Tim O'Reilly's Reflections on Apple's Tax Avoidance Tactics

https://plus.google.com/107033731246200681024/posts/JpobfLAreyo

by scottkduncan • 14 years ago

53 55 14 years ago

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jerf2• 14 years ago

A classic substitution, substituting an argument that government should exist for an argument that a government should get a given bit of money. It's not the same question, and following that substitution to its logical conclusion leads to the government needing 100% of the money. (And I do mean logical conclusion, not extreme conclusion. This is a fallacious argument.)

Those libertarians he references are strawmen.

skore16• 14 years ago

I disagree. From what I understand, he is not talking about government needing the money, but society needing the money (in his example, which is, after all, the central reason for his post, he talks about him taking in money for a group of people to organize an event for everybody).

This maps well to his addressing those "strawmen" libertarians. Most libertarian rhetoric builds on the fact that people have been made suspicious of government and are suggested to think of government as "the other". Likewise, you seem to try to force his argument on its head - Nobody argues whether government should exist and you suggesting it makes me wonder how closely you've read the post.

"The Government" is the subgroup of society who have been elected by the rest of society to invest part of societies resources to the advantage to everybody. The basic math being that society will be better off having spent the money in that way than had it kept the money. Whether or not you agree that that is happening, that is the basic plan.

Tims post simply says: If we want to be a society, that comes at a cost and somebody has to pick up the tab at the end of the night and the system to make that happen is called taxation.

Claiming that this in itself "fallacious argument" because you actually know what his argument is seems ambitious, but I simply have no idea where you take that from. Let's argue the reverse: Since you don't seem to disagree that a government in itself is a good concept, who do you think should pay the price for it?

jimmyvanhalen5• 14 years ago

Everybody's favorite ad company is also doing the same thing btw.

Google 2.4% Rate Shows How $60 Billion Lost to Tax Loopholes

Google Inc. cut its taxes by $3.1 billion in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda.

http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-sho...

jerf2• 14 years ago

"If we want to be a society, that comes at a cost and somebody has to pick up the tab at the end of the night and the system to make that happen is called taxation."

Your own summary simply repeats the fallacy. That someone must pick up the tab does not imply that the tab must be larger than it is today, or that the tab must be paid for by this particular chunk of money. It does not follow. It is not a logical argument.

It isn't even about libertarianism. It doesn't even rise to the level of an argument against libertarianism, because it isn't well-formed enough to even be called a proper argument. "We need a thing" and "We need more of a thing" are two completely different arguments, and you shouldn't allow one argument to be substituted for another without noticing.

adventureful• 14 years ago

If only most of the taxes the government takes actually went to benefit society. At least then there could be a sympathetic argument made for where $6 trillion goes each year.

That's $30,000 per adult, per year, in taxes (local+state+federal). The equation: government == society, is false. Some governments are effective and efficient, some are not; some work for the people, some work against the people, and in varying degrees.

We take as much money out of the economy through all forms of taxation as nations such as Germany, but we don't have the results to show for it that they do. They have better roads, better healthcare, better infrastructure overall, and better education.

EricDeb• 14 years ago

I admittedly have a poor understanding of corporate taxation and offshore avoidance, but this example makes sense to me. Though government is not a family, and it is safe to say all parties will act selfishly. This may further his argument that there should be no tax exceptions or render it irrelevant, I'm not sure.

glenra• 14 years ago

I don't see how Tim's conclusions follow from his premises.

If we are supposed to think of general taxation and the overall amount of government spending as reasonably justified on the grounds that these things were the outcome of a democratic process which "the people" (somewhat indirectly) agreed on, doesn't the same logic suggest that the loopholes are similarly reasonable and justified?

Loopholes aren't a bug in an otherwise perfect system; they are part of the negotiating process that produces laws. If it weren't for the loopholes, legislators wouldn't be able to find support for tax rates as high as they are. The loopholes are there for a reason. The loopholes are part of the exact same "social contract" that produced the taxes.

skore16• 14 years ago

No, that would be overly relativistic. There is a huge corporate culture that drives tax law lobbying. This has created a situation where tax law more likely reveals the will of the corporations, not the will of the people.

yummyfajitas2• 14 years ago

There is a huge government union culture that drives spending law lobbying. This has created a situation where spending laws more likely reveals the will of unions, not the will of the people.

carbocation5• 14 years ago

This is a classic example of singling out one particular actor for blame when the problem is clearly systemic.

There is little value for society to spend its time saying, "Apple is bad because it minimizes, within the contours of the law, its tax burden." And, contrary to Mr. O'Reilly's assertions at the beginning of his piece, I don't say this because I think Apple can spend its money better than the US Government can. For this argument, I don't care either way because it's irrelevant; he merely dismissed a strawman.

The question has to do with our tax code. Is it achieving the goals that we created it to achieve? If so, then there is nothing to discuss, so presumably it's not. If it's not achieving its goals, let's look at the entire picture and talk about where its failures are and how we should change it. Attacking any one particular company is merely a distraction that impedes our ability to discuss the things that actually matter.

skore16• 14 years ago

This makes me wonder, again, whether I have read a different article. If you want to attack the NYT piece, maybe you should comment on that thread, but this is the discussion about Tim O'Reilly's post containing reflections on the general theme, not apple as an actor in particular. That makes your comment seems misplayed here.

carbocation5• 14 years ago

No, I read Mr. O'Reilly's piece and am responding to it. You seem to be saying that, because I reject the premises and false arguments that he makes in his introduction, therefore I didn't read it? Feel free to respond to my substantive point rather than just distracting from the actual conversation.

dredmorbius2• 14 years ago

When that actor is that largest player on the stage, and the article (and Tim's commentary on it) make clear that many others are simply playing the same game, then your criticism falls doubly flat.

The biggest and most profitable companies are avoiding huge portions of their tax obligations. It's a systemic problem. Both points are made by the NY Times piece and Tim O'Reilly's commentary on it. It's hardly a distraction.

And yes, the underlying dynamics of the problem are manifold. Both statute and regulation should change.

carbocation5• 14 years ago

Unless you alleging fraud, then it's patently incorrect to say that Apple is avoiding its obligations. Apple is merely demonstrating what their obligations under the law are, and people aren't liking what they see. That's fine; let's change the tax code.

brackishlake• 14 years ago

I'd love to hear about a PERSON who routinely went out of their way to overpay for a service. When was the last time you arrived at a store, saw a shirt, and said, "I'd like to pay you an extra $10 for this shirt because I believe in what you're doing."

Never.

For that matter, when was the last time you called up the IRS and said, "Dammit America, you're doing such a good job, I'm sending an extra $5,000."

Never. In fact, the most you or I have ever given extra is the $3 election fund.

Let's stop joking around, people. Companies, like people, are going to find ways to pay as little as possible, so long as it's legal. Let's stop blaming Apple and blame ourselves: reform the tax code to be simple, fair, and progressive.

Lewton• 14 years ago

Ever heard of tipping?

Also, I am willing to pay more than required for products that I am particularly keen on, which is why I'm such a fan of Kickstarter

vacri4• 14 years ago

I'd love to hear about a PERSON who routinely funnels their income tax through a different country so that they pay less tax, despite not really living or doing much business there, nor stamping Designed In Different Country on everything they make.

dap• 14 years ago

You can't legally do that. That's an important difference. But you can do other things to reduce your tax burden, and people do hire tax professionals to do that. H&R Block even has a "Maximum Refund Guarantee".

josephcooney• 14 years ago

I've overpaid for goods and services that I thought were exceptionally good.

skore16• 14 years ago

Just off the top of my head - I frequently pay more than is asked on Bandcamp and Humble Bundle. I once paid $20 for an mp3 of a song to its artist, even though it was readily available on youtube.

dangrossman• 14 years ago

Actually, I've done both. I purposely overpay a local restaurant that seems to be struggling and told them they should charge more. This isn't tipping a waiter, I get takeout and tip the store itself. And I've paid extra federal income taxes for several years by purposefully failing to take some deductions I'm entitled to and could easily substantiate.

This year I purposefully overpaid my business privilege tax to the township as well, and paid a special zoning fee for having a home office that I know my neighbors (who also have home offices) don't bother reporting and paying. I also donate money exclusively to organizations that are not registered charities even though donating the same money to a charity would net me cash back in taxes.

90% of people may rarely go out of their way to pay more than they have to, but it's not unheard of.

drieddust• 14 years ago

HP under its founder's leadership did this by ignoring deductions.

waratuman• 14 years ago

His family example doesn't really work. If we had all agreed to throw this big party then each person who agreed stated his obligations to the party. If someone had not agreed to the party, they simply would have not payed and not come. This is not how it works with the government. You are forced to come to the party and pay for it to make everyone else happy. It does not matter that it cost you or that it is not what you want to do. You must surrender yourself for societies "greater good."

It is also worth mentioning that happiness is a subjective value. It is pointless to draw a conclusion about what make society happy when only individuals can be happy. If someone goes their own way, they are not leaving happiness on the table, they are seeking it out elsewhere.

DennisP• 14 years ago

The whole point of taxes is that we can't rely on voluntary donations to fund public goods. It's pointless to argue that people or corporations should voluntarily pay more taxes than they're legally required to pay.

skore16• 14 years ago

> It's pointless to argue that people or corporations should voluntarily pay more taxes than they're legally required to pay.

[[Citation needed]] - don't see what you're talking about in the post - who is arguing that?

eli• 14 years ago

Are there major corporations already doing this ?

Aethaeryn• 14 years ago

    The whole point of taxes is that we can't rely on voluntary
    donations to fund public goods.

Actually, the Romans did just that.

https://en.wikipedia.org/wiki/Aedile

Note this part from the article in particular:

    Because Aediles were not reimbursed for any of their public
    expenditures, most individuals who sought the office were
    independently wealthy. Since this office was a stepping stone to
    higher office and the Senate, it helped to ensure that only
    wealthy individuals (mostly landowners) would win election to
    high office.

So, yes, it's possible to organize things that way, but the side effect is that it limits political power and offices to those who are wealthy. And, yes, the Romans also had taxes so they didn't rely on this method entirely, but this is an alternative model of funding public expenses without taxation and hence a counterexample to your claim.

On the other hand, there's a lot of money that is being spent on campaign advertisements. Perhaps it would be a net gain for society if politicians 'advertised' by spending that cash on public goods instead. Perhaps we can learn from the Romans. :-P

jbarham• 14 years ago

The family analogy is heart-warming, but scaled up to a societal/country level it can lead to destructive practices like nepotism and tribalism.

3pt14159• 14 years ago

The way I usually say it is like this:

Communism works best between two spouses, a little worse with immediate family, a little worse with extended family, a little worse with orthodox religious communities. People can see the trend. As the number of people that get involved goes up the total number of connections goes up n + 1 choose two and the chance that you deeply care for them goes down.

Tim O'Reilly's Reflections on Apple's Tax Avoidance Tactics

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