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Thread: How the Swindlers of Silicon Valley Avoid Paying Taxes

  1. #1

    Default How the Swindlers of Silicon Valley Avoid Paying Taxes

    https://www.thenation.com/article/ho...-paying-taxes/

    By William Greider, OCTOBER 17, 2017


    A stunning view of South Shore Beach in Bermuda, a country with a GDP of only $5.5 billion, though Fortune 500 companies claimed, in the most recent year for which statistics are available, that they harvested a total of $104 billion in profits from the island nation.

    The sleeper issue in Donald Trump’s tax-cutting agenda is a potential bombshell called the “territorial tax system.” It doesn’t get the headlines, or even much political discussion, so the public is clueless. The industrial titans of Silicon Valley like it like that. Their proposal would fundamentally alter the taxation of US multinational corporations, and beneficiaries would include celebrated brand names like Google, Microsoft, and Apple.

    Those tech giants and other globalized companies have been after Congress for years to make the switch to “territorial.” But corporate execs are not making their campaign noisy, because their so-called “tax reform” would be a dead turkey if citizens understood the threatening implications.

    That seems unlikely. The big names of information technology are popular companies and, yes, global trade is complicated stuff, hard to explain in a few sentences. Scores of independent watchdogs—citizen organizations like Tax Analysts and Americans for Fair Taxation—are sounding the alarm and lobbying members of Congress. But it’s an uphill struggle, especially since the Democratic Party has not tried to alert voters and mobilize public opposition.

    In my experience, this is how American democracy frequently fails its promise. Politicians privately blame people for indifference; I mostly blame politicians for ducking their obligations. In my decades as a political reporter, I have found that people of ordinary intelligence can usually see through the corporate smoke and understand complex issues if the pols explain things with plainspoken clarity.

    Political parties used to be personal teachers, going door to door in neighborhoods, listening to gripes and opinions, plugging the party line and ticket. In modern politics, cynical candidates needn’t bother. They can parrot what the pollsters tell them people want to hear. I prefer politicians who tell people what they need to know.

    If the scheme is passed, American companies with operations dispersed globally would pay taxes only on the profits earned within US territory.
    So here are critical points about the “territorial” tax system people need to understand but corporate advocates won’t mention: If the scheme is passed, American companies with operations dispersed globally would pay US taxes only on the profits earned within the territory of the United States. In the current system, Washington attempts to tax multinationals on their worldwide earnings but fails miserably because the corporations have figured out fiendishly complicated ways to hide their profits in low-tax foreign countries. (That speaks to a separate but related item on the multinationals’ current wish list for tax reform: “forgiveness” for the roughly $600 billion in profits they would owe once they repatriate those profits, an issue I have addressed previously in this column.)

    At first glance, the territorial approach sounds vaguely patriotic—an “America first” approach to the taxation of US multinational corporations. In reality, this new system would be more like the “Get Out of Jail Free” cards in the game of Monopoly. The legislation would allow an ingenious scam, in which America’s celebrated high-tech champions would be rewarded for abandoning the mother country if they decide the price is right.

    The Institute on Taxation and Economic Policy (ITEP), a nonpartisan organization, has warned, “Corporations would have even greater incentives to engage in accounting gimmicks to make their U.S. profits appear to be earned in offshore tax havens such as Bermuda and the Cayman Islands, where corporate profits are not taxed.”

    The logic for companies is not complicated. Silicon Valley and other sectors like the drug industry are notorious for dodging US taxes. A basic technique involves assigning the supposed “ownership” of a company’s profit-making functions to affiliates in cooperating foreign nations. This works especially well for intangible assets like intellectual property—drug patents or hard-to-value high-tech innovations. The process reeks of fraud, but government enforcement has either been intimidated or overwhelmed by the volume of fictitious deals. The new territorial system does not in theory prohibit these fraudulent corporate arrangements with foreign countries; it merely ends Washington’s failed attempts to collect the taxes.

    “Corporations would have even greater incentives to engage in accounting gimmicks to make their U.S. profits appear to be earned in offshore tax havens.” —Institute on Taxation and Economic Policy

    The examples of US companies doing fraudulent deals or ignoring the rules are so numerous they seem like business as usual. Bermuda, for instance, has a GDP of only $5.5 billion, but Fortune 500 companies claimed, in the most recent year for which statistics are available, that they harvested a total of $104 billion in profits from Bermuda. The European Union’s antitrust commissioner accuses Apple of funneling $15.2 billion in profits from two Irish subsidiaries to an unnamed office that had “no employees, no premises, no real activities.” And the commissioner has accused Amazon of an illegitimate tax agreement with Luxembourg, ordering that country to collect $293 million in unpaid taxes from the American retailer.

    A 2017 policy paper from the Urban Institute, citing scholarly sources, traced the twists and turns of a single tax evasion without naming the company or its invention. Here’s how an American company hides its profits from the US tax collector:
    The essential English leadership secret does not depend on particular intelligence. Rather, it depends on a remarkably stupid thick-headedness. The English follow the principle that when one lies, one should lie big, and stick to it. They keep up their lies, even at the risk of looking ridiculous.



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  3. #2

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    Once Danke gets deported I can have him set me up an off shore office and launder my egg, bean & apple monies .

  4. #3

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    Quote Originally Posted by oyarde View Post
    Once Danke gets deported I can have him set me up an off shore office and launder my egg, bean & apple monies .
    Which part of $104 billion did you miss?
    The essential English leadership secret does not depend on particular intelligence. Rather, it depends on a remarkably stupid thick-headedness. The English follow the principle that when one lies, one should lie big, and stick to it. They keep up their lies, even at the risk of looking ridiculous.

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    Where are the tax shelters with the nicest beaches again?

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    Quote Originally Posted by The Northbreather View Post
    Where are the tax shelters with the nicest beaches again?
    Nice try, peasant.
    The essential English leadership secret does not depend on particular intelligence. Rather, it depends on a remarkably stupid thick-headedness. The English follow the principle that when one lies, one should lie big, and stick to it. They keep up their lies, even at the risk of looking ridiculous.

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    Quote Originally Posted by timosman View Post
    "The scheme if passed, American companies with operations dispersed globally would pay taxes only on the profits earned within US territory."
    And this is a bad thing?

  8. #7

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    Quote Originally Posted by Madison320 View Post
    And this is a bad thing?
    Most profits are shifted to subsidiaries in jurisdictions with lower taxes, e.g Double Irish - https://en.wikipedia.org/wiki/Double_Irish_arrangement
    The essential English leadership secret does not depend on particular intelligence. Rather, it depends on a remarkably stupid thick-headedness. The English follow the principle that when one lies, one should lie big, and stick to it. They keep up their lies, even at the risk of looking ridiculous.

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    Quote Originally Posted by timosman View Post
    Most profits are shifted to subsidiaries in jurisdictions with lower taxes, e.g Double Irish - https://en.wikipedia.org/wiki/Double_Irish_arrangement
    Without those tax shelters we'd have even more corporations leaving. I've got nothing against mom and pop stores but they don't make anything all that useful.

  10. #9

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    Quote Originally Posted by Madison320 View Post
    Without those tax shelters we'd have even more corporations leaving. I've got nothing against mom and pop stores but they don't make anything all that useful.
    My main problem is that it seems a lot of these people using those tax shelters also seem to be the ones supporting the policies that lead to bigger government, inflation and more taxes. Should they not also eat the $#@! others are forced to eat that they vote and support monetarily?

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    Quote Originally Posted by specsaregood View Post
    My main problem is that it seems a lot of these people using those tax shelters also seem to be the ones supporting the policies that lead to bigger government, inflation and more taxes. Should they not also eat the $#@! others are forced to eat that they vote and support monetarily?
    I think most business owners just want to be left alone. I think we've been taught our whole life, by government schools, the media, and vote buying politicians that the rich secretly control everything and we need to "get even." But if the rich control things they sure are doing a crappy job for themselves, if you had control why would you enact progressive taxation? Or minimum wage laws? Or discrimination laws? Antitrust laws? If I was rich I'd be looking to eliminate those laws not make them worse.

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    Quote Originally Posted by timosman View Post
    Most profits are shifted to subsidiaries in jurisdictions with lower taxes, e.g Double Irish - https://en.wikipedia.org/wiki/Double_Irish_arrangement
    Right. And it is a good thing. Tax competition forces tax rates down.

    Having a low rate flat tax is the only way to prevent shifting income to other jurisdictions.

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    Quote Originally Posted by Krugminator2 View Post
    Right. And it is a good thing. Tax competition forces tax rates down.

    Having a low rate flat tax is the only way to prevent shifting income to other jurisdictions.
    So how do you move your ass to a different jurisdiction to avoid being taxed like crazy?
    The essential English leadership secret does not depend on particular intelligence. Rather, it depends on a remarkably stupid thick-headedness. The English follow the principle that when one lies, one should lie big, and stick to it. They keep up their lies, even at the risk of looking ridiculous.

  14. #13

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    Quote Originally Posted by Madison320 View Post
    I think most business owners just want to be left alone. I think we've been taught our whole life, by government schools, the media, and vote buying politicians that the rich secretly control everything and we need to "get even." But if the rich control things they sure are doing a crappy job for themselves, if you had control why would you enact progressive taxation? Or minimum wage laws? Or discrimination laws? Antitrust laws? If I was rich I'd be looking to eliminate those laws not make them worse.
    Why? Because they like the public image of looking like they are for "equality" and paying taxes, but like to keep the loopholes so they can do just what this article talks about in private.

  15. #14

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    Smoke and Mirrors
    1. American Companies
    2. American CEO's
    Sign up, Log in:
    http://forums.officer.com/
    Surviving
    http://www.themodernsurvivalist.com/

    Does the fucking victim have family? Why does the precinct still exist?

  16. #15

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    I support anyone who avoids paying taxes any way possible.

  17. #16

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    Quote Originally Posted by The Gold Standard View Post
    I support anyone who avoids paying taxes any way possible.
    Even those who also preach the gospel of muh roads?
    The essential English leadership secret does not depend on particular intelligence. Rather, it depends on a remarkably stupid thick-headedness. The English follow the principle that when one lies, one should lie big, and stick to it. They keep up their lies, even at the risk of looking ridiculous.

  18. #17

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    Quote Originally Posted by specsaregood View Post
    Why? Because they like the public image of looking like they are for "equality" and paying taxes, but like to keep the loopholes so they can do just what this article talks about in private.
    If corporations have it so good, why are they moving offshore or shutting down? I don't care how you slice it the most productive pay the most taxes and at the highest rate. It should be the same rate for everyone. We shouldn't have special laws targeting minority groups that are outvoted. I think it's by far the biggest problem in this country (and most countries). It's called socialism by the way and it bothers me that most people on this forum support it. At least when it comes to the most productive they support socialism, when it's their tax bracket than hey, we need capitalism!

    The corporate rate should be zero. All the employees and shareholders are already taxed.

    Quotes from Ayn Rand:

    "America’s industrial progress, in the short span of a century and a half, has acquired the character of a legend: it has never been equaled anywhere on earth, in any period of history. The American businessmen, as a class, have demonstrated the greatest productive genius and the most spectacular achievements ever recorded in the economic history of mankind. What reward did they receive from our culture and its intellectuals? The position of a hated, persecuted minority. The position of a scapegoat for the evils of the bureaucrats."

    "If a small group of men were always regarded as guilty, in any clash with any other group, regardless of the issues or circumstances involved, would you call it persecution? If this group were always made to pay for the sins, errors, or failures of any other group, would you call that persecution? If this group had to live under a silent reign of terror, under special laws, from which all other people were immune, laws which the accused could not grasp or define in advance and which the accuser could interpret in any way he pleased—would you call that persecution? If this group were penalized, not for its faults, but for its virtues, not for its incompetence, but for its ability, not for its failures, but for its achievements, and the greater the achievement, the greater the penalty—would you call that persecution?

    If your answer is “yes”—then ask yourself what sort of monstrous injustice you are condoning, supporting, or perpetrating. That group is the American businessmen . . .

    Every ugly, brutal aspect of injustice toward racial or religious minorities is being practiced toward businessmen.. . . Every movement that seeks to enslave a country, every dictatorship or potential dictatorship, needs some minority group as a scapegoat which it can blame for the nation’s troubles and use as a justification of its own demands for dictatorial powers. In Soviet Russia, the scapegoat was the bourgeoisie; in Nazi Germany, it was the Jewish people; in America, it is the businessmen."


    "The legal treatment accorded to actual criminals is much superior to that accorded to businessmen. The criminal’s rights are protected by objective laws, objective procedures, objective rules of evidence. A criminal is presumed to be innocent until he is proved guilty. Only businessmen—the producers, the providers, the supporters, the Atlases who carry our whole economy on their shoulders—are regarded as guilty by nature and are required to prove their innocence, without any definable criteria of innocence or proof, and are left at the mercy of the whim, the favor, or the malice of any publicity-seeking politician, any scheming statist, any envious mediocrity who might chance to work his way into a bureaucratic job and who feels a yen to do some trust-busting."


    "Businessmen are the one group that distinguishes capitalism and the American way of life from the totalitarian statism that is swallowing the rest of the world. All the other social groups—workers, farmers, professional men, scientists, soldiers—exist under dictatorships, even though they exist in chains, in terror, in misery, and in progressive self-destruction. But there is no such group as businessmen under a dictatorship. Their place is taken by armed thugs: by bureaucrats and commissars. Businessmen are the symbol of a free society—the symbol of America. If and when they perish, civilization will perish. But if you wish to fight for freedom, you must begin by fighting for its unrewarded, unrecognized, unacknowledged, yet best representatives—the American businessmen."

  19. #18

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    Quote Originally Posted by timosman View Post
    Even those who also preach the gospel of muh roads?
    I don't care what they preach. The fewer people paying, the better.

  20. #19

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    Quote Originally Posted by Krugminator2 View Post
    Right. And it is a good thing. Tax competition forces tax rates down.

    Having a low rate flat tax is the only way to prevent shifting income to other jurisdictions.
    Thank you. The class envy warriors are really annoying me lately.

    Several years ago I heard someone talking about a meeting he had with other business owners in Brazil. In Brazil it's almost impossible for large businesses to exist. Ironically, small family businesses are almost unregulated. Anyone can put a table outside their home and start serving customers food for example. In the US, small businesses are more heavily regulated but luckily large corporations are less regulated than Brazil. That's why our standard of living is much higher. Without large business we'll end up as a third world country.

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    The mistake america made on corporate tax is they should never have had one higher than the lowest . If lowest available was 10 percent you would want to be at 9 .

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    Quote Originally Posted by Krugminator2 View Post
    Right. And it is a good thing. Tax competition forces tax rates down.

    Having a low rate flat tax is the only way to prevent shifting income to other jurisdictions.
    Yep, good for Bermuda and Caymen. Maybe the US will wake up and drop its rates.
    - SUPPORT FREE TRADE, SMUGGLE -

    2 + 2 = 5.

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    Quote Originally Posted by Pauls' Revere View Post
    Yep, good for Bermuda and Caymen. Maybe the US will wake up and drop its rates.
    Yes. Thank you. Maybe if we had a low rate corporations wouldn't need to find tax shelters.

    Actually I think the corporate rate should be zero. If we're going to have an income tax it should be one low rate for everyone. Corporate dividends would be taxed at the flat rate.






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