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Facebook Paid 0.3% Taxes On $1.34 Billion Profits

Soulskill posted about a year and a half ago | from the all-about-the-benjamins dept.

Facebook 592

theodp writes "Facebook is unlikely to make many new (non-investor) friends with reports that it paid Irish taxes of about $4.64 million on its entire non-U.S. profits of $1.344 billion for 2011. 'Facebook operates a second subsidiary that is incorporated in Ireland but controlled in the Cayman Islands,' Kenneth Thomas explains. 'This subsidiary owns Facebook Ireland, but the setup allows the two companies to be considered as one for U.S. tax purposes, but separate for Irish tax purposes. The Caymans-operated subsidiary owns the rights to use Facebook's intellectual property outside the U.S., for which Facebook Ireland pays hefty royalties to use. This lets Facebook Ireland transfer the profits from low-tax Ireland to no-tax Cayman Islands.' In 2008, Facebook COO Sheryl Sandberg cited 'local world-class talent' as the motivation behind Facebook's choice of tax-haven Dublin for its international HQ. Similar tax moves by Google, Microsoft, and others who have sought the luck-of-the-Double-Irish present quite a dilemma for tax revenue-seeking governments. Invoking Supreme Court Justice Potter Stewart's famous common sense definition of ethics ('Ethics is knowing the difference between what you have a right to do and what is right to do') is unlikely to sway corporations whose top execs send the message that tax avoidance is the right thing to do and something to be proud of."

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592 comments

Tax avoidance (-1, Flamebait)

XanC (644172) | about a year and a half ago | (#42414373)

Tax avoidance IS the right thing to do and something to be proud of.

Re:Tax avoidance (-1, Offtopic)

logjon (1411219) | about a year and a half ago | (#42414405)

Why is this modded "flamebait?"

Re:Tax avoidance (5, Insightful)

SerpentMage (13390) | about a year and a half ago | (#42414459)

Because it is flamebait! Some folks have this fantasy that you can get everything for nothing. Things cost money! As I was writing to the GP, sure we can argue about a bloated government. But to argue that tax avoidance is a good thing is not correct either.

Police, military, firemen, judges, etc, etc all cost money. Adam Smith who was a capitalist wrote in his papers that government and taxes were needed. The question is how much government, not whether or not government there is a government.

Re:Tax avoidance (2, Insightful)

fche (36607) | about a year and a half ago | (#42414521)

"Some folks have this fantasy that you can get everything for nothing."

Some folks wish they got a lot less from government.
Some folks have this fantasy that they are entitled to someone else's money.

Re:Tax avoidance (2)

SerpentMage (13390) | about a year and a half ago | (#42414537)

You are raising an argument that does not exist. I wrote very clearly we can argue about a bloated government, but not about taxes. You are saying that I somehow want people to pay high taxes for other people. I did not make this point and thus please stick to the argument.

Re:Tax avoidance (2, Interesting)

Anonymous Coward | about a year and a half ago | (#42414599)

You are raising an argument that does not exist. I wrote very clearly we can argue about a bloated government, but not about taxes. You are saying that I somehow want people to pay high taxes for other people. I did not make this point and thus please stick to the argument.

Facebook paying no taxes is the kind of crap you get when you get a large powerful government that makes it worthwhile for entities with a lot of money to bribe, err, lobby that government to make rules favorable to them.

Don't like it?

Quit voting for candidates who want more and bigger government.

THAT'S the root cause of the problem.

Re:Tax avoidance (1, Insightful)

Pluvius (734915) | about a year and a half ago | (#42414663)

And if there wasn't a large and powerful government, then corporations would suddenly have no power over the system? How does that work?

Rob

Re:Tax avoidance (4, Insightful)

Goose In Orbit (199293) | about a year and a half ago | (#42414683)

The problem isn't "more" or "bigger" government - but having a government that has the balls to stand up and say "pay your fair share"

Unfortunately - here in the UK we have the same problem... the people pay more while the corporations pay next-to-nothing

Re:Tax avoidance (0)

Anonymous Coward | about a year and a half ago | (#42414723)

Facebook paying no taxes is the kind of crap you get when you get a large powerful government that makes it worthwhile for entities with a lot of money to bribe, err, lobby that government to make rules favorable to them.

Don't like it?

Quit voting for candidates who want more and bigger government.

THAT'S the root cause of the problem.

No, that's what happens with free speech and a congress that is allowed to raise funds via taxes. Don't like it? Then don't vote for candidates who support democracy.

Re:Tax avoidance:....root cause... (0)

Anonymous Coward | about a year and a half ago | (#42414803)

The term you use "Big government" is really meaningless, double-speak, Orwellian language. As an example 15-years ago there were far more government employees than there are know and the national debt was about 3-trillion dollars, yet now in 2012 after all the out-sourcing, and privatizations the national debt is approaching 16-trillion. So your argument is what? exactly, just pure double-speak.

Re:Tax avoidance (5, Insightful)

man_of_mr_e (217855) | about a year and a half ago | (#42414601)

I get it. You don't like paying for lazy people. Fair point, neither do I.

But what happens if you stop welfare? Crime rates go through the roof. People that can't eat get desperate and start doing things they'd never do otherwise. Poor people won't just starve and go away, they WILL rise up and take a lot more from you.

People are only complacent when they have something to lose. If you give them a little something to lose, then you can control them better. Create a society of have's and have not's and eventually the have's are all destroyed by the have not's.. It's happened throughout history, and apparently people don't learn from it.

Re:Tax avoidance (0)

Anonymous Coward | about a year and a half ago | (#42414649)

>But what happens if you stop welfare? Crime rates go through the roof.

Do you have a few historical examples of this?

Re:Tax avoidance (0)

Anonymous Coward | about a year and a half ago | (#42414741)

The cost of policing, prosecution, and of imprisonment is astronomically higher than the cost of welfare.

Equally the harsher the penalties become, the more resentful the friends and family become.

I have always considered it ironic that the far right who are for user pays always stop at law and order, why ?
The crime was not committed against me, I did not ask for expensive imprisonment.
Perhaps when crime and punishment also become user pays they will start seeing that there are better ways.

Re:Tax avoidance (0)

Anonymous Coward | about a year and a half ago | (#42414677)

Yes, some folks wish they got a lot less, because it gets in their way from screwing other people.

And yes, some folks do have the fantasy that they are entitled to a lot of what someone else has, whether it be their money, their time, or their life.

Ain't discussion of vague and non-particular things helpful? No reason to even see the other side, just stand by your empty rhetorical assertions.

Re:Tax avoidance (0)

Anonymous Coward | about a year and a half ago | (#42414767)

Some folks have this fantasy that they are entitled to someone else's money.

Sure. Please stop paying taxes. But then please do not expect cops, firefighters, public schools, roads, bridges, social security (yes, it is a tax too) etc to be available for you.

But of course you are nothing but a selfish prick, and that is what is wrong with this world. Excuse me. "most of this world, especially USA..." Coz some countries doesn't have a problem with it [Scandinavia] and seem to do alright...

Re:Tax avoidance (2)

KiloByte (825081) | about a year and a half ago | (#42414525)

A vast majority of tax money, though, goes either to waste or to things that are outright harmful for the taxpayer. And even for police and judges, a big part is spent gathering the driving without disrupting traffic flow tax, and to patent/etc litigation, respectively.

Re:Tax avoidance (2)

SerpentMage (13390) | about a year and a half ago | (#42414573)

Yeah, and? I wrote clearly, we can argue about the bloat, not about the argument of paying taxes. Vast amount of money goes to things that are harmful? Please check the budget of governments. The stuff you mention is peanuts compared to what really sucks up the cash. It is things like military (depends on the country), and pension benefits (most countries). Unemployment, etc do not suck up much cash. Those are just populist arguments as people and politicians want to keep things the way that they are.

Re:Tax avoidance (2)

Attila Dimedici (1036002) | about a year and a half ago | (#42414645)

When government spending is at a level where the bulk of it is for things that the overwhelming majority agree are important things for the government to do, then you would be correct that tax avoidance is wrong. However, the world we currently live in has few if any countries where the overwhelming majority agree that the bulk of government spending is on important things for the government to spend money on. There may be disagreement as to what the important things are, and you might not be able to get a majority to agree to cut any one thing (although I am pretty sure that if Congress were to start passing spending bills that each contained only one thing, the budget would drop in size overnight--not just because they would never have time to pass all of the bills).

Re:Tax avoidance (1)

TigerTime (626140) | about a year and a half ago | (#42414653)

As an individual or a business, you are supposed to look for ways to pay the least amount of taxes. That's life and there's nothing really wrong with that. If someone didn't look for ways to get as many deductions as possible on their tax return, you'd wonder if they were mental and just enjoyed paying a higher rate. The same applies for businesses. The government so far has said that there is nothing wrong with what they are doing.

The core problem here is with these loopholes. The tax system is a constantly changing cat/mouse game of people/companies finding loopholes and the government closing them. The REAL question is why hasn't this enormous loophole been closed yet?

Re:Tax avoidance (0)

Anonymous Coward | about a year and a half ago | (#42414777)

If someone didn't look for ways to get as many deductions as possible on their tax return, you'd wonder if they were mental and just enjoyed paying a higher rate?

You mean like this: http://abcnews.go.com/Politics/OTUS/romney-paid-required-raising-tax-rate-141-percent/story?id=17291504#.UN4jLHc5dLk [go.com]

Re:Tax avoidance (0)

Anonymous Coward | about a year and a half ago | (#42414701)

Yes, those things do cost money. Too bad I don't support all of them. Firemen, sure, we need them. The rest, not really.

Re:Tax avoidance (1)

K. S. Kyosuke (729550) | about a year and a half ago | (#42414703)

Police, military, firemen, judges, etc, etc all cost money.

Well, when a fire erupts at the Facebook HQ, simply don't send the firemen when Facebook calls and tell them to contract a private firefighting company. They will have the fire put down by that company and will simply pay an invoice for the services rendered. :-)

Re:Tax avoidance (0)

Anonymous Coward | about a year and a half ago | (#42414411)

lol

Re:Tax avoidance (5, Informative)

SerpentMage (13390) | about a year and a half ago | (#42414425)

Oh so you would like to pay for the police, the firemen, the roads, and everything else? We can argue about a bloated government, no doubt. But to argue that we should pay zero taxes make NO SENSE WHATSOEVER.

For if we don't pay taxes you better be prepared to pay Vinny down the street a bit of money to make sure that you don't get mugged, robbed, or killed.

Simply put, you sir are a nutter! Even Adam Smith knew we had to have a government and had to pay taxes!

Re:Tax avoidance (0)

Anonymous Coward | about a year and a half ago | (#42414577)

Fuck roads. We need to get rid of most of our cities and return them to a natural environment. Use trains for long distance travel.

Re:Tax avoidance (1)

Your.Master (1088569) | about a year and a half ago | (#42414775)

Short distance travel, even without motor vehicles, is facilitated by roads too. Just ask the Romans.

(do you live in some place that is perfectly flat for hundreds of kilometres?)

Re:Tax avoidance (1)

Vaphell (1489021) | about a year and a half ago | (#42414607)

where the police are obliged to protect your personal property and your life

http://en.wikipedia.org/wiki/Warren_v._District_of_Columbia [wikipedia.org]

where we have a military that enforces our economic interests

did you just advocate colonialism 2.0?

Re:Tax avoidance (1)

Vaphell (1489021) | about a year and a half ago | (#42414625)

sorry, meant to reply to another post

Re:Tax avoidance (1)

Synerg1y (2169962) | about a year and a half ago | (#42414609)

The way this country was set up is if you're about to get mugged, robbed, or killed, you invoke your gun holding right and use it. This has been warped beyond recognition, but... if you've ever called the cops to come help you / do something for you that doesn't involve them harassing you... you're better off keeping your dollars and buying the gun.

On another note, I think the state fixes most of the roads, so cali would benefit from taxing facebook / MS / etc... the most there.

I'm sure the pro's of having the tech giants on shore with minimal taxes outweighs them moving most of their assets away as they're all about profits and stock holders. It would benefit us to see them pay more taxes, but it's a tough battle to win.

Re:Tax avoidance (5, Informative)

bmo (77928) | about a year and a half ago | (#42414429)

You live in a complex society where the police are obliged to protect your personal property and your life, where food is not full of melamine, where we have a military that enforces our economic interests, where roads improve the flow of goods and services.

Pay for it.

--
BMO

Re:Tax avoidance (0)

Anonymous Coward | about a year and a half ago | (#42414499)

Then have the military invade Cayman Islands, Ireland, and get back the said-to-be due money.

Re:Tax avoidance (1)

Richy_T (111409) | about a year and a half ago | (#42414505)

Good luck with the police thing.

Re:Tax avoidance (3, Insightful)

gewalker (57809) | about a year and a half ago | (#42414591)

It is a fact of law in the US that the police are not required to protect you or your property (at least in most jurisdictions).

In its landmark decision of DeShaney v. Winnebago County Department of Social Services,” Stevens writes, “the U.S. Supreme Court declared that the Constitution does not impose a duty on the state and local governments to protect the citizens from criminal harm.

In Warren v. District of Columbia, it is a "fundamental principle of American law that a government and its agents are under no general duty to provide public services, such as police protection, to any individual citizen."

In Castle Rock v. Gonzales, "the police have no duty under federal law to protect the citizens."

There are other cases that more or less have the same result.

When seconds matter, the police are only minutes away. Maybe.

Re:Tax avoidance (1)

retchdog (1319261) | about a year and a half ago | (#42414713)

so... in the castle rock v. gonzales case, we have the supreme court taking a federalist position (can't sue a town under a federal statute), which is something libertarians generally like (smaller government and laboratory of the states and all that). at the same time, you're using that case to argue that public services are ineffective, because they aren't enforced at the federal level.

which one is it going to be, then? you can't have it both ways. (well, actually you can, but only because no one stops to think about it.)

there's nothing stopping the individual states from, you know, requiring a duty of their police to provide public services to individual citizens. the warren v. district of columbia case was, unsurprisingly, restricted to the district of columbia, which is infamously fucked up anyway. any state, and d.c., could trivially legislate a greater duty to its police. but of course that would cost money, and the libertarians would crow on and on about how we should instead have private security for rich people.

Re:Tax avoidance (1)

Vaphell (1489021) | about a year and a half ago | (#42414619)

where the police are obliged to protect your personal property and your life

http://en.wikipedia.org/wiki/Warren_v._District_of_Columbia [wikipedia.org]

where we have a military that enforces our economic interests

did you just advocate colonialism 2.0?

Re:Tax avoidance (2)

bmo (77928) | about a year and a half ago | (#42414697)

>did you just advocate colonialism 2.0?

We've already had it ever since the end of WWII.

What the fuck do you think the military is /for/?

--
BMO

Re:Tax avoidance (0)

Anonymous Coward | about a year and a half ago | (#42414671)

>You live in a complex society where the police are obliged to protect your personal property and your life, where food is not full of melamine, where we have a military that enforces our economic interests, where roads improve the flow of goods and services.

I don't want the police being the useless waste of money they are. I want to pay for better police with my own money.

I want to have whatever food I wish rather than the listeria ridden shit the government pedals as just fine until someone finally has a freakout.

And I don't believe in the military.

Can I have a refund? Will you even let me leave the country? Stop holding me prisoner for pay for it.

Re:Tax avoidance (1)

rroman (2627559) | about a year and a half ago | (#42414725)

When talking about income taxes, yes, you are member of the society, you benefit from such things, you should pay taxes. Companies, however, don't benefit from army, from healthcare and from any other things that society provides. In fact, when nobody uses the company, the company ceases to exist. Taxing the companies only forces the companies to spend every year the most so they don't have to pay such high taxes. For me, it is not bad if for example Microsoft holds great untaxed amount of cash this year and invests it the next year or the year after. The company is already punished for not spending their money by inflation, the income tax is just bad tool and shouldn't be used.

Re:Tax avoidance (1)

bmo (77928) | about a year and a half ago | (#42414759)

>Companies, however, don't benefit from army

Bullshit.

It's like the Banana Wars never existed, eh?

--
BMO

Re:Tax avoidance (0)

Anonymous Coward | about a year and a half ago | (#42414435)

considering how asinine taxes have become, I can't blame them either.

Taxes need to be reigned in to saner rates for the good of everyone.

Re:Tax avoidance (0)

Synerg1y (2169962) | about a year and a half ago | (#42414641)

First, the social security bubble needs to be solved, no more retirees getting 300k/y off the rest of us. The other big spender is the military and that's a little more complicated as historically you want the best military on your side, the dollar is just about worthless without it.

Re:Tax avoidance (1)

jedidiah (1196) | about a year and a half ago | (#42414733)

300K per year?

Have you ever actually seen an annual social security statement?

I suspect not.

Re:Tax avoidance (0)

Anonymous Coward | about a year and a half ago | (#42414439)

That's okay, peon weasels like you are just gonna have to pay more.

Re:Tax avoidance (2, Insightful)

Nadaka (224565) | about a year and a half ago | (#42414445)

Tax avoidance impoverishes the job creators in order to transfer wealth to the leaching class.

Job creators being the working people who actually create wealth through their labor, and consume goods to drive the capitalist system.

Leaching class being the plutocrats who do nothing but extort and siphon off the labor of others.

These aren't the rich you are looking for... (0)

Anonymous Coward | about a year and a half ago | (#42414453)

Yeah, let's tax the wealthy people in the US making more than $125/$250k because they are the problem. In fact, please post more information about that top 1% causing the problem on Facebook using your iPhone again...

The rich aren't the problem, these guys are the problem. If they want to do business in the US, they should be required to pay US tax rates for all income in the US. Period.

Re:These aren't the rich you are looking for... (2)

SerpentMage (13390) | about a year and a half ago | (#42414519)

THANK-YOU!!! I used to work a hedge fund and talked to a guy who lived in Monaco and worked on tax avoidance schemes. He was not happy about the idea, but liked the work because it paid well. The issue here is that governments have to clamping down on this royalty kickback scheme.

It is a really bogus idea. Here is how it works. You have a company, it does not matter what kind of company. This company produces a widget and sells it across the world. You open a subsidiary, and that subsidiary sells your widget. The subsidiary has to pay something for the widget. In the old days it was costs of subsidiary, and wholesale of the widget. Now its, wholesale of the widget, plus a royalty.

The royalty is the kicker here. For it is a nebulous value that the company can define to be any feather I pull out of my arse. In most cases it basically eats all of the profits generated everywhere.

Trying to get rid of this is hard for you would be circumventing tax law where you really need to be able to not be taxed on foreign income. What needs altering is the concept of royalty and the governments have to say, "royalty, see this middle finger, that is your royalty."

Re:Tax avoidance (0)

Anonymous Coward | about a year and a half ago | (#42414455)

You're right, actually. If the possibility is there, the smart thing is to take advantage of it. What's wrong is the tax system, not taking advantage of it.

Re:Tax avoidance (5, Insightful)

sqrt(2) (786011) | about a year and a half ago | (#42414491)

I like to pay taxes, with them I buy civilization.

That a lot of deluded "rugged individualists" falsely think they are entirely self-made and have no obligation to pay back into society amuses me. Seeing them frustrated and resentful at paying taxes makes me smile.

Re:Tax avoidance (-1)

Anonymous Coward | about a year and a half ago | (#42414527)

Sick of you collectivist apes thinking you're justified in ganging up on everyone else. You people are a cancer on the planet and why we're going extinct.

Re:Tax avoidance (2)

jedidiah (1196) | about a year and a half ago | (#42414737)

Even a libertarian can acknowledge the fact that you don't want Crassus Maximus as your fire chief.

Re:Tax avoidance (1)

Mr. Underbridge (666784) | about a year and a half ago | (#42414709)

I think most of the disagreement depends on the definition of "society". Binning coarsely, we have group A who wants a libertarian anarchy. Group B wants to pay for shared infrastructure, but not the welfare state. Group C wants a social democracy with a variety of personal, non-infrastructure services guaranteed as rights. Lines blur of course, but that's the general idea.

Choose your own definition of society. I'm not sure exactly who you mean with your comments - I agree with you on the group A nuts who think that private enterprise will develop useful markets, electrical grids, roads, etc. However, I agree with those who dearly want to pay for infrastructure, but don't want to have to pay everybody's personal bills as the cover charge into "society".

Re:Tax avoidance (1)

SolitaryMan (538416) | about a year and a half ago | (#42414587)

Only if you are a corporation. If you are an individual, you must support our troops.

People will say their duty is to shareholders... (3, Insightful)

KrazyDave (2559307) | about a year and a half ago | (#42414403)

but they're still actual human beings - not a faceless entity - who make the decisions and understand the ramifications, so they and all of the other corporations (and individuals) who seek tax havens are essentially privateers and definitely scumbags.

Luckily individual citizens don't do this. (0)

Anonymous Coward | about a year and a half ago | (#42414421)

Thats why Obama raising taxes on those that make 5 times more than the average citizen will solve all of our fiscal problems.

In a simmilar way that his credit card legislation didn't result in banks raising fees and interest rates to recoup lost profits.

Re:Luckily individual citizens don't do this. (0)

Anonymous Coward | about a year and a half ago | (#42414539)

Indeed, you can't just say "Do the right thing" but have to sometimes tell the Marines to go kick in some doors and shoot some Limey bastards in the head.

If Obama were half the tyrant that certain right-wing pundits make him out to be, he'd be doing some of the hard stuff rather than just pretending.

It's not like they're going to come up with any worse criticisms. Might as well implement Agenda 10.5.

Re:Luckily individual citizens don't do this. (1)

Jeng (926980) | about a year and a half ago | (#42414561)

In a simmilar way that his credit card legislation didn't result in banks raising fees and interest rates to recoup lost profits.

They didn't have to raise their fees, they raised their fees because they had an excuse to. If they thought they could charge more before that happened they would have charged more. Just because someone gives a reason as to why they are screwing you over that reason shouldn't be believed, but it should be acknowledged that you are being screwed over.

Re:Luckily individual citizens don't do this. (-1)

Anonymous Coward | about a year and a half ago | (#42414711)

Just because someone gives a reason as to why they are screwing you over that reason shouldn't be believed, but it should be acknowledged that you are being screwed over.

New legislation might change the position or orifice they are screwing you in but it won't stop the rape. They will screw you the maximum amount they can and still remain competitive. Obama's concept of redistitribution of wealth and fair share simply promotes political theater and the concept that we still have a control over our government.

Simple solution, more government! (2, Informative)

haystor (102186) | about a year and a half ago | (#42414437)

Government makes stupid laws.
Companies follow those laws.
This is the fault of the companies and requires more government.

FB tax avoidance (2)

BancheroMedia (2804181) | about a year and a half ago | (#42414443)

Tax avoidance is good business. But I would also want to make sure that USA companies don't totally offshore their revenues ... and jobs. This is why we need tax reform.

Re:FB tax avoidance (3, Informative)

hguorbray (967940) | about a year and a half ago | (#42414611)

If they are making money off US citizens who are in the US then it seems they should be paying US taxes, but I bet the line is blurred when they are selling 'services' such as allowing marketers access to FB users...

Certainly when HP sells products overseas they are required by many of the countries in which they sell products to keep the bulk of the revenue for those products inside that country -it seems odd that US companies are allowed to get away with this in the US when they are not allowed to do this elsewhere?

Here is something I found in the way of background -although the source is somewhat disreputable ;-)

http://www.goldmansachs.com/our-thinking/topics/accounting-policy/tax-time-foreign-profits-PDF.pdf

I guess one of the big differences is that most other countries use the 'Territorial' tax system in which the home country's taxation of foreign profits is only the difference between the foreign tax rate and the local one -afaiu

Can someone without an axe to grind as far as laissez faire capitalism, etc explain how this works?

thx

Re:FB tax avoidance (0)

Anonymous Coward | about a year and a half ago | (#42414685)

Real tax reform would be abolition of 99.4% of the IRS and the current unwieldy tax code. Crunch the tax code down to 10 or so pages (max) and watch compliance go through the roof if terms are reasonable. Bonus: less overhead from tens of thousands of useless highly paid IRS workers & mindless audits means businesses can focus more on productivity and driving this economy out of the rut this ginormous gov't has driven it into.

The solution to offshoring profits to tax havens (5, Interesting)

swb (14022) | about a year and a half ago | (#42414461)

...is to pass a law which states that the government will not provide material support or assistance to companies who offshore their profits.

Your container ship full of product headed to Europe gets hijacked by Somali pirates? Well, you can either ask the Liberian government (your ship's flag of convenience) or the Cayman Islands government (your international HQ) to help rescue your ship.

Website breached or attacked? The FBI isn't going to help.

The Chinese pirating your IP out the back door? Sorry, the State Department won't be lobbying China on your behalf.

You want a real government's help? OK, well then you have to pay taxes to the real government. Having a shiny sign on some skyscraper where 1% of your workforce lives, 50% of your profit is generated and nearly none of your income tax is paid means you're really not a local entity and won't get the government on your side.

Re:The solution to offshoring profits to tax haven (0)

mumblestheclown (569987) | about a year and a half ago | (#42414503)

naive.

Re:The solution to offshoring profits to tax haven (1)

ohnocitizen (1951674) | about a year and a half ago | (#42414517)

How about we just close the loopholes? If you have a US based company that is clearly operating a subsidiary, that subsidiary (even foreign) will be subject to US taxation. Far simpler strategy.

Re:The solution to offshoring profits to tax haven (2)

Attila Dimedici (1036002) | about a year and a half ago | (#42414675)

Sure, that will go over well...right after the country that subsidiary is located in agrees to stop taxing it. Of course, if you pass that law and get other countries to agree to not tax the subsidiaries, pretty soon the "parent" company will be based in a no-tax country.

Re:The solution to offshoring profits to tax haven (0)

Anonymous Coward | about a year and a half ago | (#42414571)

That would be a wonderful idea, highly likely to backfire.

After all, lobbying the US is expensive by comparison.

Re:The solution to offshoring profits to tax haven (0)

Anonymous Coward | about a year and a half ago | (#42414615)

I bet that all those companies are already paying their fair share of money to the government, senate, congress and many other agencies, but not with taxes. A win win situation for all the parties involved, not for common people who have to make up for the difference with higher taxes.

Re:The solution to offshoring profits to tax haven (0)

Anonymous Coward | about a year and a half ago | (#42414643)

How about we just start requiring executives to pony up the difference in taxes. Company should've paid 100mil in taxes, but used loopholes to only pay 15? Make the executives and board members cough up 85mil.

Re:The solution to offshoring profits to tax haven (1)

Xarvh (1244438) | about a year and a half ago | (#42414659)

This assumes that the govt officials are not in the corporation's pockets and have the taxpayers best interests at heart.
Are you that naive?

Re:The solution to offshoring profits to tax haven (0)

Anonymous Coward | about a year and a half ago | (#42414691)

Yeah, because shiploads of FaceBook profiles are being shipped across the Indian Ocean all the time.

It might make more sense if the government levied a special tax on assets of corporations held on our territory. FaceBook's likely response would be to move their HQ from Palo Alto to some island. They might not get all their employees to move with them; but they'd get enough.

The government doen't have too much leverage here except to exert pressure on the other government that are leading the race to the bottom. First diplomacy, then gun boats.

Maybe your tax laws ought to be adjusted (4, Insightful)

holophrastic (221104) | about a year and a half ago | (#42414473)

Seems logical to me. Ireland is happy to get 4 million that they wouldn't otherwise get at all. Ireland's simply undercutting other governments. Makes sense.

But if you want to collect tax dollars from companies that operate in the .U.S.A., you might want to assess their global revenues, period. Global companies paying global rates makes perfect sense.

Otherwise, you're looking at a future without tax revenue. Good luck with that. Let me know how it goes.

On the other hand, you can look at this as simple capitalism. Ireland made a better offer. You lost. Suck it up, or learn to compete.

Either way, don't bring ethics into it. You're talking about taking someone's money for "the greater good". And you're forcing them to participate. If you're going to discuss ethics, you might want to start with your own.

Re:Maybe your tax laws ought to be adjusted (2)

BitterOak (537666) | about a year and a half ago | (#42414559)

But if you want to collect tax dollars from companies that operate in the .U.S.A., you might want to assess their global revenues, period. Global companies paying global rates makes perfect sense.

Problem is, many of the large companies that operate in the U.S.A. operate in many countries. If all of them followed the same policy and taxed global revenues, the total tax rates they'd have to pay would exceed 100% pretty rapidly.

Additionally, such a policy would make it extremely unattractive to operate in the U.S. at all. So Facebook, Google, etc., would simply close their U.S. campuses and move them into Canada. The U.S. would not only lose the employment those companies provide, but also the income tax revenues from the individuals who work there.

Re:Maybe your tax laws ought to be adjusted (1)

holophrastic (221104) | about a year and a half ago | (#42414731)

Exactly. So these global companies would need to choose a place to operated -- if all of the countries followed the same policy. That's the point. All of these tax games happen by splitting up a company into multiple places, and playing those places against each other.

You can't have it all ways. You can't get money, allow everyone to get money, have the company pay money, and not control where they are.

At some point, you need to either globalize the policy -- having all governments agree to an umbrella concept -- or globalize the company.

Think about it this way. How would you tax a outerspace alien with customers on earth? You either wouldn't, or you'd have government enforcement on their site, or you'd be on their side.

That last one is the easiest thing in this case. Having Facebook say that 30% of their customers are .U.S.A. citizens, would mean that 30% of their revenue is taxable by .U.S.A. governments. Then all you need to do is define a facebook customer, and count them. Since dollars are spent by customers, there's an audit trail every time.

But doing nothing differently for decades is exactly what the .U.S.A. likes to do. Yesterday an episode of All in the Family was on from 1972. And it had the same arguments for and against gun control as CNN's had for the last two weeks. It's been 40 years, and not a damn thing has improved.

If your laws don't get updated, then they become totally and completely useless. Welcome to personal privacy. Your laws say that you can't break into someone's house, but it's ok to watch from the street. So x-ray cameras from the street are perfectly ok -- even though they see through walls.

Welcome to checks and balances.
You've ensured that no one can screw with things by ensuring that those things can't be changed.

Let's see what happens as a result of newtown over the next two months. I suspect that absolutely nothing will wind up changing.

Leaving me with my new question for your country: what will it take to change things? If 20 children and millions of tax dollars and unemployment and failing banks and failing car companies and defaulting mortgages and falling dollar and finacial cliffs and reducing population, aren't enough to change things, just tell me what would be enough so I know what to expect.

Re:Maybe your tax laws ought to be adjusted (1)

Vaphell (1489021) | about a year and a half ago | (#42414729)

why tax abstract entities at all? Set CIT to 0 and tax the money when it goes to live people if you really have to. People are material and it's them who use roads, police protection and what not. The corps on the other hand are an idea that can uproot and move with few strokes of a pen, good like pinning it down.

Re:Maybe your tax laws ought to be adjusted (1)

SirGarlon (845873) | about a year and a half ago | (#42414789)

Either way, don't bring ethics into it. You're talking about taking someone's money for "the greater good". And you're forcing them to participate.

Taking someone's money for the "greater good" is called tithing, and it's optional in the U.S. Taxes are taking someone's money to fund the functions of government that the people deem necessary, such as providing armed forces to defend the natural resources from which businesses extract wealth, or highways so businesses can transport their goods at higher speeds and lower costs than any time in history, or a court system to enforce contracts and enable businesses to trust one another.

So taxes are for your own good. By the way, in a democracy, sometimes the consensus decision is the one you disagree with. Suck it up, indeed.

I applaud them (0, Flamebait)

Gunfighter (1944) | about a year and a half ago | (#42414487)

Tax avoidance is a good thing. Kudos to Google and every other company who keeps the government's thieving paws out of their coffers by any and all legal means available to them.

And you are surprised? (1)

s.petry (762400) | about a year and a half ago | (#42414493)

Come on people, get with it! You realize that Facebook is owned by a member of the "family" right? Look at who the owner is related to, and what they are doing for the Government. I'll bet that after they get paid by the Government for spying, that US citizens actually pay them to exist and be a business.

/sigh

EU and the rest screwing themselves over? (0)

Anonymous Coward | about a year and a half ago | (#42414495)

How long will it be until laws are enacted that income sales to entities in a given nation results in deemed presence in said nation? And moving money from external entity results in taxable income (minus tax already paid to other jurisdictions)

The current setup is clearly unsustainable. It is nothing less than leeching of money from a nation without returning it back into circulation (which is done by either taxes or wages).

You would do the same... (0)

Anonymous Coward | about a year and a half ago | (#42414507)

...if you could.

But we can't.

That the rich and powerful get to step around (or plainly just stomp over) the law is the whole reason this is alarming.
I, for one, am not complaining about the lack of "ethics" involved in tax evasion, but rather about how the system seems to be EXTREMELY BIASED towards the rich.

There is something rotten when in a given system the more powerful/rich you get the less you contribute to its development(proportionally).
It almost seems like the rules were designed to distance the elite from the commons, further pushing the former up and the later down.

good idea (-1, Troll)

Anonymous Coward | about a year and a half ago | (#42414509)

you know what? good for them. also, thanks for the idea. I run a small business, 3 people including myself in the us, 10 overseas. all working hard. I put in about 80 hours a week of work. I pay an insane amount of taxes in the us - high income. from my point of view - union guys and other mid and low level jobs. people didn't work their ass of in school, don't have the needed skills, don't get as much an hour. people who don't work nearly the hours I do. I'm supporting them. I pay in more money, yet they have equal vote in how it's spent. and even in a tax system that's not having a higher % for more income - how's that fair? same %, yes, but it's not the same amount of money. I pay way more, but I studied more, I work more hours. that's why I make more. you're punished for not being a c student at school and a c worker in life. yes, get my money the fuck out of the us, and don't get fucked in the ass by people who didn't work hard enough and didn't earn it.

now you might say - hey, factory guy, hard fucking work. he works hard, and may work two jobs. well, maybe learn a skill earlier on in life that doesn't get you stuck at a fucking factory and 2 jobs? that's what I did while they were smoking pot and ditching school.

don't agree - please reply with your point of view. I'm open to an argument I didn't think of to change my mind. haven't heard a valid one so far, but please give me one if you think of something I haven't in my life.

Re:good idea (1)

SirGarlon (845873) | about a year and a half ago | (#42414687)

If you are actually paying a higher percentage of your income than your workers, then you're doing it wrong. Yes, rates at your income level are higher, but you also (should) have more options with which to shelter your income. Warren Buffet pays a lower percentage of his income in taxes than his secretary. So I think your sense of indignation that you pay a higher rate is misguided.

Hypocrisy writ large (2, Insightful)

jmichaelg (148257) | about a year and a half ago | (#42414543)

I suspect the poster, as most people, choose not to pay more tax than they're required to pay.

That's money that *didn't* fund the Patriot Act! (0)

Anonymous Coward | about a year and a half ago | (#42414551)

Or warrantless wiretaps. Or hoovering every damn email, text, and phone call in the entire USA.

Good for them.

Because crap like the Patriot Act is what higher taxes are used for.

So keep voting for candidates who want to "invest" your money. Keep telling yourself the candidates YOU vote for really want "good government". Sure they do.

Re:That's money that *didn't* fund the Patriot Act (0)

Anonymous Coward | about a year and a half ago | (#42414689)

+-1 ?

Corporations should not pay taxes on profits (5, Interesting)

pubwvj (1045960) | about a year and a half ago | (#42414563)

Making corporations paying taxes on profits is double taxation and should not be done. Rather the profits should pass through to the owners (investors) and then the investors should pay taxes as if that was their earned income. Any retained earnings by the corporation (profits not passed through to investors) should be taxed as if it were earned income. This includes paying SS, Medicare, Medicate, workman's comp, federal, state and local income taxes.

While we're at it lets eliminate all the loopholes, subsidies and deductibles on the personal income taxes as well.

Simple Fix (2, Interesting)

maz2331 (1104901) | about a year and a half ago | (#42414567)

Wouldn't a simple fix for the countries involved just be to impose a tarrif on the importation of the "IP Rights"? Just set it to be equal to taxes on profits, and the problem is solved. So, FB UK doesn't make a paper profit of, say, 3 billion because their revenues of 3.2 billion are offset by "IP Licensing Costs" of 3 billion - just tax the importation of the right and collect the same amount as you would if they didn't try the shifting.

 

ACTA (0)

Anonymous Coward | about a year and a half ago | (#42414569)

If only all that time spent on ACTA would have been spent on international tax agreements to eliminate these kinds of ridiculous constructions.
I know, not easy to do, but a whole lot more worthwhile. Until this happens it will only get worse and, honestly, if given the chance, I would do it too.

Ethics (0)

Wonko the Sane (25252) | about a year and a half ago | (#42414579)

Is the submitter under the impression that taxes can be justified via ethics? I'd be impressed if it could be done without resorting to magical thinking, logical contradictions, non-seguirs, or appeals to force.

So let me get this straight... (0)

Anonymous Coward | about a year and a half ago | (#42414613)

Basically small companies that provide most of the jobs in the US, but don't have the resources to mulit-nationally hide their profit have to subsidize those large companies that do now that the country is broke...

Where are the democrats on this one? Oh yeah, some of those large companies are part of the "family", so they must be "exempt"...

Moral obligation (0)

Anonymous Coward | about a year and a half ago | (#42414623)

Facebook has a moral obligation to its shareholders to maximize profit.

You think that's something? (5, Interesting)

50000BTU_barbecue (588132) | about a year and a half ago | (#42414651)

Just WAIT til you find out how IKEA operates! Go on, look it up yourself, you wouldn't believe me if I told you!

Start linking the IRS with the DoD already (3, Interesting)

sethstorm (512897) | about a year and a half ago | (#42414661)

Start using the NSA for some good and uncover the people involved.

In addition, start taking advantage of the nature of these tax domiciles as being easily knocked over by a superpower's military. Offer to disclose each conquered country's information to other regions such as the UK and EU. In any case, move in a way that thwarts any effort to move out assets to "somewhere else".

Finally, be willing to use extraordinary rendition to moot jurisdiction movement. This would be viable for cases such as Eduardo Saverin, and assets of companies sent offshore.

In any of the cases, there will be no shortage of people willing to defend their country from tax jurisdiction abuse. With plenty of people out of work - more than a few leaving from good jobs - opportunity exists to discourage/deny the use of creative accounting.

(If you really want to turn up the heat, ensure that nobody involved, whether directly or indirectly, will have any protection from the US)

Everything not forbidden... (-1, Offtopic)

Nutria (679911) | about a year and a half ago | (#42414673)

is compulsory.

With "liberated" attitudes like that floating around the 1960s and 1970s, no wonder ethics and morality are bat-shit out of whack.

This is capitalism (1)

Hentes (2461350) | about a year and a half ago | (#42414695)

Corporations follow the laws of capitalism, not the laws of ethics. They will never pay more than they are legally required. If you don't like it, change the laws.

Tax the revenues of these companies ... (1)

jschultz410 (583092) | about a year and a half ago | (#42414707)

Set up an AMT for corporations that operate in the US. If they are bigger than a certain size in terms of US revenues, then they have to pay a minimum tax rate on those revenues or the usual taxes on profits, whichever is higher.

Yes, that sucks for low margin companies with lots of revenue, but it's likely better than letting very profitable companies like MS, Google, FB and many others get off essentially scot free through international tax games.

Who should get the money and why? (1)

ZombieBraintrust (1685608) | about a year and a half ago | (#42414745)

The Caymans and Ireland are tax shelters. It is not clear in a just system why these goverments should get any of Facebooks profits. How are Irish roads or Cayman firefighters providing a service for Facebook? Facebook profits come from advertising. It might be smart for countries to focus their taxes on the ads. Tax advertisement revenue instead of profits. This would distribute the wealth to locations where Facebook is used and where profits are generated.

Not this shit again (1)

paiute (550198) | about a year and a half ago | (#42414771)

If the community spent half the energy we spend flaming each other with the same argument over and over and over calling their Congressmen to yell at them, faxing their Congressmen copies of large checks written to their opponent in the upcoming election, etc., then things might start to change.

Another Famous Judge disagrees. (0)

Anonymous Coward | about a year and a half ago | (#42414781)

Since we are going to argue based on judicial statements let me give you another. From the Honorable Judge Learned Hand
"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the
treasury. There is not even a patriotic duty to increase one's taxes.Over and over again the Courts have said that there is nothing sinister
in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any
public duty to pay more than the law demands."
So long as the methods used are completely legal their is simply no room for complaint.Corporations are legal devices for making money, they posses no morality, and no ethics. These are human traits. Corporations, despite the legal treatment they receive, are not people. The executives of these corporations are legally tasked with maximizing the profitability of the corporations. It is their fiduciary duty to do so. If the law allows this arrangement then the executives of this corporation would be failing in their responsibilities to not take advantage of it. The government is entitled only to what the law allows. Since the government makes the law this is clearly fair. There is nothing immoral, illegal, unpatriotic, unfair, or wrong with any corporation, organization, or individual using the law as it is written to reduce their tax liability so that the tax payer keeps as much of the money they made for themselves.

Avoidance IS the right thing to do, but... (0)

Anonymous Coward | about a year and a half ago | (#42414787)

In a corporate sense it is the right thing to do as long as it is within the law. It's the only thing to do, really, if you're meeting the obligations to your investors.

Correspondingly, terminating the tax and incorporation laws that allow this kind of corporate tax avoidance is the right thing for the ordinary citizens in multiple countries to do. The law is broken if this is the end result. Therefore, the law must change. No more big company free rides on the backs of the rest of individual taxpayers and small companies. They make billions in profit, and pay single-digit millions? Ridiculous. *I* pay more in taxes, and so do a lot of other people *and* smaller companies, so that Facebook or [insert huge multinational company here] can make huge profits. I'm paying more for the services that they receive from government, be it transportation, education, defense, or whatever. Some people complain about the "welfare state" and people taking advantage of it, but you head down to Wall Street and these shell companies are standard operating practice to get out of paying taxes. Crafty and smart they may be, but they're a bunch of free-loading corporate welfare bums to me. And unlike people who actually do need help, they aren't living below the poverty line. I have zero sympathy.

This shouldn't be an ethical issue. The point isn't to shame companies into "doing the right thing" in an ethical rather than financial sense. That's nonsensical. The goal is to get the fricking broken tax laws fixed, so that big companies pay a fair amount on billions of profit rather than almost nothing. They're getting too good at socializing the costs of society while privatizing the profits. I'm not begrudging companies the ability to avoid whatever taxes they can within the law. That's their job. Good on them. But the law under which they do so must be fixed.

Fiduciary Duties (2)

Warhawke (1312723) | about a year and a half ago | (#42414793)

At risk of being modded down -1: Disagree, there's an important counterpoint worth mentioning here:

Companies have a legal duty to pay taxes according to the laws.
Companies theoretically have a moral duty to pay taxes according to the spirit of the law.
Companies have a legal duty to minimize expenses and maximize returns for their shareholders and investors.

Accordingly, corporations have a legal duty to engage in legal-but-potentially-morally-questionable tax sheltering to minimize expenses and maximize returns for their shareholders. If a director is not using every tool at his disposal to make a business profitable, then at best he will be fired or reprimanded for being a bad director, and at worst he will be sued for breach of his fiduciary duties.

It would appear that a better solution is simply to write simpler tax laws that don't create the loopholes in the first place rather than to try to patch the loopholes with more convoluted tax law. But that is so very much unlikely to happen while Congress is immune to the insider trading and securities exchange laws. Congress won't think that this is broken so long as they're the ones making money off of the loopholes, even if it's at the expense of the U.S. taxpayer.

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