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What do you think about corporations exploiting tax loopholes

Forums - General Discussion - What do you think about corporations exploiting tax loopholes

I was doing a bit of research today and I found a few companies who exploit tax loopholes very effectively. Some of the big offenders are...

  • Ikea - Owners registered as a charity and pay only 3.5% tax
  • McDonalds - Based in Switzerland to avoid tax, but operate worldwide.
  • Google - Avoids paying £100m in taxes for the UK by basing themselves abroad, where corporation tax is less.
  • Walmart - Pays itself rent to exploit tax loopholes saving hundreds of millions of dollars.

...These are just a few, the list is endless.

Now two things strike me here. One is that the government could be much better funded if the tax loopholes were closed, because the corporations would have to pay more tax. The other is that closing loopholes could potentially be a regressive movement and it couls cause more businesses to move abroad to tax havens like in the case of McDonalds or Google.

What do you think the best solution would be?



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Who would have thought that corporations full of highly intelligent and successful people wouldn't be dumb enough to operate in high tax areas simply because some people believe it is a corporation's duty to provide everyone with welfare?



HappySqurriel said:

Who would have thought that corporations full of highly intelligent and successful people wouldn't be dumb enough to operate in high tax areas simply because some people believe it is a corporation's duty to provide everyone with welfare?

Just using it at a conversation point really.

Also, I too believe it's not a corporations duty to provide everyone with welfare, however some corporations exploit the system in a grossly unfair way. An average business in Sweden will pay 26.3% corporation tax, Ikea pay only 3.5%, a bit of a better balance is required here don't you think? It's a bit like a progressive taxation system that is operating the wrong way round.



highwaystar101 said:
HappySqurriel said:

Who would have thought that corporations full of highly intelligent and successful people wouldn't be dumb enough to operate in high tax areas simply because some people believe it is a corporation's duty to provide everyone with welfare?

Just using it at a conversation point really.

Also, I too believe it's not a corporations duty to provide everyone with welfare, however some corporations exploit the system in a grossly unfair way. An average business in Sweden will pay 26.3% corporation tax, Ikea pay only 3.5%, a bit of a better balance is required here don't you think? It's a bit like a progressive taxation system that is operating the wrong way round.

I personally believe in a simple and straight-forward flat tax system for both individuals and corporations at a rate (somewhere) between 15% and 25% of total income (with the possibility of a smal, say $5,000, deduction for basic living expenses per person) where the government is forced to run a balanced budget.

If there are no "Special Incentives" to produce certain behaviours from individuals or corporations then there are no tax-loopholes to exploit.



Well...technically it isn't illegal. Like you said, it is exploitation of a loophole...but...the tax dudes created that loophole on purpose. Don't you think that the tax dudes know this shit is going on...of course they do..but they don't care. On the other hand though...if you are making a boat load of money, directly or indirectly, would you really want to get taxed like 100 million dollars extra if you could avoid it by exploitation.

Look at it this way...if I make $150 000, I have to pay around $50 000 tax on that shit. Good luck said the duck...I'm am not giving away that much money to money grabbing douches. I will exploit every loophole I can to minimise that tax. I worked hard for that money...I am not throwing away 4 months worth of cash just like that.



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Close the loopholes and turn the extra loophole monies into incentives or the like. I'd rather have a functional tax code with no loopholes and incentives for corporations than one that provides incentives by being broken given the choice only between those two.



HappySqurriel said:
highwaystar101 said:
HappySqurriel said:

Who would have thought that corporations full of highly intelligent and successful people wouldn't be dumb enough to operate in high tax areas simply because some people believe it is a corporation's duty to provide everyone with welfare?

Just using it at a conversation point really.

Also, I too believe it's not a corporations duty to provide everyone with welfare, however some corporations exploit the system in a grossly unfair way. An average business in Sweden will pay 26.3% corporation tax, Ikea pay only 3.5%, a bit of a better balance is required here don't you think? It's a bit like a progressive taxation system that is operating the wrong way round.

I personally believe in a simple and straight-forward flat tax system for both individuals and corporations at a rate (somewhere) between 15% and 25% of total income (with the possibility of a smal, say $5,000, deduction for basic living expenses per person) where the government is forced to run a balanced budget.

If there are no "Special Incentives" to produce certain behaviours from individuals or corporations then there are no tax-loopholes to exploit.


I agree in theory, a flat tax system will work much better in this situation. Around 17% would be acceptable, it would be low enough to keep the larger business from fleeing to tax havens and it would alleviate some of the financial hardships that smaller businesses face. This could result in a less regressive tax system.
Personally, I would opt for a very mild progressive tax system ranging from 16% for smaller businesses to 19% for the massive corporations. Mostly because I think 19% tax wouldn't be enough incentive for a large corporation to move their operations to a tax haven and 16% would further go to help small businesses flourish. But I think our basic idea for a closer balance is similar.

But country for country of course this would vary depending on the size of businesses.



D_Boy said:
Well...technically it isn't illegal. Like you said, it is exploitation of a loophole...but...the tax dudes created that loophole on purpose. Don't you think that the tax dudes know this shit is going on...of course they do..but they don't care. On the other hand though...if you are making a boat load of money, directly or indirectly, would you really want to get taxed like 100 million dollars extra if you could avoid it by exploitation.

Look at it this way...if I make $150 000, I have to pay around $50 000 tax on that shit. Good luck said the duck...I'm am not giving away that much money to money grabbing douches. I will exploit every loophole I can to minimise that tax. I worked hard for that money...I am not throwing away 4 months worth of cash just like that.

Of course I realise that the loopholes were created for a reason. I imagine they are there to keep the larger businesses from moving to tax havens, even if that means the tax they pay is far lower. That's what is happening in the UK, there is a tax exodus which is the case with McDonalds and Google, who can't exploit the loopholes and move to tax havens. The logical solution is to change the corporation tax rates to a more fair rate so that people don't move abroad. Essentially you half the tax and that results in 2X+ more tax paying corporations in your country, assuming you close the loopholes to an extent.

Essentially everybody could stand to benefit more than they are under the current system. the taxes wouldbe lower and it could reverse the migration of corporations.