Is tax avoidance evil?

This was covered on NPR a couple months back (and in bloomberg, obviously), but now it appears that Google is finally getting audited for tax avoidance.

I'm sure the free market would have sorted it all out...

Tax avoidance is going to happen - it's motived by an organisation's self-interest - as far as the Objectivists are concerns it's evil to punish them for their success - to force them to share their wealth. In which case tax avoidance is a good thing because it keeps capital with those who truly earned it.

I guess I was referring to the old "do no evil' motto.  Has it been replaced with "I got mine"? 

I wonder how successful they'd be if they had to invent the internet themselves.  Or if the money they were paid wasn't a federally standard currency.  Or if they had to create their own utilities infrastructure.

2 minutes ago, ScanIAm wrote

I guess I was referring to the old "do no evil' motto.  Has it been replaced with "I got mine"? 

I wonder how successful they'd be if they had to invent the internet themselves.  Or if the money they were paid wasn't a federally standard currency.  Or if they had to create their own utilities infrastructure.

Great point. People that think that they should get to keep 100% of whatever they earn forget that the value of the currency that they receive in income is maintained by the government that issues it. If they don't like the fact that the government takes a portion of those earnings as "overhead", they should make a request to their employers that they be paid in chickens, and bushels of wheat.

Yes, and as a company they still rely on public, tax funded services.  I would say that yes, they can keep the tax money, but when someone sets fire to one of their offices, the fire services won't turn up to put it out and the police won't try and catch whoever did it. When they think that someone stole their idea, the patent office won't care and they won't be allowed to use the courts to claim compensation or to stop it happening again.

Herbie

illegal is illegal. And doing something illegal intentionally is worse. I hope Google didn't sink this low. "trust" is open for debates. Pirce list for different customers and product bundling are common in typical businesses.  But tax avoidance doesn't seem to have many room for debate.

Hmmm...now that you mention it, if it weren't for governments establishing a framework for paper money to exist, it might finally be that fictional burden to be rich.  You'd have to find some way to store the goods and keep track of the services owed to you. 

Banks would be giant warehouses or farms where you'd deposit and withdraw your wealth.  Interest would be acrued when the livestock bred, but bank fees would be the equivalent of the grain you had to give up to feed them.

Wait.  Did we just invent farmville?

15 minutes ago, dahat wrote

Oh my head hurts...

It seems some people here failed basic vocabulary.

Recap:

Tax avoidance: Legally using the tax system to reduce ones taxes by arranging their affairs so as not to incur a tax.

Tax evasion: Illegally using omissions or other fraud to minimize a tax.

*snip*

There's a very thin line between the two. Besides what does legality have to do with being evil or not? It's completely legal to swindle 10% of people's income by convincing them that you can show them a way to achieve an afterlife. Is this evil? In my book, it is.

Besides, nothing Microsoft has done that Google claims to be "evil" is illegal either. Microsoft's getting licensing fees from Android OEMs is completely legal, but how does Google feel about that? Would they consider that evil?

How did this get into a "I don't have to pay taxes" argument? The real issue here is the tax code (assuming Google shifted this money legally, which I'm sure they did with all of their lawyers).

Companies and people shift income overseas all of the time. It's a loophole in the tax code that needs to be closed. As much as I hate Cain's 9-9-9 plan (9% federal sales tax would kill the economy), I do like that it strips away all of the cruft and makes everyone pay a flat rate on their income.

40 minutes ago, dahat wrote

*snip*

Bing tells me that:

Definitions of evil (adj)

e·vil [ v'l ]  

1. morally bad:profoundly immoral or wrong
2. harmful:deliberately causing great harm, pain, or upset
3. causing misfortune: characterized by, bringing, or signifying bad luck

Then explain to the class how they reducing the amount of tax they pay through legal means is profoundly immoral or wrong, how their act deliberately causes great harm, pain or upset, or how it is characterized by, bringing, or signifying bad luck.

Evading taxes causes harm because it creates a greater burden on others.

Besides, Google themselves are the ones who established the bar for doing "no evil"--not Bing web search. If they're going to hold Microsoft to such high standards, they should not be throwing stones from their glass house.

The money in question... is not yours to be taken from them, you have no moral or legal right to it.

Spare me your producer-wanking rhetoric. "Producers" that try to skate and pay no taxes do a disservice to all the other producers, including me and you, and they have no moral or legal right to benefit from any of the infrastructure that my tax contributions helped pay for.

That you would respect any company that goes to these means to avoid taxes, as if it's a normal part of doing business, shows me what you really think about this concept of being a "producer". I think your philosophy is an utter crock of sh1t, but I have far more respect for a company that puts more money into its employees to (you know, to actually "produce" something?) and takes a smaller profit than one that hires an army of lawyers to work the tax loopholes.

If you're going to have this grandiose notion about what being a "producer" means, believing that just producing money makes you a producer almost belittles even what that batsh1t crazy Ayn Rand thought.

If you feel they should be paying more in taxes, then change the law so as to ensure that, otherwise Gregory v. Helvering gets in your way as it holds:

*snip*

Do note... if you take any deductions yourself... write anything off on your taxes... even the standard deduction... contribute to a 401k... or any other act that reduces your taxes in the slightest... you are guilty of the exact same moral crime that you claim Google is... and thus EVIL!

I can take a standard deduction without taking any kind of action other than marking a box on my 1040. Taking advantage of some foreign income tax loophole requires some kind of external deliberate act: creating a shell company and then moving the money.

@ScanIAm: Avoiding taxes is a competitive requirement in a free market.  You can bet the competition will.  Avoiding as many monetary outflows while maximizing as many monetary inflows, is how one competitor wins against another.  I don't see evil involved in the equation.

1) They shifted tax money out of the US to another country so that they could pay less of it. 

2) They did so by exploiting rules in such a way that the very societal framework that allowed them to prosper wasn't allowed to collect the revenue.

3) In doing so, they require us to come up with a way to make up for that shortfall, even as we are chastised that taxes are too high on the wealthy.

And, as we've seen, the end result is that a corporation that claims the rights of a 'person' doesn't end up paying the taxes of a person.  Your astute observation about people avoiding taxes fails to take into account the difference in difficulty between the taxes that the 99% pay and those that Google pay.

Google spent extra time and energy to purposefully make sure that the government was less funded than it expected to be.  If one of their employees had found a way to shift some of the money out of one of these schemes and into an offshore account, I'm sure Google would be quick to expect the US legal system to prosecute. 

What is the difference?

1 hour ago, dahat wrote

*snip*

Agreed... only that's not what is happening here is it?

If it walks like a duck...

They are being accused of avoidance, not evasion. Sounds like the IRS wants to make sure things are on the up and up.

Yes, they are being accused of evasion. In an audit, you're essentially guilty until proven innocent.

*snip*

Again... you have not yet established that their act is evil... in fact, the fundamental basis for all of this sounds like it was OKed by the IRS back in '03.

*snip*

Try to read slowly, and maybe you'll comprehend it this time. Google is the one who set the bar for what it means to "do no evil". It goes beyond just not doing anything illegal. By all accounts, since the DoJ ruling Microsoft has kept its nose clean, yet that's not good enough for Google. "Do no evil" is still their mantra to fight against Microsoft. They use this mantra to hire thousands of idealist kids from some of the best schools. People use their products because of their image as a company that not only "doesn't do illegal sh1t" but also has social contract to make the world a better place. When one finds out that they go out of the way to form shell companies to avoid paying taxes like Exxon-Mobil does, that kind of blows this image no matter what the IRS says is legal or not. Every large corporation could legally do the same thing as Google is doing, but they don't.

Aside from the fact that those producers like Google not only provide more economic benefit to the economy (ignoring taxes for the moment) than you or I have or ever will... don't they have a greater claim to said infrastructure that they almost certainly paid orders of magnitude more for than you? Federal income taxes are not the only taxes out there you know.

Oh, spare me. Without individuals like you or me, these corporations wouldn't even exist. Without consumers, there's no need for producers. And what's the economic benefit to the economy of the tens of thousands of taxpayers who now have to pick up the slack because of the taxes Google avoided paying?

Again... why this double standard? Why should a company seek out to pay every penny of tax they can when few individual tax payers do?

What double standard? Google can buy a computer and write off the entire amount under Section 179 of the tax code. Individual tax payers cannot. There are countless other expenses corporations can write off that individuals cannot. Corporations can write-off all these expenses without having to resort to setting up offshore shell companies to hide income, which is something for damn sure individual tax payers can't do.

Call me crazy... but I've never heard a single person say "I found the greatest tax guy ever! He made sure I was paying every penny I can, in fact, he found extra ways I increase my tax burden that I never thought of!"

Strawman. I don't need to say anything more here.

People don't have to deduct their charitable donations, college tuition, student loan interest, mortgage interest, or any one of a thousand other ways that individuals reduce their tax burden.

Why is it so horrible for a company to do the same thing as any individual?

*snip*

Corporations have way more options for deductions, and most of the time, it's for the full amount if it's considered cost of goods sold. For individuals that itemize, mortgage interest makes up the bulk of what they will deduct. Again, individuals do not form offshore shell companies to hide income.

What all do you think the companies do when they save a few bucks on their taxes? While it is true many are sitting on their cash right now (as many individuals are) given the uncertainty in the economy... more often than not they spend it (doubly so when things are good and there is certainty)... either on R&D, increased wages, expansion, etc.

Oh, they defer the spending so that makes it OK, huh? OK. I won't pay my taxes either, because I'll eventually spend it too to help the economy. What an asinine argument! LMAO!

Wanna encourage them to spend more? Remove some/all of the uncertainty that hinders them.

Oh, poor Google! They just can't cope with uncertainty. Do they need a hug or something? Look, I don't know if I'll make another dime of income tomorrow, but I don't form offshore shell companies to avoid paying taxes. Corporations just need to buck up.  They're are so f*cking coddled in this country, it's beyond absurd.

While I have said nothing of the sort... it is more than clear that is clear you do not understand Ayn Rand very well... allow me to quote from the end of the 'money speech' in Atlas Shrugged (emphasis mine): 

*snip*

Unlike you it seems... I recognize the tremendous economic benefit that companies like Google have created... and not just in terms of direct taxes paid... or the # of employees they have (who are not only paying taxes as well, but also having taxes paid for on their behalf).

Chalk up another straw man. I recognize their economic benefit, but if Google didn't exist, it might be another company producing the same products and services as Google, but chooses not engage in underhanded tactics to avoid paying taxes.

More so, there is a dirty little secret which folks on the left tend to forget... or more likley ignore (as vilification of corporations is just so fun & easy)... corporations don't actually pay taxes. Sure... they do fill out forms with the IRS... however they have the ability to simply charge their customers more to make up for the cost.

But, you see, simply charging more means putting their competitors at a price advantage. A more efficient company will find ways not to have to raise prices despite actually paying the taxes that they're supposed to pay. Think of taxes as a stressor that ensures that only the most efficient corporations survive. Sh1tty companies that use tax loopholes to survive don't deserve to exist anymore than an animal species that can't evolve to avoid more nimble predators. That's the way nature works, and that's the way it should be for business.

I must say though, given this rather anti-corporate attitude you have... I think your time would be better spent joining your local contingent of the Parasites on Parade (or if you prefer, the Flea Party) than trying to make your case here... as you don't seem to understand taxes (or the law) all that well.

You know what? I file a 1120S every year in addition to my 1040. I don't have an anti-corporation attitude. I have an anti-tax-evasion attitude.

*verbal diarrhea snipped*

I think addressed everything above

5 hours ago, spivonious wrote

How did this get into a "I don't have to pay taxes" argument? The real issue here is the tax code (assuming Google shifted this money legally, which I'm sure they did with all of their lawyers).

Companies and people shift income overseas all of the time. It's a loophole in the tax code that needs to be closed. As much as I hate Cain's 9-9-9 plan (9% federal sales tax would kill the economy), I do like that it strips away all of the cruft and makes everyone pay a flat rate on their income.

Why should income be the only thing taxed?  If there were some way to tax the trillions of dollars sitting idle right now, I'd be all for it.  All wealth should be taxed back into circulation where it can contribute to the economy.  Libertarians were all about freedom as long as that freedom doesn't infringe upon someone else's freedoms.  If I can't improve my lot in life because you've shifted all the liquidity out of the economy, that seems pretty infringy.