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Some voters are sick of companies like Amazon paying no corporate tax

156 points by Cbasedlifeform 7y ago

tim333 7y ago
>the list of those paying zero roughly doubled last year as a result of provisions in President Trump’s 2017 tax bill The gripes seem to largely a political issue which I guess is down to the voters as to who they vote in.
grenoire 7y ago
Really have to start taxing over revenues. It's long due.
- seunosewa 7y ago
  They do. Sales tax.
  - hmate9 7y ago
    One could argue that the consumers are the ones paying this too. Sales tax is almost always passed onto the consumer in the form of raised prices.
    - kgwgk 7y ago
      One could argue that consumers are the ones paying every tax.
      - cies 7y ago
        Sure. But what is taxed does steer society. Imagine only taxing on pollution (so not on wages/sales/home ownership). Currently we tax on wages/ sales/ home ownership and not on Amazon an little on pollution. Look around to see the result.
        kgwgk 7y ago
        I don't get your point. Are you suggesting that Amazon alone should pay a tax on revenue (steering business to its competitors and reducing consumption slightly), that every company should pay a tax on revenue (steering business from more expensive and less vertically-integreated competitors to Amazon, but reducing overall consumption) or something else entirely?
        cies 7y ago
        Im saying all tax is paid by consumers in the end. But what is being taxed is still interesting. I'm suggesting Amazon is currently doing what it does because of taxation law. It simply complies/optimizes. Profit taxed? Dont make profit. Pollution free, dont worry about pollution.
      - eeZah7Ux 7y ago
        Strawman. Not all companies pay the same amount of taxes. Also customers not are supposed to indirectly pay corporate taxes in the same way.
    - pure-awesome 7y ago
      I don't understand: What's the difference in them passing on the sales taxes and passing on the corp. taxes, or indeed any other expense?
      - deleted 7y ago
        [deleted]
      - cies 7y ago
        Agreed. But where the tax is coming from pushes society in one direction or another. Picture this: all tax for the budget collected from pollution taxes, so: zero sales tax, zero wage tax, zero home owner taxes. What do you think society will optimize in that case? Yet currently we tax on labour and on home ownership, but not on Amazon. Look around an see the result.
        asdff 7y ago
        This assumes tech giants aren't the giant colluding monopolies that they are, and actually need to be competitive in quality or price to survive. The tax will be payed by consumers, and shareholders aren't going to see a difference in their dividends.
  - 6nf 7y ago
    So increase sales tax and drop corporate taxes maybe?
- joesb 7y ago
  Way to kill businesses that relying on subcontracting and surviving on small margin.
  - deleted 7y ago
    [deleted]
- dragosbulugean 7y ago
  Yea sure.. good way to kill incentives for businesses to re-invest their revenue and grow/innovate. Just tax on revenue he said... Holy shit the minds these days...
- chatmasta 7y ago
  If it costs you 95 cents to make 1 dollar, an 8% revenue tax would means you would pay 1.03 in cost to make 1.00.
  - Maarten88 7y ago
    In my country, my company has to pay 21% VAT. For a dollar in sales we have to add 21% in taxes. But we deduct the VAT paid, so if we had to buy stuff for 95 cents, we'd get back the VAT paid on that, resulting in having to pay taxes only on the difference, being 5 cents x 21%, approx 1 cent. Hence it being called "value added tax". I think this is a better tax than income taxes because it taxes consumption, not labor (although if you do work to add value this does get taxed).
    - Fordec 7y ago
      Except then it affects poor people more as consumption of things that people need makes up more of their income than the rich who have more disposable income, savings, capital and investments. Thus driving even more wealth inequality. But HN readers are more of the "Temporarily Embarrassed Millionaire" types...
      - ex_ex_nihilo 7y ago
        So you don't apply VAT to inelastic commodities. We have in fact figured this shit out. Austrian or Keynesian are not the only two choices available to us, despite what some would try to lead you to believe.
    - chatmasta 7y ago
      Many companies explicitly pass VAT to the consumer. For example, I have to pay VAT as a line item on the rent for my coworking space. VAT is the reason a MacBook is hundreds of dollars more expensive to buy in Europe than in the US. I’m an American living in UK. I bought a jacket here, wore it home, and then forgot it, so I had my mom send it to be in the UK (where I bought it). She declared its value and so I had to pay £35 in VAT for a jacket I bought in the UK for £150. VAT also makes it difficult for companies in a VAT jurisdiction to compete on price with companies in other jurisdictions, and for small businesses to sell internationally. I’m not sure I’ve ever heard someone talk about how great VAT is. It’s a system you implement when your country fails to innovate and instead siphons off the innovation of others.
- daemin 7y ago
  Initially I too thought this was a bad idea, but if you think about it and set the tax rate really low - like a handful of percent, say 1% or 2%, not more than 5% - it might actually work. Because even if the corporate tax rate is 30%, but we only collect it on profit, which ends up being only 5%-10% of revenue. So in actual fact, if the corporation was honest, we're really only collecting 30% of 5% or so, which is about 1-2% of revenue. The thing which I think works with this "revenue tax" is that it removes the ability of the corporation to do clever accounting tricks to reduce the amount of profit. For example moving the IP offshore to a lower taxed country. It is something that could work for a lot of countries and would satisfy a lot of people. The one place where it might not work is where margins are already razor thin and the business makes up on volume. But then again the business would have to charge more to cover the extra expense.
  - icebraining 7y ago
    Seems like that would lead to massive vertical consolidation. If you have a retailer buying from a distributor buying from manufacturer buying from a raw material producer, the revenue flowing from each to the next would be taxed again and again, but a single company doing everything would only pay once. Is that something you want to encourage? A VAT might make more sense, since you can deduct the VAT you paid to your supplier from the amount charged to your customers.
    - daemin 7y ago
      A VAT, GST, or sales tax always affects only the final consumer, where as a revenue tax would dig into every stage whenever goods or services are moved between companies. There is nothing inherently wrong about taxing the revenue at each stage as material flows between companies. Right now we tax those companies profitability instead, and at a much higher rate. So there is an incentive for companies to minimise profitability in terms of how much tax they have to pay. If instead we tax revenue directly it could simplify things and mean that they could optimise profit to some degree. It could lead to more vertical integration but it would also lead to the dissolution of accounting schemes between companies like the double Dutch Irish sandwich (or whatever it's called). Because every time a company makes revenue it would be taxed in that country. In general you could think of a revenue tax as more of a land tax for companies. Real-estate owners generally pay government an amount per year which is just because they own that property. So think of a revenue tax as one which is applied to businesses.
caprese 7y ago
> One of the benefits of taxation is taking it and using it for the collective good Which is true no matter if the tax rate is 1% or 75% > He could be taxed at 99.9 percent and still have millions left over I realize this is hyperbole but do realize that no 99.9% tax would be complied with > tax on every dollar over $100 million in profits they earn anywhere in the world oh the American hubris, so lost in the goal of catering to their constituents that they think this institution has a valid claim on assets, and income. Lets take a cut of everyone's productivity IN A MORE FAIR WAY crowd cheers. But alas, the US rule of law makes it secure for you to do business and these corporations benefit from this society and use its services - but thats also true whether the tax is 1% of 75%, so it isn't really an argument > article shows graphs about tax rebates Article doesn't talk about how the corporations used tax rebates at all. It talks about the outcome of paying no tax, talks about all these proposals, and none of the proposals talk about tax rebates. Even the most ambitious proposal here would probably not effect how these corporations operate. Are people - I dare say - stupid? Is this a mass reading comprehension issue? It is interesting that people who can simply read can play tax games like this for another 100 years before anyone catches on.
seunosewa 7y ago
The article is reluctant to mention the reason why they got those tax rebates, and focuses on the way people feel about it. This seems like bad journalism. According to CNBC, “Amazon's low tax bill mainly stemmed from the Republican tax cuts of 2017, carryforward losses from years when the company was not profitable, tax credits for massive investments in R&D and stock-based employee compensation.” https://www.cnbc.com/amp/2019/04/03/why-amazon-paid-no-federal-income-tax.html https://www.cnbc.com/amp/2019/04/03/why-amazon-paid-no-feder... These are the actual things we should be talking about.
- civilitty 7y ago
  Those all sound like corporate tax policies. That's literally what they're talking about. Clearly, a growing portion of the electorate doesn't like those policies. That's the first step in democracy, no? Engagement?
  - lfcc 7y ago
    I agree that engagement and discussing policies is important. But it does feel disingenuous and aimed at provoking outrage (to trigger a knee-jerk reaction) when you just mention a fact like "look at these rich guys that don't share anything!" and ignore the context of why it got to be the way it is. And I'm not saying that there aren't changes that could and should be made. Just that this particular article doesn't have the feel of a fair debate aiming to inform people, but more of an outrage-inducing propaganda.
    - locklock 7y ago
      I'm fine with outrage-inducing propaganda against people who have tens or hundreds of billions of dollars since that class as a whole spends so much time putting out propaganda in their favor. I'm not particularly interested in the details as long as it elevates consciousness about the inherent problems with a society that allows Jeff Bezos to have more money than he could spend in ten thousand lifetimes while millions of people aren't entirely sure how they're going to afford food next week
movax 7y ago
Am I to believe Bezos and his investors will simply take the hit of paying taxes, or will that expense get passed to consumers?
- lmm 7y ago
  Smaller companies pay their taxes and set their prices at a level where they can afford that. If Amazon are forced to compete fairly on efficiency/quality/... rather than on tax avoidance, that's a good thing for customers in the long run (and of course collecting tax to be spent on public services is good for citizens immediately).
  - movax 7y ago
    That makes sense, thank you.
bdibs 7y ago
Voters are sick of it because of a general misunderstanding of corporate taxes, and sensationalized headlines are just making it worse.
- rocgf 7y ago
  I must admit that my knowledge is lacking in this area. Can someone offer a high-level explanation to one of the people who don't understand corporate taxes in the US? As far as my understanding goes, the bulk of taxes are paid on profit (to be more precise, operating income), and not revenue. As far as I understand, big companies do everything possible to make it seem like they are not profitable from an accounting perspective. As an example, this might mean that they'd pay some subsidiary in Ireland, where corporation taxes are smaller. What am I missing?
  - TomMarius 7y ago
    You're missing that Amazon is reinvesting, not hiding profit.
    - Beldin 7y ago
      "Margrethe Vestager, the EU commissioner in charge of competition, said Luxembourg’s “illegal tax advantages to Amazon” had allowed almost three-quarters of the company’s profits to go untaxed, allowing it to pay four times less tax than local rivals." https://www.theguardian.com/technology/2017/oct/04/amazon-eu-tax-irish-government-apple https://www.theguardian.com/technology/2017/oct/04/amazon-eu...
      - TomMarius 7y ago
        That is in EU, we're talking about the USA corporation.
        notacoward 7y ago
        The fact that they're not so neatly distinguishable is very much at the heart of the problem. One of the main ways companies avoid tax is by making it appear that their revenue, profits, and (to a lesser extent) costs are somewhere other than where they really are. Amazon in the US is very much aware of the tax implications of hiring or locating assets in the EU, whether legitimately or as a pure dodge, and depends on the difference.
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acslater00 7y ago
It doesn’t matter if corporations pay taxes because the money just flows to people who own equity in or work for those corporations, and they pay taxes.
- crispyambulance 7y ago
  It would be OK if corporations didn't pay taxes. BUT there's more to the story. Not only do they not pay taxes, they also enjoy absurd political power through lobbyists and through being able to pump huge sums of money into politics thanks to the Citizen's United decision. There is simply too much power in the hands of the corporations. I mean, Amazon literally had dozens of city governments falling over themselves to give up enormous tax goodies and red carpet roll out all for the weak promise of 50000 jobs and an HQ2.
bedhead 7y ago
The intellectual dishonesty of this from allegedly smart people continues to astound me. Amazon has little-to-no taxes mainly because they have such low taxable income in the first place because they spend so much in R&D and other things. They’re actually creating jobs and new businesses rather than showing massive profits and paying a ton in taxes. I have no doubt they take advantage of perfectly legal tax code items like accelerated depreciation, just like millions of other companies. At the end of the day, people of a certain mindset just want to take other peoples’ money and the more of it they have they more desperately people believe they don’t deserve to have it.
- lugg 7y ago
  > take advantage of perfectly legal tax code items Nobody is saying otherwise. They are saying these legal loopholes are the problem that need changing.
  - sokoloff 7y ago
    Plenty of people are saying otherwise, either directly "These cross-national inter-company agreements are illegal and should be reversed" or indirectly "These companies are free-riding by improperly exploiting loopholes and should pay more." If the only issue were loopholes, the fixes are outside of Amazon/Google/other companies hands and in the hands of the legislatures of the various companies.
    - ex_ex_nihilo 7y ago
      Exactly. There is such a thing as fiduciary duty. As a board member, if I find out my CEO is overpaying on taxes because he feels like it's the "right thing to do", his ass is getting canned. Our competition is not going to do that, and you get no brownie points for being a naive simp. This is a competition, not a drum circle.
- _Microft 7y ago
  Taxes are no end in itself, they are necessary to provide the infrastructure (streets, legal system, ...) so that people and businesses can thrive. Not wanting to contribute to that is the epitome of free-riding.
gigatexal 7y ago
This comes up all the time. The issue is not the companies. The issue is the loopholes that their highly paid tax accountants are taking advantage of. Change the law not attack the company for acting in the best interest of its shareholders.
- jyounker 7y ago
  And how did we end up with those loopholes?
  - ex_ex_nihilo 7y ago
    Most people would hold that offering a bribe is not the unethical action, accepting the bribe is the unethical side. So if you're implying that the companies acted unethically by bribing politicians, I beg to differ. That is like blaming a lion for killing gazelles. Corporations are in competition with one another. It's a winner-take-all world, and they will always seek every edge they can get. If you want to hold someone accountable, vote the bastards out and elect someone with a spine.
  - gigatexal 7y ago
    Repeat after me: elected officials are our representatives. If you don’t like them either by how they vote or the bribes I mean donations they receive then make your voice known by getting involved, voting, or donating to causes and people you do support. A flat tax is an idea. It has come up from time to time and failed. There are lobbyists on both sides and both are evil in their own ways. In the end the elected officials pass laws. Companies pay tax under those laws. The laws have loopholes and those same companies use them. The. Companies. Are. Not. To. Blame. For. Saving. On. Their. Taxes. Legally. Even if it is a bit unethical while being profitable.
Quarrelsome 7y ago
High revenue low profit is good. Surely Apple are a better target?
netcan 7y ago
Taxing profits (as opposed to revenue, value add, capital gains..) is the ultimate quixotic temptation for politicians. On paper, it is a fantastic tax. Google, Apple, FB, Amazon... all the new economy winners are very profitable, 20% - 30% margins & fast growth are expected (and priced into market caps). They're so profitable that money is just piling up, atm. They can't usefully invest it all. This means you can tax their profits without affecting the real economy. There's nothing google is doing that it couldn't do if they had to pay $10bn (25%-30%) as a tax on profits. OTOH, unprofitable companies (eg Tesla), would have trouble paying extra taxes. It'd need to come out of investments in production capacity, R&D, etc. They wouldn't have to pay. Corporate income tax is just a sensible idea, on the face of it. Unprofitable? Don't pay. Profitable? Pay. Minimum economic disruption. But in practice... across many times and places... it's proved very hard to make a corporate tax scheme work. Tax policy complexity. Accounting complexity. Multiple jurisdictions. The looping cascade of company ownership, partial ownership, contractual relationships, making up the legal "structure" of a google or amazon. It all adds up to a reality wherein politicans cannot make a law that says 25% tax.. and have that mean something similar to what it sounds like. This is a pill very few politicans or voters can swallow. Of course we can! We're legislators. We make laws. We have police, and tax authorities. Google finance said google made $40.42bn. The rate is 25%. Gives us $10.1bn. Empirically, they generally can't. Changing things to enable corporate tax would require massive, difficult legal/bureaucratic reforms. You would need to consider insanely difficult changes, like heavy handed restrictions on a company's ability to own other companies, and the types of legal entities that can own legal entities. You'd need new accounting standards. The bureaucratic guts of the economic machine.
- 300bps 7y ago
  We make laws. We have police, and tax authorities. Google finance said google made $40.42bn. The rate is 25%. Gives us $10.1bn. Your post is very insightful. The only thing I’d add is that when you have a $10 billion tax bill that you can afford to pay $5 billion to attorneys and accountants to avoid it. That’s the crux of the problem to me. No matter what scheme the government can come up with to tax it, the numbers are so large that it is in the company’s interest and ability to find loopholes. That’s why we end up with sophisticated shell companies shuffling money around in tax havens that are perfectly legal but don’t make sense outside of tax avoidance schemes.
juskrey 7y ago
To be fair, why companies should be paying tax at all? Companies are taking all the risk, employees aren't.
just_a_dev 7y ago
Some voters are sick of fools who dont understand why they aren't paying a corporate tax currently.
notacoward 7y ago
> carryforward losses from years when the company was not profitable The idea of carrying forward losses in general is sound, but I'm beginning to wonder if there should be an exception. If the loss is intentional, using investment instead of profit to drive growth, I'm not so sure those losses deserve to be carried forward. Probably an unpopular opinion here on HN, but I think denying reductions in those cases would be beneficial not only in terms of tax revenue from the larger companies but also in terms of reducing the VC-fueled ""unicorn or bust" mentality among the smaller ones.
- tomohawk 7y ago
  Agree that these companies are using the tax code to write off losses that they are intentionally incurring in order to achieve a lower cost point than their (profitable) competitors. This is a very predatory practice that should be ended. Companies should compete in the marketplace. Having tax payers foot the bill for some companies disruption gambit makes no sense.
  - icebraining 7y ago
    Any new company, including a mom&pop restaurant or whatever, will have startup costs that established companies do not (e.g. buying equipment, training people, etc). How do you propose to distinguish those from these "predatory" losses? Or should those losses not be carried over either?
    - notacoward 7y ago
      That's a really good question, and - contrary to HN tradition - I'm not even going to pretend I have a complete answer. Some cases are easy, for example a lot of non-tech startups are funded by loans rather than equity exchanges. Other cases are surely harder, but I think clear lines can and should be drawn. The key IMO is that the company should be paying tax somewhere along the line. Right now VC is a double gift - it provides funds to grow, and the corresponding expenditures magically turn into "losses" that erase future tax. Besides its effect on government revenue, it also gives VC-funded companies an unfair advantage (as though they didn't have enough) over competitors who are being taxed more for having the audacity to grow organically.
mikojan 7y ago
> some I'd call that a success.
glerk 7y ago
> Colin Robertson wonders why he pays federal taxes on the $18,000 a year he makes cleaning carpets, while the tech giant Amazon got a tax rebate. Who cares about what Colin Robertson thinks?
- jdhn 7y ago
  There's also no way that he doesn't get a massive refund at the end of the year based on his salary.
  - ex_ex_nihilo 7y ago
    Yes, if he's married filing jointly the standard deduction is $24k. Meaning he pays zero taxes. If he's unmarried his standard deduction is still most of his salary (~$12k), and the remaining amount would fall into the 10% tax bracket. But he would qualify for tax credits with income that low. Also very likely social services and safety nets. His effective income tax rate should be negative. Reading these comments, it's apparent most people have no idea how this shit works. I thought here of all places, I wouldn't see people falling into the "I don't understand how progressive tax brackets work" trap.
- tclancy 7y ago
  synecdoche: a figure of speech by which a part is put for the whole (such as fifty sail for fifty ships), the whole for a part (such as society for high society), the species for the genus (such as cutthroat for assassin), the genus for the species (such as a creature for a man), or the name of the material for the thing made (such as boards for stage)
ex_ex_nihilo 7y ago
Amazon paid no income tax. Amazon paid a shitton in taxes, and will continue to do so. It is probably the case that profitable companies pay too little in tax, but articles like this are misleading as hell.
achenatx 7y ago
subchapter S (and other pass through) corporations pay no corporate income tax at all. this is the majority of small businesses. Corporations ultimately distribute their profits to actual people. Those people will pay tax on that income. It isnt automatically obvious that corporations should pay any taxes on income (or revenue) until it is distributed to actual people (shareholders and employees). We tax the profit of larger corporations because we can and because we need the tax dollars, not because there is some moral imperative to do it.
- deleted 7y ago
  [deleted]
GeekyBear 7y ago
We means test access to the social safety net programs for the poor. We can means test access to tax loopholes as well.
apta 7y ago
Surprised to see a headline from the NYT that uses weasel words ("some voters"? well some voters are also uneducated, so what?), which even Wikipedia has rules against. That being said, why does it matter if Amazon is not paying taxes itself if it is creating many jobs, with a good percentage of them being high paying, and who end up paying income taxes anyway? Not to mention taxes that Amazon pays for those employees to begin with.
Proven 7y ago
Keyword: "some". Most are happy because products they buy from Amazon are cheaper.

>the list of those paying zero roughly doubled last year as a result of provisions in President Trump’s 2017 tax bill The gripes seem to largely a political issue which I guess is down to the voters as to who they vote in.

grenoire 7y ago

Really have to start taxing over revenues. It's long due.

seunosewa 7y ago
They do. Sales tax.
- hmate9 7y ago
  One could argue that the consumers are the ones paying this too. Sales tax is almost always passed onto the consumer in the form of raised prices.
  - kgwgk 7y ago
    One could argue that consumers are the ones paying every tax.
    - cies 7y ago
      Sure. But what is taxed does steer society. Imagine only taxing on pollution (so not on wages/sales/home ownership). Currently we tax on wages/ sales/ home ownership and not on Amazon an little on pollution. Look around to see the result.
      - kgwgk 7y ago
        I don't get your point. Are you suggesting that Amazon alone should pay a tax on revenue (steering business to its competitors and reducing consumption slightly), that every company should pay a tax on revenue (steering business from more expensive and less vertically-integreated competitors to Amazon, but reducing overall consumption) or something else entirely?
        cies 7y ago
        Im saying all tax is paid by consumers in the end. But what is being taxed is still interesting. I'm suggesting Amazon is currently doing what it does because of taxation law. It simply complies/optimizes. Profit taxed? Dont make profit. Pollution free, dont worry about pollution.
    - eeZah7Ux 7y ago
      Strawman. Not all companies pay the same amount of taxes. Also customers not are supposed to indirectly pay corporate taxes in the same way.
  - pure-awesome 7y ago
    I don't understand: What's the difference in them passing on the sales taxes and passing on the corp. taxes, or indeed any other expense?
    - deleted 7y ago
      [deleted]
    - cies 7y ago
      Agreed. But where the tax is coming from pushes society in one direction or another. Picture this: all tax for the budget collected from pollution taxes, so: zero sales tax, zero wage tax, zero home owner taxes. What do you think society will optimize in that case? Yet currently we tax on labour and on home ownership, but not on Amazon. Look around an see the result.
      - asdff 7y ago
        This assumes tech giants aren't the giant colluding monopolies that they are, and actually need to be competitive in quality or price to survive. The tax will be payed by consumers, and shareholders aren't going to see a difference in their dividends.
- 6nf 7y ago
  So increase sales tax and drop corporate taxes maybe?
joesb 7y ago
Way to kill businesses that relying on subcontracting and surviving on small margin.
- deleted 7y ago
  [deleted]
dragosbulugean 7y ago
Yea sure.. good way to kill incentives for businesses to re-invest their revenue and grow/innovate. Just tax on revenue he said... Holy shit the minds these days...
chatmasta 7y ago
If it costs you 95 cents to make 1 dollar, an 8% revenue tax would means you would pay 1.03 in cost to make 1.00.
- Maarten88 7y ago
  In my country, my company has to pay 21% VAT. For a dollar in sales we have to add 21% in taxes. But we deduct the VAT paid, so if we had to buy stuff for 95 cents, we'd get back the VAT paid on that, resulting in having to pay taxes only on the difference, being 5 cents x 21%, approx 1 cent. Hence it being called "value added tax". I think this is a better tax than income taxes because it taxes consumption, not labor (although if you do work to add value this does get taxed).
  - Fordec 7y ago
    Except then it affects poor people more as consumption of things that people need makes up more of their income than the rich who have more disposable income, savings, capital and investments. Thus driving even more wealth inequality. But HN readers are more of the "Temporarily Embarrassed Millionaire" types...
    - ex_ex_nihilo 7y ago
      So you don't apply VAT to inelastic commodities. We have in fact figured this shit out. Austrian or Keynesian are not the only two choices available to us, despite what some would try to lead you to believe.
  - chatmasta 7y ago
    Many companies explicitly pass VAT to the consumer. For example, I have to pay VAT as a line item on the rent for my coworking space. VAT is the reason a MacBook is hundreds of dollars more expensive to buy in Europe than in the US. I’m an American living in UK. I bought a jacket here, wore it home, and then forgot it, so I had my mom send it to be in the UK (where I bought it). She declared its value and so I had to pay £35 in VAT for a jacket I bought in the UK for £150. VAT also makes it difficult for companies in a VAT jurisdiction to compete on price with companies in other jurisdictions, and for small businesses to sell internationally. I’m not sure I’ve ever heard someone talk about how great VAT is. It’s a system you implement when your country fails to innovate and instead siphons off the innovation of others.
daemin 7y ago
Initially I too thought this was a bad idea, but if you think about it and set the tax rate really low - like a handful of percent, say 1% or 2%, not more than 5% - it might actually work. Because even if the corporate tax rate is 30%, but we only collect it on profit, which ends up being only 5%-10% of revenue. So in actual fact, if the corporation was honest, we're really only collecting 30% of 5% or so, which is about 1-2% of revenue. The thing which I think works with this "revenue tax" is that it removes the ability of the corporation to do clever accounting tricks to reduce the amount of profit. For example moving the IP offshore to a lower taxed country. It is something that could work for a lot of countries and would satisfy a lot of people. The one place where it might not work is where margins are already razor thin and the business makes up on volume. But then again the business would have to charge more to cover the extra expense.
- icebraining 7y ago
  Seems like that would lead to massive vertical consolidation. If you have a retailer buying from a distributor buying from manufacturer buying from a raw material producer, the revenue flowing from each to the next would be taxed again and again, but a single company doing everything would only pay once. Is that something you want to encourage? A VAT might make more sense, since you can deduct the VAT you paid to your supplier from the amount charged to your customers.
  - daemin 7y ago
    A VAT, GST, or sales tax always affects only the final consumer, where as a revenue tax would dig into every stage whenever goods or services are moved between companies. There is nothing inherently wrong about taxing the revenue at each stage as material flows between companies. Right now we tax those companies profitability instead, and at a much higher rate. So there is an incentive for companies to minimise profitability in terms of how much tax they have to pay. If instead we tax revenue directly it could simplify things and mean that they could optimise profit to some degree. It could lead to more vertical integration but it would also lead to the dissolution of accounting schemes between companies like the double Dutch Irish sandwich (or whatever it's called). Because every time a company makes revenue it would be taxed in that country. In general you could think of a revenue tax as more of a land tax for companies. Real-estate owners generally pay government an amount per year which is just because they own that property. So think of a revenue tax as one which is applied to businesses.

caprese 7y ago

> One of the benefits of taxation is taking it and using it for the collective good Which is true no matter if the tax rate is 1% or 75% > He could be taxed at 99.9 percent and still have millions left over I realize this is hyperbole but do realize that no 99.9% tax would be complied with > tax on every dollar over $100 million in profits they earn anywhere in the world oh the American hubris, so lost in the goal of catering to their constituents that they think this institution has a valid claim on assets, and income. Lets take a cut of everyone's productivity IN A MORE FAIR WAY crowd cheers. But alas, the US rule of law makes it secure for you to do business and these corporations benefit from this society and use its services - but thats also true whether the tax is 1% of 75%, so it isn't really an argument > article shows graphs about tax rebates Article doesn't talk about how the corporations used tax rebates at all. It talks about the outcome of paying no tax, talks about all these proposals, and none of the proposals talk about tax rebates. Even the most ambitious proposal here would probably not effect how these corporations operate. Are people - I dare say - stupid? Is this a mass reading comprehension issue? It is interesting that people who can simply read can play tax games like this for another 100 years before anyone catches on.

seunosewa 7y ago

The article is reluctant to mention the reason why they got those tax rebates, and focuses on the way people feel about it. This seems like bad journalism. According to CNBC, “Amazon's low tax bill mainly stemmed from the Republican tax cuts of 2017, carryforward losses from years when the company was not profitable, tax credits for massive investments in R&D and stock-based employee compensation.” https://www.cnbc.com/amp/2019/04/03/why-amazon-paid-no-federal-income-tax.html https://www.cnbc.com/amp/2019/04/03/why-amazon-paid-no-feder... These are the actual things we should be talking about.

civilitty 7y ago
Those all sound like corporate tax policies. That's literally what they're talking about. Clearly, a growing portion of the electorate doesn't like those policies. That's the first step in democracy, no? Engagement?
- lfcc 7y ago
  I agree that engagement and discussing policies is important. But it does feel disingenuous and aimed at provoking outrage (to trigger a knee-jerk reaction) when you just mention a fact like "look at these rich guys that don't share anything!" and ignore the context of why it got to be the way it is. And I'm not saying that there aren't changes that could and should be made. Just that this particular article doesn't have the feel of a fair debate aiming to inform people, but more of an outrage-inducing propaganda.
  - locklock 7y ago
    I'm fine with outrage-inducing propaganda against people who have tens or hundreds of billions of dollars since that class as a whole spends so much time putting out propaganda in their favor. I'm not particularly interested in the details as long as it elevates consciousness about the inherent problems with a society that allows Jeff Bezos to have more money than he could spend in ten thousand lifetimes while millions of people aren't entirely sure how they're going to afford food next week

movax 7y ago

Am I to believe Bezos and his investors will simply take the hit of paying taxes, or will that expense get passed to consumers?

lmm 7y ago
Smaller companies pay their taxes and set their prices at a level where they can afford that. If Amazon are forced to compete fairly on efficiency/quality/... rather than on tax avoidance, that's a good thing for customers in the long run (and of course collecting tax to be spent on public services is good for citizens immediately).
- movax 7y ago
  That makes sense, thank you.

bdibs 7y ago

Voters are sick of it because of a general misunderstanding of corporate taxes, and sensationalized headlines are just making it worse.

rocgf 7y ago
I must admit that my knowledge is lacking in this area. Can someone offer a high-level explanation to one of the people who don't understand corporate taxes in the US? As far as my understanding goes, the bulk of taxes are paid on profit (to be more precise, operating income), and not revenue. As far as I understand, big companies do everything possible to make it seem like they are not profitable from an accounting perspective. As an example, this might mean that they'd pay some subsidiary in Ireland, where corporation taxes are smaller. What am I missing?
- TomMarius 7y ago
  You're missing that Amazon is reinvesting, not hiding profit.
  - Beldin 7y ago
    "Margrethe Vestager, the EU commissioner in charge of competition, said Luxembourg’s “illegal tax advantages to Amazon” had allowed almost three-quarters of the company’s profits to go untaxed, allowing it to pay four times less tax than local rivals." https://www.theguardian.com/technology/2017/oct/04/amazon-eu-tax-irish-government-apple https://www.theguardian.com/technology/2017/oct/04/amazon-eu...
    - TomMarius 7y ago
      That is in EU, we're talking about the USA corporation.
      - notacoward 7y ago
        The fact that they're not so neatly distinguishable is very much at the heart of the problem. One of the main ways companies avoid tax is by making it appear that their revenue, profits, and (to a lesser extent) costs are somewhere other than where they really are. Amazon in the US is very much aware of the tax implications of hiring or locating assets in the EU, whether legitimately or as a pure dodge, and depends on the difference.

sara123123 7y ago

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acslater00 7y ago

It doesn’t matter if corporations pay taxes because the money just flows to people who own equity in or work for those corporations, and they pay taxes.

crispyambulance 7y ago
It would be OK if corporations didn't pay taxes. BUT there's more to the story. Not only do they not pay taxes, they also enjoy absurd political power through lobbyists and through being able to pump huge sums of money into politics thanks to the Citizen's United decision. There is simply too much power in the hands of the corporations. I mean, Amazon literally had dozens of city governments falling over themselves to give up enormous tax goodies and red carpet roll out all for the weak promise of 50000 jobs and an HQ2.

bedhead 7y ago

The intellectual dishonesty of this from allegedly smart people continues to astound me. Amazon has little-to-no taxes mainly because they have such low taxable income in the first place because they spend so much in R&D and other things. They’re actually creating jobs and new businesses rather than showing massive profits and paying a ton in taxes. I have no doubt they take advantage of perfectly legal tax code items like accelerated depreciation, just like millions of other companies. At the end of the day, people of a certain mindset just want to take other peoples’ money and the more of it they have they more desperately people believe they don’t deserve to have it.

lugg 7y ago
> take advantage of perfectly legal tax code items Nobody is saying otherwise. They are saying these legal loopholes are the problem that need changing.
- sokoloff 7y ago
  Plenty of people are saying otherwise, either directly "These cross-national inter-company agreements are illegal and should be reversed" or indirectly "These companies are free-riding by improperly exploiting loopholes and should pay more." If the only issue were loopholes, the fixes are outside of Amazon/Google/other companies hands and in the hands of the legislatures of the various companies.
  - ex_ex_nihilo 7y ago
    Exactly. There is such a thing as fiduciary duty. As a board member, if I find out my CEO is overpaying on taxes because he feels like it's the "right thing to do", his ass is getting canned. Our competition is not going to do that, and you get no brownie points for being a naive simp. This is a competition, not a drum circle.
_Microft 7y ago
Taxes are no end in itself, they are necessary to provide the infrastructure (streets, legal system, ...) so that people and businesses can thrive. Not wanting to contribute to that is the epitome of free-riding.

gigatexal 7y ago

This comes up all the time. The issue is not the companies. The issue is the loopholes that their highly paid tax accountants are taking advantage of. Change the law not attack the company for acting in the best interest of its shareholders.

jyounker 7y ago
And how did we end up with those loopholes?
- ex_ex_nihilo 7y ago
  Most people would hold that offering a bribe is not the unethical action, accepting the bribe is the unethical side. So if you're implying that the companies acted unethically by bribing politicians, I beg to differ. That is like blaming a lion for killing gazelles. Corporations are in competition with one another. It's a winner-take-all world, and they will always seek every edge they can get. If you want to hold someone accountable, vote the bastards out and elect someone with a spine.
- gigatexal 7y ago
  Repeat after me: elected officials are our representatives. If you don’t like them either by how they vote or the bribes I mean donations they receive then make your voice known by getting involved, voting, or donating to causes and people you do support. A flat tax is an idea. It has come up from time to time and failed. There are lobbyists on both sides and both are evil in their own ways. In the end the elected officials pass laws. Companies pay tax under those laws. The laws have loopholes and those same companies use them. The. Companies. Are. Not. To. Blame. For. Saving. On. Their. Taxes. Legally. Even if it is a bit unethical while being profitable.

Quarrelsome 7y ago

High revenue low profit is good. Surely Apple are a better target?

netcan 7y ago

Taxing profits (as opposed to revenue, value add, capital gains..) is the ultimate quixotic temptation for politicians. On paper, it is a fantastic tax. Google, Apple, FB, Amazon... all the new economy winners are very profitable, 20% - 30% margins & fast growth are expected (and priced into market caps). They're so profitable that money is just piling up, atm. They can't usefully invest it all. This means you can tax their profits without affecting the real economy. There's nothing google is doing that it couldn't do if they had to pay $10bn (25%-30%) as a tax on profits. OTOH, unprofitable companies (eg Tesla), would have trouble paying extra taxes. It'd need to come out of investments in production capacity, R&D, etc. They wouldn't have to pay. Corporate income tax is just a sensible idea, on the face of it. Unprofitable? Don't pay. Profitable? Pay. Minimum economic disruption. But in practice... across many times and places... it's proved very hard to make a corporate tax scheme work. Tax policy complexity. Accounting complexity. Multiple jurisdictions. The looping cascade of company ownership, partial ownership, contractual relationships, making up the legal "structure" of a google or amazon. It all adds up to a reality wherein politicans cannot make a law that says 25% tax.. and have that mean something similar to what it sounds like. This is a pill very few politicans or voters can swallow. Of course we can! We're legislators. We make laws. We have police, and tax authorities. Google finance said google made $40.42bn. The rate is 25%. Gives us $10.1bn. Empirically, they generally can't. Changing things to enable corporate tax would require massive, difficult legal/bureaucratic reforms. You would need to consider insanely difficult changes, like heavy handed restrictions on a company's ability to own other companies, and the types of legal entities that can own legal entities. You'd need new accounting standards. The bureaucratic guts of the economic machine.

300bps 7y ago
We make laws. We have police, and tax authorities. Google finance said google made $40.42bn. The rate is 25%. Gives us $10.1bn. Your post is very insightful. The only thing I’d add is that when you have a $10 billion tax bill that you can afford to pay $5 billion to attorneys and accountants to avoid it. That’s the crux of the problem to me. No matter what scheme the government can come up with to tax it, the numbers are so large that it is in the company’s interest and ability to find loopholes. That’s why we end up with sophisticated shell companies shuffling money around in tax havens that are perfectly legal but don’t make sense outside of tax avoidance schemes.

juskrey 7y ago

To be fair, why companies should be paying tax at all? Companies are taking all the risk, employees aren't.

just_a_dev 7y ago

Some voters are sick of fools who dont understand why they aren't paying a corporate tax currently.

notacoward 7y ago

> carryforward losses from years when the company was not profitable The idea of carrying forward losses in general is sound, but I'm beginning to wonder if there should be an exception. If the loss is intentional, using investment instead of profit to drive growth, I'm not so sure those losses deserve to be carried forward. Probably an unpopular opinion here on HN, but I think denying reductions in those cases would be beneficial not only in terms of tax revenue from the larger companies but also in terms of reducing the VC-fueled ""unicorn or bust" mentality among the smaller ones.

tomohawk 7y ago
Agree that these companies are using the tax code to write off losses that they are intentionally incurring in order to achieve a lower cost point than their (profitable) competitors. This is a very predatory practice that should be ended. Companies should compete in the marketplace. Having tax payers foot the bill for some companies disruption gambit makes no sense.
- icebraining 7y ago
  Any new company, including a mom&pop restaurant or whatever, will have startup costs that established companies do not (e.g. buying equipment, training people, etc). How do you propose to distinguish those from these "predatory" losses? Or should those losses not be carried over either?
  - notacoward 7y ago
    That's a really good question, and - contrary to HN tradition - I'm not even going to pretend I have a complete answer. Some cases are easy, for example a lot of non-tech startups are funded by loans rather than equity exchanges. Other cases are surely harder, but I think clear lines can and should be drawn. The key IMO is that the company should be paying tax somewhere along the line. Right now VC is a double gift - it provides funds to grow, and the corresponding expenditures magically turn into "losses" that erase future tax. Besides its effect on government revenue, it also gives VC-funded companies an unfair advantage (as though they didn't have enough) over competitors who are being taxed more for having the audacity to grow organically.

mikojan 7y ago

> some I'd call that a success.

glerk 7y ago

> Colin Robertson wonders why he pays federal taxes on the $18,000 a year he makes cleaning carpets, while the tech giant Amazon got a tax rebate. Who cares about what Colin Robertson thinks?

jdhn 7y ago
There's also no way that he doesn't get a massive refund at the end of the year based on his salary.
- ex_ex_nihilo 7y ago
  Yes, if he's married filing jointly the standard deduction is $24k. Meaning he pays zero taxes. If he's unmarried his standard deduction is still most of his salary (~$12k), and the remaining amount would fall into the 10% tax bracket. But he would qualify for tax credits with income that low. Also very likely social services and safety nets. His effective income tax rate should be negative. Reading these comments, it's apparent most people have no idea how this shit works. I thought here of all places, I wouldn't see people falling into the "I don't understand how progressive tax brackets work" trap.
tclancy 7y ago
synecdoche: a figure of speech by which a part is put for the whole (such as fifty sail for fifty ships), the whole for a part (such as society for high society), the species for the genus (such as cutthroat for assassin), the genus for the species (such as a creature for a man), or the name of the material for the thing made (such as boards for stage)

ex_ex_nihilo 7y ago

Amazon paid no income tax. Amazon paid a shitton in taxes, and will continue to do so. It is probably the case that profitable companies pay too little in tax, but articles like this are misleading as hell.

achenatx 7y ago

subchapter S (and other pass through) corporations pay no corporate income tax at all. this is the majority of small businesses. Corporations ultimately distribute their profits to actual people. Those people will pay tax on that income. It isnt automatically obvious that corporations should pay any taxes on income (or revenue) until it is distributed to actual people (shareholders and employees). We tax the profit of larger corporations because we can and because we need the tax dollars, not because there is some moral imperative to do it.

deleted 7y ago
[deleted]

GeekyBear 7y ago

We means test access to the social safety net programs for the poor. We can means test access to tax loopholes as well.

apta 7y ago

Surprised to see a headline from the NYT that uses weasel words ("some voters"? well some voters are also uneducated, so what?), which even Wikipedia has rules against. That being said, why does it matter if Amazon is not paying taxes itself if it is creating many jobs, with a good percentage of them being high paying, and who end up paying income taxes anyway? Not to mention taxes that Amazon pays for those employees to begin with.

Proven 7y ago

Keyword: "some". Most are happy because products they buy from Amazon are cheaper.