Considering those tax dollars go towards torture, murder, indefinite imprisonment, war crimes, genocide, illegal surveillance, and other tragedies I applaud any company which finds novel ways of resisting the tyranny of the united States government.
It also goes towards the roads and infrastructure the company and its employees use daily.
I don't understand why people refuse to pay their countries membership fees. They have no problem paying the fees for their gym, their sports club or their phones, but as soon as they have to pay for the services their country offers its okay to not pay?
Most citizens never chose to join the country 'club', so there is no moral justification for a membership fee. If I created a club, defined territorial limits (which happen to include your house), and charged you a fee, would you feel obligated to pay? If I asserted that I was giving you a number of benefits, would your obligation increase? If I employed force to extract the fee from you, would that be legitimate? You might argue that the state is entitled to do these things, but what would give them this authority?[1]
>You might argue that the state is entitled to do these things, but what would give them this authority?[1]
In the case of the United States, doesn't the Sixteenth Amendment give the State (meaning government, the entity, not State as in Utah specifically) this authority?
Did the citizen in question personally ratify the constitution, or otherwise agree to it? If not, why would they be obligated to follow a contract they never accepted?[1]
Well...citizens, individual citizens can't ratify Constitutional Amendments in the US, so I'm unsure if this question is valid. Can you clarify your stance?
Some people voted for ratification, but none of them happen to be alive now. If you want to propose another means by which you can justify citizens being bound to follow the constitution, please do. There are a few theories including the social contract, and implied social contract which argue that citizens have consented to accept the authority of governments (unfortunately those are both wrong); philosophers have devoted a great deal of time and effort to justifying the government, but failed. If you have a novel theory, please describe it.
There are a few theories including the social contract, and implied social contract which argue that citizens have consented to accept the authority of governments (unfortunately those are both wrong)
I don't think I have much of an alternative-for no honest reason other than having not put the thought or time into coming up with one. Not for a lack of want.
That said, the quoted line above, when you say 'wrong' do you mean "the notion that the citizen automatically accepts government rule" is incorrect by virtue of criminals rejecting the rule of law, evidencing a wholesale rejection of authority, or do you mean the concept itself is morally wrong?
Social contract theory was based on the idea that there was a literal covenant placed by legitimate original owners on the land (claimed by the government), and that this bound all future occupants. This is not correct, as the current governments (of all countries I am aware of) never got their land by gradually gaining consent from all landowners on their desired territory.
Implied social contract theory is more complicated, but the problem with it is that even implied contracts are invalidated if one of the potential parties expressly disavows the implied contract. If implied contract were taken seriously, then any citizen could eliminate any obligations simply by expressing their desire not to be part of the state.
Implied social contract theory is more complicated, but the problem with it is that even implied contracts are invalidated if one of the potential parties expressly disavows the implied contract. If implied contract were taken seriously, then any citizen could eliminate any obligations simply by expressing their desire not to be part of the state.
This is a fascinating statement to me. How is an implied contact invariably invalidated-in the case of governments in a representative society, burdened with a multiplicity of values and interests-and further how does a government even function if this contract is merely "implied" and not codified?
In the implied social contract theory, the consent is what is implied, while the contract's terms may be explicit, implied, or some combination of both.[1]
Your parents made the choice to enter you into the club when you were born here. As your custodians, they had the legal right to do so. When you reach the age of majority, of course, you are free to leave and relinquish your club membership.
Ah, the 'love it or leave it' theory. This argument is not used by any serious philosophers (that I know of). One of the many problems with this argument is that there is no reason to believe the state has a greater moral entitlement to the land where I live than I do. What makes the state special anyway? Why can't I just claim to be a state and have legitimate authority over the land?
Another problem with this theory is that there is nowhere for the anarchist to go. Suppose you were abducted (at night or as a child) and put on a ship which heads out to sea when you lack the capacity to take action, then you are told that you must obey the captain or leave. Do you have to obey the captain? If you disagree with the captain, do you have to jump in the ocean and drown, or try to swim to another ship with an equally tyrannical captain? What makes the modern state different?
As an aside, the 'you should leave if you don't like it' idea is also used by such prestigious organizations as the Klu Klucks Klan.
edit: I believe it is important to know who makes similar moral arguments; if you find this company troubling, that is your concern, not mine.
You claimed that "most citizens never chose to join the club". I pointed out that your parents made the decision for you, as they were your legal custodians from birth to the age of majority.
As for the lack of stateless land that an anarchist may emigrate to, the lack of such land does not mean that the country of your citizenship is no longer valid. If you chose to renounce your citizenship and end your involvement in the social contract that your parents entered into on your behalf, where you go is up to you and no longer has anything to do with your former country.
Also, trying to compare me to the KKK? Really? Come on, you can be better than that.
I'm not even sure how to respond to the rest of this; it's difficult to make sense of it.
EDIT: It is so uncool to edit your remarks instead of replying! But I guess in the independent nation-state of nickfftopia you can do what you want, eh?
So the essence of your argument is: 'if you don't like it, leave, and if you can't leave, it's not my problem'?
The power for parents to make decisions is relatively broad, but a decision made on behalf of a child is not the same as a decision made by the latter (for example, selling a child into slavery does not imply the child wanted to be a slave, or is obligated to continue in servitude).
The abduction/shanghai-ed example of the captive on a ship is a relatively common one, if you do not know how to address it, I suggest you ponder it for a while.
In addition, you never addressed what gave the state any authority at all, and why I can't just claim to be a legitimate independent state.
If you don't like the decisions your parents made for you, once you reach the age of majority, you may undo those decisions.
I'm not sure why your decisions to renounce your citizenship should obligate the world to create the new kind of place you want to go to.
As for parents selling their children into slavery, I'm not sure why you're bringing that up. Citizenship isn't slavery.
As for your desire to claim to be a legitimate independent state, I'm sure you can do so. I wouldn't be surprised if you habitually do so right now. I can't help you with getting recognition from the rest of the world, though.
So someone who is forced to pay taxes at gunpoint is a freeloader? I'm not sure I follow (unless you are specifically arguing against anarchists on some sort of welfare/social security).
By continuing to live in a country, you give it your tacit consent to be governed. This is one of the cornerstones of John Locke's political philosophy[1], which largely formed the basis for the theory behind American government and the Constitution[2].
This argument has been put forward by other posts (currently) below, though less well expressed. If you read your first citation, you will see that Locke's reasoning was more complex than yours, and actually allows for people to live in a country without the state having authority over them. No one has ever made a solid argument for why all people born in a country are bound to follow its laws, or respect the state's authority, though many have tried (and Rawls probably came closest, though I admire the democracy-theorists for their creativeness).
The basic question is why the state has any special authority to claim the land and impose its will in the first place. Second, why are you (who may have been born there, thus giving you a presumptive right to keep living there) bound by previous agreements which may or may not have been legitimate to begin with. There are two questions which should be answered here:
1) Why can an individual not claim to be an indipendent state (and claim land as well)?
2) Suppose you were abducted (at night or as a child) and put on a ship which heads out to sea when you lack the capacity to take action, then you are told that you must obey the captain or leave. Do you have to obey the captain? If you disagree with the captain, do you have to jump into the ocean and drown, or try to swim to a different ship with a similarly tyrannical captain? How is the ship of state different from the ship described here?
Because if you choose not to pay for your country club, the country club doesn't bust your door down, shoot your dog, taze you, and throw you in jail until you do pay.
I'm not sure why the down votes. Your comment demonstrates perfectly why it's absurd to compare paying taxes (compulsory) to paying for some private club (voluntary).
Still... it isn't often that the Internal Revenue Service greets them with shotguns drawn. But that's what happened to rapper Young Buck - real name David Darnell Brown - on August 3rd, as the IRS attempted to satisfy a tax debt of roughly $300,000.[1]
Three businessmen told the Senate Finance Committee today of Internal Revenue Service agents who, with guns drawn, broke down doors, terrified workers and forced teen-age girls to change clothes in front of male agents in raids at the men's homes and businesses that they said were unnecessary.[2]
"But the testimony by the three wealthy businessmen from Texas, Oklahoma and Virginia also showed that the agents had reason to suspect they had come across a $300 million tax fraud in one case and a drug operation in another.
Holes and contradictions in testimony by two of the businessmen prompted Senate Democrats to complain that the hearings were not a search for truth but a one-sided propaganda show by Republicans, whose polling data show that attacking the I.R.S. is their best strategy for raising money and winning votes."
That's not a simple failure to pay taxes.
And the first article, the rapper was not jailed, he did have a bunch of stuff seized to pay off a $300,000 debt, however. No mention of a dog being shot, no mention of anyone being tazed.
I did read the articles. Did you read them to the end? Yes, Senate Democrats did claim there were holes and contradictions, but the victim claims there were not.
And, no the rapper wasn't tazed or his dog wasn't shot, but IRS agents did raid his home carrying shotguns.
So when you said "bust your door down, shoot your dog, taze you, and throw you in jail," for simple failure to pay taxes, what did you mean?
Because the story in the linked articles went something like "bust down your door, NOT shoot your dog, NOT taze you, NOT throw you in jail, but seize some of your stuff to pay off a sizeable tax debt or maybe work out a deal to pay off your taxes". Which is a big difference from what you originally said.
If you don't pay you country club membership, your membership will be terminated. If you then decide to stay on their property you will be almost certainly arrested for trespassing.
Alternative example: if you would barricade yourself inside your local country club with a dog, I can guarantee you they will bust your door down and taze your dog.
I can sympathize with someone distressed that their tax dollars get used in ways they may not agree with, voting ostensibly is a measure to somewhat ensure your interests in taxes are represented (without getting into an endlessly caveat-laden debate about the virtues of democratic societies).
But I think, personally my level of sympathizing with that incredulity ends with the understanding that taxes are signatures on a social contract and taxes aren't a zero-sum affair. I fully understand that my taxes might go to fund a war or might go into the landing gear of a bomber plane or a bomb itself. I get that.
I wish I had the answers on how to get this through the minds of other voters "Yes, your tax money might be spent on x, it also might be spent on y. If you want to see more money going into y, vote accordingly, but remember you exist in a society with more than one viewpoint so someone 500 miles away might vote for x. Thems the breaks".
As to your question of why people refuse to pay their country's membership fees...the cynic in me wants to blame ideological dogmatism that perpetuates "my party good, your party bad" and limits the scope of understanding a fuller picture of what being in a diverse society actually looks like (i.e. people value things differently than you)
If taxes were voluntary, I would wholeheartedly agree. As it sits, I consider (rightly or wrongly) most taxes to be voluntary, but the income tax is inescapably not. If governments are going to charge high and involuntary taxes on things, we shouldn't be surprised when people shop around where they are able.
I'm probably the wrong guy to ask, really. If I were the president, I would do everything I could to abolish the income tax and replace it with use/consumption taxes.
On the whole though, yes, I agree that taxes are likely a necessary evil, and while I object to large swaths of the federal government, I think it would be naive, or even asinine to suggest that they do not have any good functions which I deem wholly necessary.
That said, at the end of the day, citizenship is something that can be relinquished, and as such, an income tax (of any sort) is something that ought to be competitive. California offers a lot of niceties, and presumably, the people who live there don't mind the tradeoff of high taxes and a generally higher cost of living. If they did, they could trade out to one of the zero-income-tax southern states, in exchange for a generally less educated peer group, less efficient state services, etc.
At the end of the day though, if taxes are to be citizenship criteria, then America is in competition with other nations to deliver good value. In addition to economic freedom, social freedoms, fair treatment, social services, safety net and a myriad of other factors are ways in which we compete. I am not likely to move to another country to save some money on taxes, but if another country offered the same freedoms that I value in America, with lower taxes, and a lower incarceration rate, a move would be worth strong consideration.
> If governments are going to charge high and involuntary taxes on things, we shouldn't be surprised when people shop around where they are able.
Presumably they would still like to benefit from our IP and Law enforcement, our medicare subsidies, our healthcare professionals. Will a standard invoice to the shareholders be OK?
Your comment assumes that Pfizer will no longer be obligated to pay taxes at all, which is untrue. They'll pay less taxes, particularly on capital gains and such that allow them to benefit from double-Irish style tax avoidance, that does not mean they aren't paying taxes.
It would be an interesting though experiment to determine the exact cost those services provide, submit them an actual invoice, and then do the math on whether or not services rendered are more or less than taxes paid, but without it, it seems naive to assume that paying less taxes is in any way equivalent to paying no taxes.
Presumably, they get those same services in their countries of operation, and at a lower cost, which opens up an entirely new pool of questions. Are services in Dublin substantially less than what we have in America? Why is the cost of American services so much higher? If services are similar, how is Ireland able to provide them at such a discount? Will Ireland continue discounting their services as they attract more and more businesses? Etc.
I do. It has to do with value, not with price. Anything with a high price, whether it's a good or a service, has a negotiable price tag. Not so much with tax.
Say I make $25k a year, and I pay $5k in tax. I'm probably getting that back in value (health insurance, roads, safety, etc).
Now say I make $100k a year. I'd probably be paying $30-45k a year in tax (depending on the country). This is getting to the point where you're no longer getting enough value for your $/€.
Third option, say you make $1M a year. On average, you now need to pay $400-500k a year to the treasury of your country in tax. No way you're getting that in value. Alternative: you structure things through a tax friendly jurisdiction, and at the end of the road you only have to pay $150k instead of $400k, legally.
Honestly, why would I pay $400k in tax if I can pay $150k? Tax aside, I'm obviously still spending money in the country where I live (-> creating income for businesses, increasing the taxable base of those businesses, who in turn will pay full corporate tax).
It was, but it would be in place regardless of whether you succeeded or not. Maybe not historically, but today, whether I personally succeed or not doesn't matter to the budget/deficit. Those who carry the taxable base are the middle class; the employees who can't restructure their affairs.
Paying back / forward is great, but (imo) it has a limit. Unless you inherited your wealth, most people who are self made will have paid a significant amount of tax before they tax optimise their structures. So, if you’re a success, you will have paid back your “debt” to society (and then some).
There needs to be a limit somewhere. Some countries are more aggressive (i.e. the US) in collecting their tax dollars than others (i.e. the UK).
A single child raised to finish college costs the taxpayer in Germany 300'000 Euro in subsidized nursery, free school, and free college.
Additionally, each person costs a lot for roads, public transit, etc.
And then you have to add in that for every person who gets to become a billionaire, you have hundredthousands who won’t become billionaires, but still cost you equally much. There’s no way to find out who is going to become a self-made millionaire, and who isn’t.
And society already tries to provide many programs only to those kids with high potential, to save money. Programs like this [1] are already exclusive.
If you want to give the generation of your kids the same chances at becoming self-made millionaires, you have to provide all of them with this high quality service.
Which means you have to accept nominal tax rates of 48%+.
Yes, absolutely. I totally agree we need taxes for the next generation. I just don't believe 48%+ taxes are ever paid by the truly wealthy, only the middle class.
Most wealthy people (people with net worths in the tens of millions and up) pay rates closer to zero, by using every trick in the book. Or well, their advisors do it for them. At most, they will pay the capital gains tax rate.
> Without them, you won’t be able to provide intelligent and engaged children (no matter their family’s wealth) with quality education.
Wealth does give you the freedom to send your children to the best schools in the world, regardless of the country you live in. But obviously, that's an extremely selfish view.
> Which means you have to accept nominal tax rates of 48%+.
Nonsense. I won't speak for Germany, but our government spends about $500 billion annually on things that can plausibly be called public goods (I exclude defense). This is a mere 4% of total US personal income.
We build the Berlin Airport BER, the S21 train station, and the Elbphilharmonie.
All projects that waste money.
But the public services we get are still worth the tax. I wouldn’t want to pay less tax and lose our libraries, or free university access, or quality education. I wouldn’t give up just for a bit more money the public transit, which cuts down my commute times, or the services financed by the government.
Yes, the government invests broadly to get money back – from companies like T-Mobile and DHL to VW, all of which end up paying dividends to the federal budget, because the government owns a lot of shares in them – but we still need taxes.
And I’m okay with that.
The life here isn’t perfect, but it’s okay. One can live with it, without ever worrying about stuff.
How much opportunity comes from government spending versus private investment?
Money going to the U.S. Federal government goes to: 24% Social Security (i.e. the dole), 24% to the least efficient healthcare system in the world, 17% to the military to drop bombs on poor people.
If the majority, or even 25%, of government spending was creating economic growth and opportunity, I don't think anyone would have a problem with it. This is a country that was begun by a tax war, so if there is an obligation to the past, an aggressive response to tax policy is certainly part of it.
I disagree. If Mark Zuckerberg had started Facebook in Bangladesh, would he still be worth $35 billion? Almost certainly not. But-for his starting his company in a developed country with a stable government, deep technological infrastructure, educated employees, and wealthy consumers, he would not have that money. Whatever he pays in taxes is far less than what he got in value.
> Now say I make $100k a year. I'd probably be paying $30-45k a year in tax (depending on the country). This is getting to the point where you're no longer getting enough value for your $/€.
I Disagree.
The money you're getting paid in is a construct of the government that you're paying taxes to. You wouldn't even be able to collect $/€ for your goods and services without taxes. So you'd have to barter and stockpile basic commodities in order to barter for other things that you need. Can you imagine buying an iPhone with corn or oil? Or collecting ad click through revenue in gold? There would size-able inefficiencies just because of the need to hold 'stuff' rather than an imaginary thing.
Furthermore the marginal utility of a government backing the currency that you use is proportional to your income. Someone living in relative poverty probably could provide for their basic needs without currency (think peasants or yeoman farmers scraping out a living, basically self sufficient, or tradesmen exchanging services for necessary goods... vs. a hedge fund manager).
I can't imagine someone making the equivalent of 1/2 million a year having an easy way of storing and maintaining that value (particularly the excess beyond what they spend) without a currency (or even being able to collect it in the first place). (Remember the markets are settled in currency and all accounting is done based on currency, you can't just invest in AAPL with corn).
I can't imagine a normal person owning an iPhone and buying apps from an app store under the hypothetical situation. It seems to me to have a very high utility to the individual at the top of the income chain. You are completely ignoring many of the benefits of having a functional government and a stable society with many consumers (whose consumption is supported by those tax dollars) who are able to consume because of the constructs put in place by a treasury and a tax structure.
I think you're underestimating the intangible value returned by governance. It is near non-finite.
So assuming governance and currency (we can agree these have utility?), taxes can be looked at as being closer to a hedge against inflation than anything else (that is, they prevent devaluation of the currency). As a thought experiment, imagine if the government weren't allowed to collect taxes AT ALL.
How would it fund itself?
Well it controls the treasury, so it would print money, and it would issue debt (bonds). It already does this, incidentally. Both of these things would devalue the currency. (Printing money means more in circulation (its easier to get... therefore worth less), whereas a bond would promise of a certain amount of money that I plan to print in the future). These can be treated as similar, at very least.
So the real (interesting) question about taxes is tax structure. If we assume a flat % tax, it is pretty close to the above devaluation scheme. If we assume a flat $ amount, it very quickly becomes regressive, disproportionately penalizing the poor a large percentage of their money, preventing them from having anything to spend at all. That's how you get a revolution.
With a progressive tax structure, those who can comfortably pay more, do pay more, those who can't don't. (All the way down to certain people being taxed negative amounts in certain situations).
All that said.
Yes, sure, the corporation should move to jurisdictions which are the most friendly to its tax status... it is a fiduciary responsibility to the shareholders, anything else and they are leaving money on the table. At the same time, powerful governments should pressure these corporations into giving them a cut of any business that they do under that government's jurisdiction. In fact, they have a responsibility to do this so that the government can continue functioning properly.
This is a non-sequitur, or as the saying goes, the Germans kept the trains running on time?
If ISIS begins collecting taxes to fund road construction and terrorism does that somehow white wash terrorism? Of course not, yet the same tired argument is being made here because of misguided belief in American exceptionaliam, double think is alive and well when people can speak of road building one day while condemning torture the next. Those who work and fund the US government are funding genocide, you must accept that fact, you can down vote all you want to bury the truth but it remains the truth.
Disgusting hypocrisy on display, utterly disgusting, and no real counter argument has been made.
There is an entire class of hedge fund who make their money by only investing in the stock of companies who are merging. This is called merger arb and this deal is a huge one.
Unfortunately it is about as uncertain as a deal can be due to concerns about the government not allow the merger.
For those of you who don't follow corporate mergers, there has been a trend recently of larger american based corporations doing mergers with smaller foreign companies to move their head quarters to another country where the corporate tax rate is lower, these are know as tax inversions.
Burger King famously recently merged with Canadian "icon?" Tim Hortons in an attempt to domicile the corporation in Canada to lower their tax rate.
This is only going to intensify and its corporations telling America that their corporate tax rates are too high.
The US has a tax rule specific to itself where by it taxes corps at 35% on profit no matter which country it was earned it. It does let companies deduct taxes paid to foreign governments but it leads to companies operating in a way to minimize their US taxes.
From the article linked at the bottom[0]:
> Pfizer takes in about 40 percent of its revenue from sales in the United States and 60 percent from foreign sales. Yet, according to its 2014 annual report, Pfizer had about $17 billion in pretax income from overseas, and almost a $5 billion pretax loss here in the United States. By shifting profits overseas, Pfizer pays relatively low cash taxes compared with the nominal United States tax rate of 35 percent. Instead, much of its American tax liability is illusory, taking the form of an obligation to pay taxes in the future if it repatriates cash to the United States.
This leads to companies jumping through hoops to shift earnings income around and to holding large chunks of cash off shore of the US.
This might be upsetting to some people who think corporations don't pay enough taxes but it's not going to go away. The world isn't going to get more protectionist, especially on the heals of TPP.
I can't argue with their rationale or yours, but would be totally comfortable with Pfizer being barred from lobbying now, as a foreign corporation, plus being hit with import tariffs.
No reason US law has to open taxpayers to blatant exploitation by multinational corporations, who probably benefit more than anyone, from the US' unique combination of highly educated workforce, stable and for-sale political system, protective military, and millions upon millions of the most prolific, indiscriminate consumers in the world.
Taxpayers aren't being exploited. The US just has a ridiculous tax policy, as the only western country in the world. How does it make sense to want to tax every single dollar, regardless of where it was earned? It makes total sense to do an inversion if you want to build a global company.
Stopping (or at least reducing the amount of) inversions is easy. Just lower the corporate tax rate to an acceptable level. Large companies who are not doing inversion deals are often leaving billions on the table.
The problem lies in the fact that the US is all about free trade. They don't want to do that. You can't have it both ways.
Situation one: I'm a US company, expanding abroad. I acquire foreign competitors, and build a global company. I'm taxed on every dollar (profit), since I'm a US (holding) company.
Situation two: I'm a European company, expanding abroad. I acquire a US competitor, and build a global company. Since I'm a foreign company with foreign shareholders, the US can't tax my global income (obviously)
This means a US company will be at a significant disadvantage to a UK/Swedish/Belgian company competing in the same market, because, even if their results are exactly the same, their after tax income will be significantly less.
This also means that a US company bidding for a US competitor will be able to pay less than a foreign company buying up US companies, because they can achieve less/lower (tax) synergies.
If only the people in positions of power took this stance, we would be in a much better place today. What bothers me is that the merger between corporations and state through k-street and the revolving door/regulatory capture has become exceedingly rampant.
> government exists to protect its citizens, not your corporate profits.
That's how it should be. But from observation this seems not to be happening, at all.
I wonder if someone could mention any example from the last years where the US government has clearly chosen against corporate interests, and for protecting its citizens.
Of course, the cost of duty is ultimately offloaded to the same citizens you're supposed to be protecting.
Not to mention, the elephant in the room here is that no evasion is being performed, but avoidance. To equivocate the two would create a moral hazard that would also affect the same citizens you're supposed to be protecting.
How? Corporate mergers appear to be an intrinsically available strategy for avoiding an extraterritorial corporate tax system. What intervention will your legislative pen impose?
> Corporate mergers appear to be an intrinsically available strategy for avoiding an extraterritorial corporate tax system.
...because of legislation and existing tax code allowing it.
> What intervention will your legislative pen impose?
I would have to speak with a legal associate with experience drafting legislation for specific language. The purposes would be to ensure any tax intended to specifically be avoided by a merger would be re-captured (this isn't out of the ordinary; the AMT in the US is specifically designed to disallow certain income tax deductions when a taxpayers income reaches a certain level, to prevent tax avoidance).
My understanding is that the Double Irish Arrangement "loophole" has been closed, but further work needs to be done.
So, the business purpose and economic substance doctrines. Again, flimsy normative statements. A legislative pen obsessed with maximizing such a function will eventually write things unsavory to civil liberties, as well.
I'm not up to date on the details of US tax law, but I'd be surprised if such a general anti avoidance rule does not exist.
Mergers the size of this will always have genuine economic incentives in place to do the deal. Add to that very well paid lawyers who will put together an amazing story to get the deal through. So it won't stop them.
Also, this won't stop companies from being sold outright to a foreign competitor. If a Chinese company swoops in and buys the US company, these laws can not apply.
It seems like an easy problem to fix, but it's extremely complex.
That's how business is done in places like Russia and China and in many very poor countries. Displease the government and face the full force of state power regardless of actual laws.
I prefer being subject to laws and having recourse to a legal system where i am allowed to challenge even the behavior of the government.
Subjecting corporations to capricious bullying when they do something unpopular is not "protecting citizens" - governments that act like that invariably also abuse individuals the same way.
> That's how business is done in places like Russia and China and in many very poor countries. Displease the government and face the full force of state power regardless of actual laws.
Not at all. I'm suggesting the legislative process be used. You're inferring that trade protectionism is totalitarian rule. Seriously? Citizens and their quality of life is more important than you business and its profits. Full stop.
> I prefer being subject to laws and having recourse to a legal system where i am allowed to challenge even the behavior of the government.
But you are. If you operate in a country, you're subject to its laws. You have recourse under the legal system, and recourse for its legislation if you are a citizen and have a vote.
> Subjecting corporations to capricious bullying when they do something unpopular is not "protecting citizens" - governments that act like that invariably also abuse individuals the same way.
Today I learned that forcing companies to follow the spirit rather than the letter of the law is "bullying". Makes me found of how China and Russia do business sometimes.
Right, trade is neutral. Quality of life is a normative statement, however. The implication being that the state, as a centrally planning agent, is capable of calculating what will objectively increase or decrease QoL. Taken to its conclusion, we reach the spectacular failures of the Five-Year Plans and similar initiatives.
I'd say the US economy isn't centrally planned. I would also say existing tax policy is used to encourage certain behaviors. I'm suggested further tax policy to encourage other behaviors as well. I don't see the problem. Shareholder's don't get as high of a dividend? Because its not like Pfizer is going to be using those savings for R&D. Its either going into people's pockets or used to acquire competitors (which arguably does not help consumers or increase their quality of life).
Following your suggestion, go ahead and tax US corporations at a very high rate, they GTFO as you suggest, and now US citizens have to pay either for an inferior, generic low-priced drug, or a high-priced one imported by the very same, once-US-based corporation that also supplied jobs to US citizens that are now also exported overseas. What Pfizer does with its savings whether for R&D or not, is not yours or the government's business as long as they are not doing anything illegal with the profits. If they didn't invest in R&D or maintain competitiveness and their profit margins will go down. Eliminate any government subsidies and corruption that may enable them and other companies to escape market forces and it will take care of itself. Central planning - no thank you.
It is not part of the legislative process in western liberal states to introduce laws that target specific named corporations or individuals separately to their peers.
This mechanism is sometimes used by totalitarian or very authoritarian regiemes as a form of window dressing to justify punishing corporations and individuals who displease the government. And of course these punishements are always justified by some appeal to "protecting citizens" - both Hitler and Stalin constantly used this as justification.
I like the fact that I live in a country where I can be punished for breaking actual laws not one where laws are vague or can be applied whimsically based on a notion of "spirit" or the intension of the drafter of the law instead of what the words of the law state.
> I like the fact that I live in a country where I can be punished for breaking actual laws not one where laws are vague or can be applied whimsically based on a notion of "spirit" or the intension of the drafter of the law instead of what the words of the law state.
Leave or do something to change the status quo. Those are your options.
Exactly this. If the US would have a similar tax rate and policy to Ireland, this merger might not have happened. Many of these transactions are happening because they deliver quick, untapped gains. You just need to unlock them by doing an inversion deal. Or in other words, even an overpriced deal pays for itself.
I'm certainly not 100% onboard with current tax policy, but it makes some sense when much of the value of the product being sold worldwide is created by US-based designers. Apple, for example - a huge portion of their value is created by their design teams in CA, but they make a huge fraction of their profits from those products by selling overseas.
Yep, which is why we have simplified assumptions like "we tax everything at x rate", where x rate is likely lower lower than if they were successful at separating out what profit was made where.
This is the type of thing where I feel absolutely ashamed of how impotent the US is, despite its superpower status. I find it hard to believe that if we had Andrew Jackson as president today, and Ireland and Bermuda were allowing US companies to shield themselves from paying US taxes, that these tax inversions and avoidance schemes wouldn't be quickly and swiftly resolved with extreme prejudice. Ireland alone is costing the US maybe a hundred billion a year. Our relationship with them is not worth that much. Throw sanctions on them. Make Ireland pay taxes to the US. Don't recognize any IP of any Irish company. Threaten them with bombings. Do something. While it is a "problem" that the US has higher corporate tax rates, that's only an actual problem if the US lacks the will or power to enforce those higher tax rates. And the US has the power. And we look like a joke for letting little shit countries give companies back doors to our tax code.
It's also a reason why I think a defiant blowhard like Donald Trump could make waves as president. I don't think he'd have any problem dropping his sac to break treaties and crack skulls.
Ok - can you elaborate why you so clearly favour aggression and blaming Ireland rather than simple domestic legislation and general political will to prevent these companies using other countries as tax havens?
Yeah, threatening them to take the action of banning US incorporation is a bit weird. Even Trump is about fining the company that wants to move to Mexico above the tax savings rather than getting Mexico to halt the deal.
I like the logic of trying to close it with domestic legislation, but the US sucks at that. For one, congress and the president cannot ever seem to work together to get anything meaningful done. But secondly, every single time we think we make an exception or a rule in the tax code, we learn that crafty investment bankers figure out how to exploit the rule. As Plato said, "know thyself." And we suck at playing nicely.
Completely hypothetically, say we could kill tax inversions. The whole thing has felt like a game of cat and mouse game for a century now. Inversions are the tax-avoidance scheme du jouer. For example, for years, Pfizer has already been paying virtually no taxes in the US by storing all of its IP in an offshore subsidiary. The "double Irish" trick is being done by companies who have never done an inversion. There are all sorts of holes in the tax code that other nations use to fuck the US. And there's no way we can compete on the rate, since we'd be competing with countries that have a 0% rate. Many companies pay a zero percent corporate tax rate on all of their offshore profits (which, IIRC, is attributed to a subsidiary in Bermuda), and mostly claim to have nothing but losses to write off in the US.
We need to finally say, "fuck this nonsense." Companies don't need laws to inform them when they're acting morally. It is immoral to act the way they are, and instead of playing cat and mouse like we have been doing, we need to put our foot down and MAKE every company obey the spirit of the tax laws, and not the letter. And the only way I know of to make that happen is to use extreme threats like invalidating their IP if they pull these tricks, or threatening the countries that aid them.
Not antiquated at all. Protectionism has always been an integral part of U.S. economic policy since the beginning, though I don't think even ardent tariff and land law act proponents would have went as far as to threaten war on countries with more favorable business conditions (actually, the trend has been war on not being favorable enough, but otherwise retain strong domestic policies).
While I think the "bombing" hyperbole was a bit much, I do think you have a point there. Even if we accept the argument that corporate taxes in the US are too high, a tax which is unevenly enforced is effectively a tax on the honest and a subsidy for the dishonest. Facilitating such subterfuge - which several countries do quite openly and deliberately as a matter of policy - is just money laundering writ large. As with other money launderers, letting them get away with it is effectively giving them money from our own taxpayers' pockets. Instead, we should encourage them to help us collect our lawfully levied taxes, as we help them collect theirs. If they continue cooperating with criminals instead of with our government, sanctions from denial of IP to outright embargo (but not bombing) are entirely appropriate.
" The world isn't going to get more protectionist, especially on the heals of TPP."
Please remember that the TPP hasn't passed yet, and I don't think it should pass, so let's not treat it as a done deal yet. (even though you and I both know it will be a hard battle to win). Also, I think the world should be more protectionist...
Leave it to the NYT to shill for more taxes and more government. Of course the article doesn't mention one single factual dollar figure about this inversion, it only decries the horror. They estimate major inversions cost the treasury $2 billion a year. Wowsa, that's a rounding error in a $4 trillion annual budget.
I've encountered many deals where small foreign companies were looking at doing business in the US but when we explained to them federal and state corporate taxation they were discouraged from setting up shop here. I'm sure there are hundreds if not thousands of similar stories each year. Instead of reducing the US corporate tax burden (amongst the highest in the world) and encouraging companies to set up shop here, the US tax code discourages such investment and growth.
Maybe the bad thing is not in avoiding taxes but in dumb attempt of IRS to charge high tax rates to entities who has enough resources to choose more tax friendly jurisdiction anyways.
"The $160 billion deal to combine Pfizer and Allergan, the maker of Botox, does not appear to be illegal. But it should be. This merger is a tax-dodging maneuver that enriches shareholders and executives while shortchanging the public and robbing the Treasury of money."
Wow. The Wall Street Journal editorial board sounds like Bernie Sanders. If the WSJ is writing editorials like that, cracking down on offshore tax avoidance is no longer acceptable to the business community. This is forward progress.
I think everybody should contribute to pay fair taxes if they are able.
Why should small companies pay taxes and big companies pay zero? Then the small ones have to pay extra
for those who didnt pay.
There are certain things with globalization that is definitely not good for society, swapping profits for losses and paying zero tax is definitely one of the issues.
These companies take advantage of infrastructure paid by other tax payers road infrastructure, education infrastructure that brings skilled workers for them to employ. So why is that certain organization leech and do not contribute back equally?
We could solve this problem by simply offering competitive corporate tax rates and actually attract business to pay re locate here and collect higher total revenues. But of course that isn't "fair" to liberals even though it generates more revenue for the public.
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