ago.
When ever a new kind of entity fits in loop holes that weren't open one technological advance earlier it has any interest to lobby politicians to keep that niche/grey-area open. That can and should be called cheating.
Lobbying is at least transparent in its intentions.
We do not consider that bribery, yet when a group we dislike does the same thing, we’re supposed to see all lobbying as bribery or just that of opposing groups?
<Edited to add brevity.>
We need to start approaching more taxation rules at a trading/travel block level. E.g. G12 say minimum 25% corporate tax or any product/service that involves non-complainant countries has a X% duty type thing.... or something down that concept route.
I think the real rich person law they politicians have supported and can influence is capital gains tax. Capital gains at a certain point is income. There's a reason CEO's take a $1 salary, they are clearly not living on that.
Its not like the corporations haven't been using their financial influence, particularly after Citizen's United, to influence the rules.
I don't think any of us here could come up with a tax code that cannot be exploited. And of course large companies will exploit any loophole, all of us do when filing our taxes.
Maybe the problem is the existence of such powerful companies. Once you have them, it's very hard for politicians to stay on top of them.
To be clear, I'm not saying that there's no corruption or politicians favoring large companies. But most loopholes used by companies tend to stem from good intentions. It's like in IT security, there are backdoors but most bugs still have a benign origin.
The Section 482-7 regs were written by the IRS to control how intellectual property is shifted offshore. The valuation methods outlined in the article were questionable. I read the regs multiple times to understand them and made an Excel valuation model to follow their rules.
Don't think the IRS realized they created terrible, ridiculous theoretical models. Don't think it was intentional either. Just a few people that didn't understand the implications and congress that signed the code into law without being able to understand it. Tax code for valuing IP is highly complex.
The US government writes terrible tax code in my opinion, mainly because they're just not very good. They're not as good as top private sector tax lawyers.
I empathize with the "You make the tax laws @SenWarren; we just follow them. If you don't like the laws you've created, by all means, change them" sentiment. Multinational corporations have to comply with tax laws from multiple countries that are arbitrary and complex.
It seems to me that money can be used for two things: productive uses and unproductive uses. Unproductive uses can be taxed as much as we want - as a society we don't really care that much if people can't do unproductive things with their money like pay for foot massages and things like that. (Well, people who want to pay for unproductive things like foot massages and videogames care, but I think it's okay to take away some potential foot massages via taxation to pay for important public goods.) But we should take care when taxing productive things, because we're taking away opportunities from our future. If a masseuse wants to invest in some kind of robo-massager that will let them give twice as good foot massages for half the price, that's just a better use of everyone's time and money than continuing to do it the old way and not something we probably want to discourage.
Seen through that lens, a wealth tax (or better, a consumption tax like a VAT) makes more sense than a corporate tax to me. Imagine a chash-rich opportunity-poor corporation that has only one thing to do with its excess cash: invest it building new widget factories for 3% return on investment. And let's say there's a cash-strapped opportunity-rich second company that can build new factories for a 10% return on investment. What we would want to happen is for the owners of the first company to withdraw the excess cash, so they can invest it in the second company which has much better things to do with it.
With a corporate tax, that process is interrupted, because the first company can invest in itself tax-free but must pay taxes to return money to investors so they can put it to better use.
My thinking is that a wealth tax taxes nearly the same thing as a corporate tax, without this flaw. You can't really tax a "corporation", fundamentally everything is owned by someone so if you tax a corporation you really tax the owners of the corporation. Here's how that plays out: The price of a share of a company is usually modelled as the expected future earnings from posession of that share, discounted for time. So if you expect a company to pay dividends of $0.1/share/year forever and have a discount rate of 5%, you should be willing to pay $2.00/share. If a corporate tax of 50% reduces that to $0.05/share/year (since half the profits have been taxed so the dividends are half as large), the price will drop to $1/share. A wealth tax taxes the value of the shares directly, instead of messily taxing the profits and affecting the share price indirectly. But a wealth tax doesn't have the weird switching-over issue I mentioned earlier, so money would no longer be trapped in unproductive areas (or worse, trapped overseas waiting for a change in US corporate tax policy).
A VAT would be even better because it would incentivize people to keep their money in productive uses by taxing only unproductive uses (VAT doesn't apply to stocks or business expeneses or things of that nature). But that's kind of tangential.
Maybe a professional economist can correct me on this but that's my thinking.
there is no process interruption here. a tax on profit doesn't prevent corporations from investing in the highest npv projects available to it because capital expenditures and r&d investments occur before that taxation, and moreover the interest expense is deducted as well.
despite all the hand-wringing over corporate taxation, this maxim holds true in most cases. taxation has little effect on the investments a company chooses (or alternatively, the variance of choices gets lost in the error bars). they will still tend to choose the highest npv projects, even if that's negative.
In that case, it has to take that money as profits instead of reinvesting, and so is taxed.
This is a desired behavior which we want - it fosters innovation and job creation.
He was ruthless and inhuman to his workers and we should never forget that.
For Bezos that could very well be true. Interestingly enough Amazon used to have a really positive public image until about 1-2 years ago. If he had quit any earlier, maybe his image would be much better now.
Unfortunately not only that, but ruthlessness is a main characteristic of most of his business practice. This peace is obviously yet another attempt at further increasing the size of his moat around his corporations. On top of that never forget he also has a substantial stake in mass news media itself.
Be it Billy Gates, Bezos, or one of the many Midwestern Financial Gurus—-their use of 901c3‘s are basically tax dodges.
Gates foundation gives back less than 1% of the wife’s fund to the nation that birthed him, and provided a comfy launching pad for that privileged life. (I get you need to help developing nations, but America is dying. I have never seen so many homeless.)
I don’t know Bezos charities, but if it’s related to his companies commercials in media, those are carefully selected to brainwash the masses. How much money did they spend so we knew their employees had soap to wash their hands this past year? And I guess Amazon warehouse workers chuckle fund was receiving hand sanitizer that looked like vodka bottles.
I see how Amazon is now worried about climate change now with his promise of electric vehicles, so he must be worried about something? Maybe he’s running short of tax write offs, and heavily federally subsided electric vehicles make sense fiscally? Not even taking into account the millions he will save on a depreciating asset? In a way, we are buying his gift to carbon neutrality? (I would bet in five years—he will take the Uber approach to deliveries more than he does now, even requiring workers to furnish their own electric vans). I could see the boys laughing over this at the catered hootenanny. It feels good to be a gangster bllly—huh?
I only know of a few charities that truly give back. Most of the big ones we all know through media are overfunded. I once heard there is a very popular children’s hospital who could operate for the next twenty years without another cent, even when taking into account inflation/tech costs.
I used to look up nonprofits on WayStar. They have now made looking at the free 1040’s complicated.
(Does anyone know of a truly selfless charity? I’ve always given Salvation Army a long rope. They have been feeding America’s hungry forever, and I know people who eat there.)
But the whole life of Bill and Melinda is about their work in the foundation. It's not a side gig for good press, they don't do anything else. I can understand criticism where billionaires have a charity next to their business. But there's no other business left for Bill.
But to be fair, Bill Gates is probably the only prominent example of a billionaire who quit the industry completely and dedicated his whole life towards charity.
James Simons has more or less done this for the past 15 years.
Alternatively, why should Gates spend charity money on America if that money would go have a greater impact on helping people and improving lives elsewhere?
Do you mean 501c3? How are these a tax dodge? How does someone end up financially better off than just keeping and investing their wealth if they choose to donate it or deploy it in a donor advised fund?
> Gates foundation gives back less than 1% of the wife’s fund to the nation that birthed him, and provided a comfy launching pad for that privileged life. (I get you need to help developing nations, but America is dying. I have never seen so many homeless.)
If you think America is dying, boy do I have news for you about the state of most of the world. I also deploy most of my personal donations outside America, through GiveWell and Watsi (and more targeted donations independently).
America has a lot of problems. I live in NYC and can empathize with the dissonance of seeing the homeless sleeping in the cold on Madison Ave. I don't want to diminutize that, and this is something I also care about.
But the blunt fact of the matter is that America is far better off than the countries Gates focuses on. It's not even a fair comparison in terms of poverty and healthcare. Gates deploys his wealth primarily in regions that have never or only rarely "birthed" billionaires like Gates, in your words.
It is uniquely selfish to criticize billionaires for hoarding their wealth while also insisting they focus their charity on one of the richest countries in the world by median.
My mom grew up in a village where some had to resort to cannibalism to survive. My grandfather was eaten after being beheaded by communists. I am blessed to be an American.
The problem is they aren't cheating. They are hiring a lot of lawyers to find every single LEGAL mechanism in the book to allow them to pay no taxes.
I'm not saying I agree with it. But the problem here isn't with Amazon it's with the US tax code, which has been molded over decades of politicians and lobbyists to allow for this.
To fix the system you need to fix the tax code.
Because in my country basically the governments hire law firms to write out legislation, and then those same law firms sell these types of services to circumvent the laws they draft.
So the feeling I get it's not much a taxes problem, but the public institutions are managed by lawyers, and are optimized by lawyers that leave enough margin so they can thrive.
And why should they ?? To quote Steve Eisman "incentives trump ethics every single time".
Here's a tax strategy that will greatly simplify all government efforts: any corporation with a market cap of 100bn+ is obliged to sign a privately negotiated deal with the gov to agree on a annual tax rate for the next X years. The minimum is set at 20% with no exceptions and can go up to 50% depending on the estimated negative social impact of the corporation. There are no write offs, no loopholes. Every year the tax bottomline is checked and enforced.
There is also a tax distribution enforced so that only a few can get the 20% one at any time. The goal of this to force a "bidding war" between them to get the lowest tax and the only way to do that is to reduce their negative impact to a bear minimum or stop existing altogether. Incentives.
Once that is set in place work on reducing the tax code complexity for everyone and everything below 100bn. Currently most if not all tax regimes try to shoehorn all entities under the sun under similar rules and then provide various kinds of tax write offs that create incentives to dodge tax and provides the biggest players with a massive advantage as they can hire specialists to focus on every single possible loophole to avoid paying anything.
Even if you fix taxes on national level, you aren't going to catch multinationals. They keep moving just behind that inevitable race to the bottom.
In 1997, as part of the Tobacco Master Settlement Agreement, the 4 major tobacco companies agreed to sweeping restrictions on cigarette advertising. This ensured that it was almost impossible for a new player to enter the market, because they had no way to create brand awareness.
Bernie said it best a single Amazon Prime membership is more than Amazon paid in taxes in 2017 and 2018 combined.
They lost the NY tax credits because they were so cartoonishly aggressive that AOC got the whole thing canceled by tweeting about it. Then they built it anyway without any credits.
Then along comes a competitor and your local government gives them $1B+ in grants (consisting of the taxes you pay) they use to buy a property and they get $1B+ in tax credits.
You may think highly of yourself and your business but you can’t outcompete that and they will drive you out of business using in part your taxes to do it. If you don’t call that anti-business it’s at least anti-competitive.
And anti-competitive? Having more jobs in NYC? That’s actually good for workers, not bad. More competition.
And funny enough, more jobs at Amazon also means less worker supply for competing businesses. So even that is anti-competitive in a roundabout way. (Even though, yes, high worker demand is good for the economy in general).
And whether or not Amazon creates HQ2 to NYC, does that impact their competitiveness with local NYC businesses? I doubt it.
Inviting Amazon to NYC with tax incentives is similar to planting a great white shark in a small lake, injecting the local fish with sedatives and the shark with a mix of steroids and stimulants.
That’s why in many countries the cascading of corporate tax plus dividends/savings tax is close to the marginal income tax rate of high income people.
In other words, the initial goal was to essentially tax people’s income but corporate tax was introduced as a measure to prevent some of the wealthier people from not paying any income tax at all.
bezos, probably
Amazon can afford to find the loopholes but hes right that most of his competitors can't.
In the same way that the new "Stimulus package" now requires that payment processors report any transaction over $600 on a 1099-K Tax Form, it's always the little guy that is mostly affected by the changes in tax law because little guys have no lobbyists and don't have an easy access to lawyers to fight the IRS.
If taxing the big companies is the aim, how does one gauge the policy suggestion?
(I am not Americans just watching this curiously from outside)
Edit: spelling
Some big companies retain multiple law firms and ask the same advice a couple of times. If an overworked attorney who barely gets any sleep ever misses a point or drafts his/her advice vaguely in a way that would enable their evil plans, they rely on that single opinion. If there are any problems they don't assume any liability, because hey they got a legal opinion from a respectable law firm. Nobody needs to know/can prove they obtained multiple opinions on the same matter because of legal privilege.
In return, big law gets paid a lot of $$$, because of the risk of providing such opinions under considerable pressure and trickstery.
In a big corp, I think most employees are concerned with saving the day. If the management pressures them to cut corners most will. What better way is there to pass the blame?
The solution would be to have absolute minimalist tax rules which are so simple that there wont be loopholes. Then also make judges apply common sense and smash every attempted loophole until everyone stops wasting money to find one.
Never going to happen obviously but we can dream.
I think we'd be better off fixing the deduction of such problems, but just pointing out that part of the reason taxes are so complicated are to enable this. Another reason is to create corporate tax loopholes...
Yes the loopholes are intentional but it only helps very few individuals and a whole industry of layer, while corporations aren't actually in the business of finding tax loopholes they are indirectly forced to participate anyway because their competitor does. People blame the companies for evading taxes but they are not the problem they have to play along because everything else would be hard to explain to the shareholders.
Imagine if you are a business owner and your company slowly grows to amazon size. At what point would a sane person like to pay people to evade taxes? You would never want to do that instead of building a team of tax specialist or outsource that you could expand in real business. Your local small business owner and Jeff Bezos both have no interest in that.
Large corporations have an effective tax rate below the nominal one due to antics with exceptions — while smaller businesses get hit harder. What’s called “progressive” often ends up regressive due to the imbalance in ability to do finance trickery. Rich people will always find or create exploits in the law, so those “high taxes on mega corps and billionaires!” hit the middle class and medium sized businesses: they’re who bear the brunt of taxes, in the US.
You get out of doing that unnecessary damage by removing the game: no whatever exceptions, just a flat rate everyone pays.
What’s called “regressive” is actually progressive in that it lightens the tax burden on the middle class and medium businesses, while making the richest pay a fair share. (Also, simpler codes are harder to cheat.)
Discussing the tax burden of the poorest is a misdirection used by politicians: the poorest in the US receive more benefits than they pay, so it’s a question of how that burden is split between the middle class and the upper class.
The big issue is with "just a flat rate that everyone pays". What do you pay that rate over? Big corporations manage to pay that rate over nothing. Generally those corporate taxes are paid over profits, so corporations avoid taking profits in countries that tax them. They sit on their money, pay it out as bonuses to executives, and take their profits in tax havens.
The issue isn't the tax rate, it's the loop holes. It's that the amount that's taxed is easily manipulated. Instead of easily manipulatable profits, the tax should be levied on something less easily manipulatable. Like revenue. Of course that already happens: VAT taxes, only because you pay them on all products, they are effectively paid by consumers, not corporations.
But how about allowing corporations to deduct their local external costs from their revenue? Not easily manipulatable foreign external costs, but simply the costs made in the same market as where the revenues come from? Then you're effectively still taxing profit, but tied to the local market, cutting tax havens and internal trickery out of the picture. A company on the other side of the world selling in your country but not making any costs there; no labour, manufacturing, rent, etc; would pay tax over their entire revenue, whereas a local shop that has does have all those costs, and therefore cannot help but invest in the local economy, gets to deduct those costs and pay less taxes.
I think that could do a lot to even out the imbalance and make the playing field a lot fairer.
I think we need to address this somehow. Perhaps by counting size by which actual people control and/or own the companies rather than the current arbitrary legal structure.
If a country doesn’t make automobiles or refrigerators, are those taxed as if they were pure profit for the retailer? It’s not like a local retailer is going to manufacture even refrigerators, let alone cars or phones.
Did you even read my post?
It’s entirely about this fact: you wrote a long rant concurring, but phrased as violent agreement.
You just pulled a single phrase out of a multiparagraph post, then strawmanned my argument.
That’s not up to the standards expected of HN posts.
You had one more paragraph with some random technical considerations agreeing with me.
Then you concluded.
You literally just repeated my point, but started with “it’s more complicated than that” — which is phrased as a disagreement with my point.
That’s a straw man (misrepresenting my suggestion as being a flat rate, even though my entire comment was about loopholes — like yours) and violent agreement (phrased as disagreement when repeating the same thing).
Your reply here is just wrong. (:
Besides, paying tax should be a much easier process for the small fish.
Both declarations are available to the IRS; if you force corporations to declare how they "bridge the gap", while it would let them practice tax evasion, it would make it easier to assess what form that evasion takes; and it would make fraud much harder.
I don't remember if it went through.
[1] https://s2.q4cdn.com/299287126/files/doc_financials/2020/ar/...
What you mention is less true if corporate tax is progressive on profits.
On the other hand, Amazon wouldn't care about corporate taxes on profits because it reinvests all its revenue.
You could make that argument against absolutely any policy. So what is your solution then? Don't do anything?
Could you explain why this is the case?
> So just tax wealth of individuals
Individuals can play the same games. Jeff Bezos could move most of his wealth into funds, foundations or companies and be poor on paper while still keeping the de-facto control of all assets. Or they could shift their wealth overseas, into tax havens or into less transparent areas like crypto.
I’m talking all loopholes, even giving money to a 501c3. Billy’s nonprofit gives back less than 1% to the country that coddled him. Plus—I feel a lot of nonprofits are just tax dodges.
Want to manufacture overseas? Fine, but move to that country, and don’t come back.
I got carried away again. I would like to basically see tax loopholes closed, or only allowed the first few years of a business life.
> Could you explain why this is the case?
Just to comment on this real quick, this has multiple reasons. Basically, the larger your company is, the more funds you have to spend on lawyers and experts, as well as offshoring. Also, depending on the country you're in and the specific tax laws, it might be easier to fulfill incentives for nullifying the corporate tax (IIRC reinvesting and creating jobs is how Amazon nullifies a good chunk of their taxes, right?). That is not to say, we should completely axe corporate tax imo, because some of those incentives are really good. You want corporations in your country to reinvest and create jobs, because that's overall a really good thing for the job market.
The thing about Bezos' wealth is that a huge chunk (maybe even the majority) of it is already in the form of assets. That's not as easily moved overseas (though to my limited understanding it isn't impossible) without hurting his own company, and at that point it might be profitable to just pay a wealth or asset tax or something like that. Obviously that would need to be designed REALLY well, but there's a good chance that that's how we can tax exactly what we want to tax, without hurting small businesses and without hurting the lower class.
The problem is real-estate as this is what people need. If people could buy property they would not be interested in stocks or crypto and they would not care for rich people getting richer. They would be busy in their pools or backyards.
And fixing real-estate is not done by having more taxes, penalizing vacant homes, or grabbing your inheritance. It's simple: Build more housing.
You can set a fee of 3% for restaurants let's say, and 10% for some other business (example)
This makes sense for small business
Even if it does mean less restaurants and less eating out, there is nothing inherently more unfair about it.
You can also see for example the digital services tax introduced by France because VAT was not proving effective.
Unless your thought is that businesses would charge more if there was no sales tax. I don't really buy that, though; businesses list pre-tax prices specifically to avoid sticker shock.
I am almost in my 40s now and one thing I've recently learned is that sometimes it is better not to do anything at all.
This is arguably a more efficient transfer capital rather than raising taxes and then dealing with bipartisan political entities in the most efficient use.
Id also point out that the new tax policy also raises wealth tax by a significant amount. Also, its probably better to deal with wealth tax on a state by state basis, since this in turn forces the development of generally low tax areas since its favorable for people to move there (like all the companies setting up shop in Austin right now, which in turn raised the wealth of anyone there who owns a house by close to 100k at this point)
How about a policy of mandatory 10% profit for companies over 1B in revenue? That would produce some nice antimonopoly effects too.
This is the desired outcome and we should not touch this.
Agreed. To add perspective, I don't believe corporations will give a crap about the people (extreme example, Amazon) like we believe our respective governments should. I'd rather have bad spending on keeping people alive than no spending at all.
Instead of actually promoting innovation, they tend to become a subsidy for the tech industry.
R&D would get us fastest nice things like space colonization, longevity, megastructures, the next step on the Kardashev scale.
NASA doled out public money to prime contractors for various pieces of the program (North American, Grumman, Rocketdyne, Douglas, IBM...) and the primes subcontracted various pieces as they always do.
This is not to understate the tremendous engineering effort of organizing such a huge program, but it’s not like this achievement was done by a bunch of government workers alone.
Meanwhile Joe Schmoe bought yet another iPad (which wouldn't exist without the government inventing much of computer tech) to go in a landfill in two years. But at least he funded Apple's ability to make a brand new, basically identical model, next year.
How do we measure who has a "good" track record on spending money?
To avoid pure anecdotes, the Government Accountability Office actually studies this every year: https://www.gao.gov/products/gao-20-440sp ...
That's not to say I don't believe in government spending. I don't know that there is a much better solution, and any conglomeration of humans is going to have roughly equal capacity for doing the right thing and doing the wrong thing, hopefully weighted more towards the "right" thing with solid leadership...
Say I run a company out of the US called 'Paraná' (Seeing as the other big river is already taken), turning $1B/year profit.
I promptly spend the profit buying consulting services from 'Paraná Consulting and Tax Shenanigans LLC' based out of a Panama mailbox for $1.05B, for instance - then I even run my US business at a loss.
(I don't know anything about US or international tax codes, but the above basically sums up the methods described in X stories I've read about tax planning over the years.)
UK, Netherlands and others countries have their own tax havens like Cayman Island, Curacao Island. Are you really going to ban trade with such big financial powerhouses?
> doesn't let you entirely evade taxes
"Entirely"?
It's not about evading taxes to 100%, but maybe 90% (not sure about the numbers).
Also, the taxes get paid in a different country, doesn't benefit the people in, say, the US.
https://www.kwm.com/en/au/knowledge/insights/australian-soft...
In that example they found that the 'licensing fee' was a royalty meaning there is a 30% withholding depending on double tax treaties and rates between the two locations. Which for a zero tax foreign licensor would mean a 30% local tax on however much you send overseas.
I wonder how much the company saved on avoiding taxes in that way, until it didn't work any more. (Didn't see any numbers, having had a look at the linked page)
I wonder if there's any table of all different methods companies use, to avoid taxes, and how much they typically save, and what could be ways to stop it
Maybe could be helpful for lawmakers
> required to pay 30% withholding tax
That's quite a lot is it? Compared to company taxes. Seems like a strong incentive to stop cheating
Pay the damn wages and dividends, I'd say. The former will go into consumption, the latter will go probably into other companies, especially if we discourage less productive uses of capital (like real estate). And also getting taxes from these is more straightforward. Maybe they don't even have to be that high percentage-wise, if there is less possibility of avoidance.
If the goal is to increase wages, then government should lower the supply of labor and increase the demand for labor. Provide minimum x weeks of vacation, parental leave, maximum 8 hours per day until overtime rates kick in, free higher education, etc.
As for forcing companies to pay dividends, I’d rather the government not be able to tell me what to do with my company’s funds. If the government wants control of the funds, they should raise the tax rates.
> As for forcing companies to pay dividends, I’d rather the government not be able to tell me what to do with my company’s funds
I don't want to digress too much, but limited liability corporation and more complex structures with shareholders are creations of the government. You used to have to obtain a specific charter from the sovereign for each one of them. So unless you're an individual doing business with unlimited liability, it's debatable whether government (or the lawgiver, to be more specific) shouldn't get to make the rules for you.
Of course, the idea that states are created for the benefit of humans is bullshit, but it's nice to dream of something better...
I agree with this. Which is why I wrote the state can choose to increase taxes. I have yet to be shown how requiring a company to pay dividends accomplishes the goal of improving the lives of humans.
Of course, that's too tame. We'd be better off eliminating the most common forms of incorporation, or severely curtailing them e.g. maximum revenue limits. All the things that corporations can do, individuals, partnerships, mutual-benefit firms, etc. can also do, except often more carefully.
Thank you, loopholes!
Generally the answer is: they "spent" the money on "intellectual property" licensed to them by a subsidiary in Ireland (patents, brand name, software license) where that subsidiary pays zero takes through some accounting trickery[0] and moves that money offshore to Bermuda or Caymans. So the main company makes zero profit in markets outside Ireland because coincidentally licensing expenses exactly equal the gross profits of the company - and thus pays zero taxes anywhere ever.
[0] formerly the "double Irish" international tax loophole, nowadays there's a different "Irish patent box"
Funny. China had a profitability requirement for any IPO until the beginning of 2020.
Something that people from middle class are not able to afford.
The other reason is that making difficult for members of middle class to accumulate wealth secures their own business, they are effectively killing the growth of potential competitors.
In the longer perspective this is very dangerous, it creates oligarchy, which, in turn, has all the incentives to restrict free market, free speech and democracy.
Middle class is important for the society since those are people who have time to engage themselves into public affairs, they don't have to spend all their time trying to earn money. In addition middle class is much more numerous than 1% of the wealthiest. As a result they give work to a lot of people who are down the social ladder. Both Mark Zuckerberg and some Mr. Jones, who owns a grocery shop employ a single babysitter, need a single plumber to fix their pipes, are able to eat the same amount of food, etc. So thousands of Jones are given job to much more people than single Mark Zuckerberg (obviously I am talking about Zuckerberg as a person, not his company).
That's why from the social perspective it is important to have as many Mr. Jones as possible. They give work to a lot of people, they drag them up. That's why taxing heavily middle class is a terrible idea and all the "tax the rich" regulations in the end mean "tax those who cannot escape taxation".
This seems to relate to marginal income tax rates, not corporate taxes.
>and all the "tax the rich" regulations in the end mean "tax those who cannot escape taxation".
They don’t have to. Simply eliminate deductions and credits and exemptions.
Simply? In a global world economy? There is nothing simple about it.
There’s nothing at all simple about switching from one to the other. (Grocery stores in particular would be extremely hard-hit and a lot of us rely on them to survive. The wheels would come off quickly if not carefully thought though.)
If the issue is it affecting poorer people adversely, then that should be addressed by making them less poor, e.g. the government giving them money.
Whole Foods could conceivably become the equivalent of a discount grocery by virtue of such integration, after Amazon bought up farms and distribution channels.
One could argue that the US is already an Oligarchy or more accurately an 'Oligarchic Plutocracy' which has accomplished all of the above.
Even I would refer to USA as democratic, but there is lot of evidence that the democratic component is pretty weak.
But then you say:
> all the "tax the rich" regulations in the end mean "tax those who cannot escape taxation"
Why is avoiding taxes different than any other moral problem? Why cannot you say, "putting conmen in prison" in the end means "smart conmen will avoid prison". It's this moral defeatism that gets me.
Sure, there will be people who do immoral deeds and avoid being caught, but how are we better off by not trying to catch anyone?
It's even in the open, that the large corporations pay little taxes, everybody is a witness to that. You (as a society) can change that system if you want.
"Tax the rich" sounds kind of like a good idea at first but then you take into account the point about how the rich have lawyers, lobbyists, and accountants. Rich people and companies already figure out how to subvert tax laws. Why wouldn't they figure out how to subvert the new laws they are clamoring for too?
Put another way, is Bezos supporting this law because he wants to be worth less?
I'd prefer we solve things more directly. Break up big business via anti-trust. Stop businesses from buying one another. Rather than raising taxes let's just simplify the tax code so it's automatic and there is minimal ambiguity or flexibility for creative tax accounting. Let's bring legal cases on all the questionable tax strategies big companies are engaging in. Raising taxes to hope we catch the big guys doesn't seem like a smart plan to me. It seems more likely they'll dodge the increase and smaller companies will get hit with it.
In theory I am all for it but on the other hand what would be the allowed size? I can hardly imagine mom and pop shop producing Lithium Ion cells, starting foundry etc, etc. This measure could put country to severe disadvantage against any other that does not implement same measures.
To be more practical and keep competitive edge internationally I'd just milk big companies by way of taxes and make sure there are no loopholes and perks like foreign earning exceptions etc. And outlaw political corporate lobbying.
Well, I don't see how it's feasible or desirable to do things more directly. You're saying BigCos are a problem, and you want to disincentivize their formation, then picking them on one-by-one basis will actually require more expertise and more effort, compared to having laws (e.g. tax laws) that apply broadly, and then enforce these laws.
We have laws precisely so that we wouldn't have to decide every case individually, and that the rules are clear to everyone, so they can avoid possible (and arbitrary) punishment.
I also think that as long as you want to tax all corporations the same, there will always be an inherent advantage in being big. That's why many people suggest progressive taxation in various forms to disincentivize such empire-building.
> Raising taxes to hope we catch the big guys doesn't seem like a smart plan to me.
This is a straw man - nobody is arguing just for raising taxes and then not enforcing those laws, we would love to enforce these laws of course. But having them is the first step to enforcement, I don't think your approach (enforce something without support from laws) is more viable, even legally. It requires more regulatory expertise, which you argue we are lacking compared to corporations.
Also nobody is really arguing against tax code simplification, but it only can get you so far.
Big governments love a couple big businesses because it’s much easier to infiltrate, influence, control and ultimately procur wealth with that small group of businesses rather than attempting to influence 100’s or even 1000’s of smaller and independent companies.
So the next time you see 3 domestic car companies, and 3 airplane makers, and 4 toilet paper makers, 3 oil companies, etc. Understand they want it that way because of control and $$$$.
Notice that there isn't an argument that Zuckerberg should have less money. There is an argument that Mr Jones should have more. As far as anyone on the left is concerned that would decrease equality (the obvious way to achieve it is less transfer payments from the middle class to the poor).
This is an oft-touted talking point, but not actually correct. If you add up all the numbers, most social welfare in the West proportionally goes to pensions and healthcare. Poverty relief is usually a smaller budget than corporate welfare. This article (0) shows the distribution for the US.
Additionally, part of US social welfare specifically enables companies like Walmart to get away with not paying their employees a living wage, so is de facto corporate - not social - welfare. In short: thinking of it in terms of "the poor are the problem" only helps hide the wealth transfer from the middle class to the upper class.
There is no way for the middle class to have more money while keeping the wealth for the upper class constant, because the system already trickles up middle class wealth. At some point, we should be expecting companies to pay their dues and change rules to make them: corporation tax, liveable wages, overtime compensation, emissions, pollution, workplace safety and perhaps even off time caused by burnout.
0: https://www.usgovernmentspending.com/us_welfare_spending_40....
UBI solves all these issues nicely. People get to spend the money in the way that works best for them. Because they aren't 100% tied to the corporations, the worst, lowest paying jobs gain leverage when negotiating.
While not the best solution, it is far better than current welfare. Even Milton Friedman supported UBI in this context.
They're just shackled to a government handout making them totally dependent on the government of the day's generosity or lack thereof.
Isn't a complex tax code a moral problem for the same reason? The other way to attack the problem would be to simplify tax codes more.
> all the "tax the rich" regulations in the end mean "tax those who cannot escape taxation"
I think they are usually talking about avoidance (legal), not evasion (illegal). while some avoidance schemes do toe the line of outright evasion, I (perhaps naively) don't believe ultra-rich people routinely employ illegal tax strategies.
personally, I'm okay with the fact that some people will inevitably break the law and not get caught, as long as it's not pervasive. if nothing else, they will have to live with the anxiety that the music might stop for them at any moment.
what I'm not okay with are the "tax the rich" initiatives that look good when condensed to a set of talking points, but in reality are just a tax hike for the upper-middle that will be easily (and fully legally) avoided by the wealthiest people. convince me you have a solution for that before you come for even more of the wages I actually work for.
Many EU states seem to get this very wrong.
I agree in principle, but reducing immigration and restricting free trade aren't policies that make the poor rich; they're policies that benefit those in possession of scarce resources at a cost to the rest of society.
Take steel tariffs for instance. They benefit the steelworkers, at the cost of every domestic industry that consumes steel. The entire economy pays to support an otherwise unprofitable industry.
Reducing immigration won't magically increase the supply of skilled workers. There aren't masses of unskilled poor who aren't going to college due to immigration putting downwards pressure on skilled wages. They aren't going to college because they lack the resources and opportunity.
By using a tax ladder [1] (tax rate increases in steps).
[1] https://en.wikipedia.org/wiki/Tax_ladder
Here's some ideas:
1. Tax stock buybacks similar to dividends. Or eliminate them entirely. This leads to...
2. Let unearned income tax brackets go up to the same % levels as earned income, only for different income levels. For example, if $400k in earned income is 38%, then maybe $2m in unearned income should also be 38%. Right now long term cap gains tops out at 15%, which is bullshit.
3. Since wealthy people borrow against their assets to spend, instead of selling assets and incurring taxes, place limits on interest deductions when doing this. There are already similar limits in place for mortgage interest deductions.
This seems like a false narrative to me.
For example, the policies Biden is putting forward tax household income at those above $400,000 annually and above, which is firmly in the 1%. This isn't your plumber or single babysitter.
In addition, they are discussing a minimum corporate tax rate and closing loopholes so that corporations and individuals can't pay 0% in income taxes, which is what many are paying now.
If the numbers at https://dqydj.com/average-median-top-household-income-percen... are correct, the "top 1%" household income threshold in the US in 2020 is $53lk. $400k is closer to the "top 2%" level.
More importantly, these numbers like "400k" tend to not be inflation adjusted (e.g. the cutoffs for the net investment tax and the additional medicare tax are not, cutoffs for phaseouts of the child tax credit are not, etc). And income percentiles grow faster than inflation. Looking at that same data table, it looks like the percentile boundaries grew 6%+ year over year from 2019 to 2020. If that's not a fluke caused by the pandemic in some way, then in 10 years you expect something like 1.79x growth in the cutoff numbers, which would put $400k at about the "top 8%" level at that point.
Is it possible that your idea of what level is "firmly in the 1%" is just a few years out of date?
Take the raw numbers. Yearly household income of $400,000 is not gong to affect the baby sitter or local contract plumber. I stand by my assertion that the OPs comment was attempting to distort the narrative.
Yes this may need to be adjusted for inflation down the road, like anything else.
I suspect that both of those claims are dubious, by the way. Someone with more wealth is in fact likely to employ more plumbers (due to having more toilets) and babysitters-per-child (full-time nannies, tutors, etc). And given how low-margin grocery stores are, I don't know that I'd expect a grocery shop owner to end up with $400k+ taxable income....
> Yes this may need to be adjusted for inflation down the road, like anything else.
My main point about the inflation bit is that it's disingenuous to introduce a new tax with a claim that it "does not affect the middle class" when you know with near-certainty that in 10 years or less it absolutely will. In fact you are banking on that to make the numbers you depend on actually work out.
Almost all proposals to "tax the rich" that do not come with automatic inflation adjustments built in are just proposals to tax the middle class in disguise.
He probably views it as an investment. Amazon has a keener interest than most in ensuring road maintenance is done properly and if that means a small increase to his tax bill he's probably ok with it.
He also desperately needs to score some progressive points. His reputation is getting trashed rn. I'm sure that factored in to his decision.
I'm skeptical of the notion that he wants this to keep competitors down.
Why wouldn’t he just advocate for road maintenance?
Edit: whoops, I didn’t read his actual statement. Tricked by CNN! Still, I’m a little skeptical of ascribing motivations to people like Bezos that aren’t in line with his past actions, but instead are in line with my personal politics, which is why I’m skeptical.
So, in practice, that's just lobbying to kill his competition off?
Chasing corporations out of the country in order to raise that to 7% doesn't seem like a good idea.
Would companies actually back out if this tax increase would somehow be coupled with a threat of blocking their business in the US? For sure they wouldn't.
In short: this is a stark example of a distracting puff piece that exists only to fool the public.
One possibility is that he sees it as an inevitability so he might as well support it and reap some goodwill with politicians. Another possibility is that infrastructure spending (which increased taxes would fund) benefits his business disproportionately. Another possibility is that this wouldn’t hurt Amazon much but would be the final blow for struggling small and medium size businesses that can’t compete with the juggernaut tech giants. Most likely it’ll take the form of Amazon avoiding taxes by (legally) claiming credits and deferrals where possible, while smaller businesses without the same massive capital, tax avoidance opportunities, and armies of accountants/lawyers will pay the new increased tax rates here and now.
What we really need is updated anti trust laws and stringent enforcement. Where companies can’t be split up easily due to products dependent on network effects, we should regulate them like a public utility. We need to ensure healthy competitive markets.
These loopholes, exemptions, "grants", etc need to be closed - THAT is fixing the problem - not increasing taxation for those that act honestly.
That said, why are corporations taxed less than individuals when they are otherwise considered a legal person (but with increased indemnity!)? Thats should be addressed too, IMHO.
Therefore are you advocating that no one person should be allowed to control a large company or own large houses?