Also true for just not paying taxes at all. The number of times I have had people tell me that they just let it float for years so they can settle up for a fraction later is unbelievable.
> contending the company lowballed the price of trademarks, customer agreements, software licenses and other rights it moved offshore
At the same time they were telling HMRC (the British tax authority) that IP rights, etc. were incredibly valuable and a significant cost of doing business (in the form of payments back to the mothership), and that's why they made very little profit in the UK and didn't need to pay much tax.
That mentions the digital services tax; I remember some of HN being quite angry that "Europe" was trying to get a share of the immense wealth extracted from it by American multinationals.
"Wealth extracted from it" seems like a disingenuous framing of "voluntary market exchange of money for services." It's not like Europe is a colony. Tech companies only make money by providing goods and services people choose to pay for.
Ah, the next level in determining Schrodinger's cat's outcome is if the detector measures Zuckerberg's profit taxability instead of radiation decay; the measurement's results depend on who is carrying them out, where they've taken place and, in all instances, the cat kills itself due to our inability to fix the crazy rich-favoring taxation systems.
One thing I'd love the US to do was something that happend in Germany ~2015, where they bought a lot of "Steuer-CD"s, with leaked info about people hiding money in offshore accounts. Then they allowed everyone to self report and applied more scrutiny to larger corporations which in total added several billions in revenue.
The US passed FATCA in 2010, you can't operate a foreign bank that touches US anything without snitching out accounts with US persons as ultimate beneficial owner.
Because the article said so? That’s your rationale for saying the executive branch isn’t weaponizing the rest of government offices for their own influence and benefit. Sorry, color me unconvinced until this administration shows good faith.
Because... the article clearly says the case began under the FORMER administration, and goes further to say that it's not clear whether the CURRENT administration is going to drop the case.
Am I the only one who thinks it's totally bonkers that a lawsuit can outlast a 4 year presidential administration? I mean, I get it, court cases can be complex, but what on earth could they be continuously doing for four years? I would love to see an hour by hour accounting of the time actually spent by humans on a case like this. My guess is that it's like a poorly run software project: mostly empty, where Person X is blocked waiting on the output of Person Y for weeks, and so on.
This is the nature of any non-trivial litigation. It can take a long time just to source all the records of what's being argued over, then it takes a long time to argue over what's allowed, then a long time to argue what all of it means, then a long time to argue over which laws, jurisdictions and precedents apply, then a long time to figure out when the judge (who is juggling >1000 cases) can fit you in, then your legal counsel is on vacation, then the complaint gets amended and you have to reevaluate everything you've been fighting over for the past half decade, repeating much of the above, then opposition replaces their counsel (that's a 60 day pause), then the judge dies from old age, and then finally everybody forgets about it because space has expanded so much since you started the case that nobody can communicate anymore and the universe is going into heat death.
> It can take a long time just to source all the records of what's being argued over,
It seems to me that if you can't timely procure your own records in a court case the case should be allowed to proceed with any assumptions based on them in your opponent's favor. Whats really the difference between taking 2+ years to procure a document and deleting that document?
It's typically not a matter of having the documents, it's a matter of filtering them.
Suppose you have a corporate mail server with all your mail on it, and a competitor sues you. Your emails are going to be full of trade secrets, prices negotiated with suppliers, etc. Things that are irrelevant to the litigation and can't be given to the competitor. Meanwhile there are other emails they're entitled to see because they're directly relevant to the litigation.
What option do you have other than to have someone go read ten years worth of emails to decide which ones they get?
> Whats really the difference between taking 2+ years to procure a document and deleting that document?
The difference is obviously that they get the document in the 2nd+ year of the trial instead of never.
Oftentimes the records aren't in the hands of either party and need to be subpoenaed. When you get them, they can open up entirely new lines of inquiry. Opposition will fight this tooth and nail so that the evidence can't be included, or they'll go on a fishing expedition under the guise of having all the facts on the table, and the court might just allow them. This process can take a very long time, and from what I've seen, the higher the stakes, the more the court will be willing to allow it to happen, so nobody can cry to the appeals court that something important was left out. Judges don't like their rulings overturned.
The court system is designed to optimize throughput at the expense of latency, against the background of a system where authority is vested in a relatively small number of presidentially appointed and Senate-confirmed constitutional officers. About 350,000 civil cases and 65,000 criminal cases are filed every year, spread out across less than 700 district court judges.
To maximize throughput, proceedings are structured like batch processing systems. You submit work, it waits in the queue until the system gets to it, some intermediate decision is rendered, and then you submit some more work. For constitutional reasons, criminal cases cut in line, which can further increase the latency of civil cases. That means that, in a four-year case, the lawyers don't actually work on the case for four years straight. They do batches of work a couple of months at a time, and then work on other cases while waiting for the output.
Moreover, court case are, to a degree, inherently serial. Motions to dismiss--briefs that argue a case must be dismissed because its legally defective--must be filed before you start deposing witnesses or exchanging documents. You generally need to do depositions of witnesses after you've reviewed all the relevant documents. And all the fact gathering must be done before you file summary judgment motions--briefs that argue a case can be decided on the factual record without a trial.[1]
Part of the inherent delay is that the legal system is already an "exception path" in the ordinary course of business. A lot of time is spent waiting for people outside your organization who don't work for you. For example, when you're deposing a witness, they have work responsibilities, vacation plans, etc., and everyone has to work around that.
It's possible to structure cases where everything can be done in a year. That's what happens at the International Trade Commission, for example. Arbitration proceedings can also be structured like that.
[1] This also means that legal teams aren't very big. Massive corporate cases with billions of dollars on the line are handled with core teams of a dozen or so lawyers--with maybe another dozen or two parachuting in to help with specific phases like trial. Technology was squeezed out a lot of the parallelizable work. The days of 20 junior attorneys sitting in rooms reviewing boxes of paper documents are gone.
When I was still at a firm, several of our clients were fighting off investigations related to the Bermudan loss harvesting scheme that started in the 1980s. The investigations started in 2003 and weren't resolved until 2013.
I don't think that really disproves GP's hypothesis. The Trump admin is happy to drop lawsuits for connected entities. The fact that they're sustaining a Biden-initiated suit is plausibly because they just don't like Meta/Zuckerberg.
>> Probably less about tax revenue and more about the executive branch squeezing tech companies to assert influence.
The case existed and presumably had the same lawyers all the while. How, then, can the case become less about tax revenue?
You may say that there are ulterior motives, but, at the most, one can say that additional concerns have complicated the tax revenue concern. We're well into fascist times, but the OP comment simply ignores the facts.
"Trump's stupid" is how we got here. You don't need to be smart to get where he is. You just have to have the willingness to engage in shady business practices, have enough money to outlast opponents in a courtroom, and exist in a society where there's no real pressure on people who do those things.
> The agency has lost more than a quarter of its staff, withdrawn directives to auditors to crack down on aggressive tax shelters and permitted other auditing efforts to falter.
When you see a government doing this, you know they're not interested in collecting Tax from their rich buddies.
That's a success rate that largely is based on suing people who don't have the resources to fight it (no claims made about if they're right or not).
However, the IRS has had reductions in staff and funding which made it harder to go after the bigger accounts who have more forensic accounting needing to be done to find the money in the various tax shelters.
> "The IRS is simultaneously confronting a reduction of 27% of its workforce, leadership turnover, and the implementation of extensive and complex tax law changes" mandated by Republicans' tax and spending measure that President Donald Trump signed into law last summer, Collins said in her report.
> The Global High Wealth department of the IRS is designed to audit ultrawealthy individuals and corporations, who often hire highly sophisticated tax advisors to devise ways to avoid taxes and to respond to the IRS if they are challenged. But, as of late March, the department was cut by nearly 40 percent—and likely more by now with the additional RIFs.
I would be willing to contend that while they've got a 93% overall, that's historical numbers and the teams that would go against Meta and others are severely understaffed.
>..withdrawn directives to auditors to crack down on aggressive tax shelters..
The above might be a salient point, but as for the 1/4 auditors lost and the rest:
The low income (under 25k) with EITC, were the largest audited group with 298,485 of 626,204 audits performed in 2022. The rest of those earning under 200k had 250,391 audits.[]
48% of audits were under 25k income w/ EITC. 87% of audits were people under 200k income.
Kind of interferes with the idea these audits were all about going after the "rich buddies." They were way more about going after the poor than they were about going after the rich.
What percentage of that is automated audit, and what percentage is manual audit? Nowaday my country is mostly sane with tax filings, but in the weird time between the 90s and the 2010s, we had an uptick in "fraud" by low-income earners. This was caused by inconsistencies between filed data and the data the IRS equivalent had, but i guarantee you no effort was put into thsi (except secreterial manpower for the hotline/mail), that was just automated system ringing.
In fact my first college side-job was exactly that, responding to taxpayers who were "caught" by the automated system and needed a payment delay.
This has been debunked as these are just data matching audits as EITC is full of fraud with an estimated 30% of over claiming and improper payments by taxpayers.
And I would estimate 30% of people using tax shelters are underpaying their taxes. If there's profitable work to do for tax auditors, hire more auditors and cover both problems.
Even if you change the view to it's mostly the poor who are the tax scammers it doesn't degrade the counterpoints that these auditors were by far mostly going after the middle class and poor -- you're just asserting the poors are *disproportionately tax cheats that perhaps deserve it.
I think you're strawmanning a bit. They're not saying poor people are tax cheats, just that tax cheats tend to be poor. This makes sense for the same reasons other types of crime are also associated with poverty. This is not to say that wealthy people do not also evade taxes, but they do so in ways that are harder to catch and prosecute. You're implying that going after poor people is some sort of classist discrimination but I think it's far more likely that there are good reasons for it.
Or just that there are more poor people. Say 10% of all people are tax cheats, evenly across income. The top 1% who are the rich is much smaller than the bottom 50% who are the poor. So in absolute numbers there will be far more poor tax cheats than wealthy. Even if 100% of the wealthy are tax cheats, that still ends up being fewer wealthy tax cheats than poor tax cheats. Anything involving absolute numbers of audits is going to be skewed to show more happening to the poor, because there are so many more poor people than rich people.
Last I checked it's way closer to 28% than 48% of people that have earned income of at least $1 (thus EITC) and total income less than $25k -- which fall under the bucket of 48% of audits were for those with EITC and income under 25k. They are definitely disproportionately going after the poorest workers.
am i missing something, or is the statistic that is used to pinpoint someone as poor, is the same statistic that is gamed here? Namely the amount of income that a person declares to the IRS?
There are many, many more tax returns filed by people earning under 200k adjusted gross income than those earning more, I assume. So if there's a uniform chance that a return is audited, we would expect most audits to be done on returns under that threshold.
Of course, it may not make sense to select returns uniformly at random for audits...
Also, if tax cheating is uniform across the population, then the statement "there are more tax cheats earning under 200k" is true but wildly misleading, since "there are more taxpayers earning under 200k" is also true.
Nowhere near 48% of the population earns enough wages for EITC but still under 25k. It's way way way way overrepresented in audits. Nearly half of the audits are aimed at the poorest workers.
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.... they were audits according to IRS. This is from the FOIA'd audit numbers from IRS via TRAC.
They are not audits. They are automated notices to idiots trying to claim the same child tax credit in multiple returns or hiding income(not reporting their w2 lol) to claim the EITC
Biden and democrats increased funding in order to have the resources to go after rich offenders and they were doing it successfully and earning more than it cost, but Trumpublicans immediately rescinded it.
It’s all public record go look for it.
Not sure why you're being downvoted for this comment as it's true.
Democrats increased IRS funding so it could go after more tax evaders. Conservative estimates are that eliminating tax evasion (evasion, not avoidance) by the ultra-wealthy could allow the U.S. to reduce rate brackets by 2-3% across the board while maintaining revenue.
Yet they refused to codify the "promise" it wouldn't be used for under 400k income families. Look at what they do, not what they say. In public they make 'promises' but in statute it turns into ether, meanwhile real audit data pointing to otherwise.
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>I'm very confused about where you're going with this. Are you upset that too many rich people are getting audited, or that tax cheats under 400k income might also get audited?
... this was a direct response to parent stating increased funding was added specifically for going after rich people. Yes I would be upset if I was told they were adding new funding specifically to go after rich tax cheats but then turns out to be something like "welp actually we refuse to codify that or make anything binding that it will be used for those purposes, but for the cameras we will pinky swear it will be used for that and please don't look at the historical data for inferences."
> Yet they refused to codify the "promise" it wouldn't be used for under 400k income families.
This is a lie. They didn't refuse. They didn't have it codified because they were trying to figure out how to define that. For example, one of the challenges IRS was having was someone reporting $390,000 but they actually earned $450,000. How do you deteremine that without an audit? Do you need a waiver? How does that get resolved without breaking the promise.
> Look at what they do, not what they say.
They were actively working on how to respect the promise in a reasonable way.
I'm very confused about where you're going with this. Are you upset that too many rich people are getting audited, or that tax cheats under 400k income might also get audited?
Biden's desired policy was none of the additional funding would be used to increase audit rates for <$400k returns.
The IRS didn't follow the intended policy, getting bogged down in the details of how they would define that threshold (primarily, would somebody who understated their income to get below the threshold count as "under 400k and audited").
Not really sure why the OP is so upset - either way, the payback on additional funding to the IRS is almost universally stated as revenue-positive.
Ayup. Trump was able to get a stay on a case on an "allegedly" improperly-applied tax write-off for his casino's bankruptcy. It's been in limbo at least since 2016. Ten years. This is the standard operating procedure for people at that level of wealth.
Which would suggest that perhaps that level of wealth doesn't need to exist in our society.
True, as it is just another symptom of not too much wealth, but the growing disconnect of what wealth is designed to be. Money shouldn't be power, too many people are starting to blame "too much money" instead of asking why money is turning into political power. Seemingly none of the politicians or rich people want that narrative because they all want both.
Sure, societies that don't have the concept of currency. The inhabitants of the Sentinel Islands for example.
Some other societies have different ways of measuring authority and delegating power, but in general currency is more efficient and if they have to interface with the rest of the world then money will be critical. That's why money is usually a proxy for power.
Is it even possible for money to not be power? Like, how do you separate purchasing power from influence power? Purchasing is a very easy route to influence.
In that case I can't think of time my country hasn't been a regime I guess. Police have pretty much always been executing people in the streets without repercussions. Although there has been a small amount of progress recently, these days they do it on camera and still face zero repercussions much of the time.
It is very naïve to think adding staff won’t help. Just look at what the IRS did before staff was cut; they investigated Microsoft aggressively and announced $29 billion in back taxes for 2004 to 2013, plus penalties and interest.
> You're saying auditing megacorps is hard, but somehow more staff won't help? I don't buy it.
It's not so much that it's hard, it's that it has a lower return on investment, because the IRS gets money from finding mistakes or intentional fraud. Megacorps have entire legal teams dedicated to preventing those things from happening, while lowering their taxes by finding lawful ways of reducing their taxes to almost nothing by pouring over the unfathomable complexity of the tax code to find obscure credits or chain together the right sequence of things so their profits end up in a jurisdiction where they're not taxed.
If you audit them you spend an enormous amount of resources because their accounts are so complicated and then only get money if they screwed up, which they're less likely to have done than someone with fewer lawyers, and even then it will typically be something like you found a credit they weren't allowed to take and they owe $50,000 but the thing where they have a hundred billion in revenue and 0.2% of that in taxable profit was all by the book.
Meanwhile smaller entities are far more likely to have screwed up because they have fewer resources to navigate the complexity of the tax code, and their accounts are less complicated, which makes it easier for the IRS to find mistakes and therefore get money. So if you give the IRS more resources and tell them to do audits to maximize recovery, those are the people they audit.
But that also involves auditing a ton of individuals and small businesses who didn't do anything wrong in order to find the ones that did, and they rightfully hate that because nobody is paying them for the actual costs of the audit where the IRS found nothing, which is why they keep lobbying to stop the IRS from getting more resources to do that to them. And if the IRS had to pay the taxpayer's side of the audit costs then their "recovery efficiency rate" would go way down.
> It's not so much that it's hard, it's that it has a lower return on investment, because the IRS gets money from finding mistakes or intentional fraud. Megacorps have entire legal teams dedicated to preventing those things from happening
Or: Megacorps have entire teams of people looking for ways to reduce their taxes, many of which are legally dubious but the risk of being caught * the size of the fine means it makes business sense to do it regardless of legality.
This is a moved set of goalposts from the comment I responded to -- and we know that, because the original author had already confirmed that replying to me before your comment: https://news.ycombinator.com/item?id=47139400 .
> It's not so much that it's hard, it's that it has a lower return on investment, because the IRS gets money from finding mistakes or intentional fraud....
Isn't this exactly what all megacorps are hoping for everyone thinks? I am not saying that you are wrong but these megacorps are some of the most evil the Civilization has ever seen (see Meta) and now you and I are hired as tax attorneys - pretty soon (if not right away) one of us will go "this shit's very much so illegal but who is actually going to audit us? - the answer, per your comment is basically no one because we think these megacorps and their lawyers are there to play by the book...
In order for that to make sense to them, it would have to be impossible for them to avoid paying taxes without breaking the law, but the very nature of applying "corporate income tax" to an international supply chain makes that relatively straightforward.
The general problem is this. You have a company with its headquarters in Ireland that designs a product in California, manufactures it in China and sells it in Germany. In which country did they make a profit and therefore owe taxes? It depends on what each subsidiary bought from the others and how much they paid, so they're going to structure their operations so that the profit ends up in the one with the lowest taxes. That's the defect in "corporate income tax" for international companies, and why it gives international companies an advantage over domestic ones.
In order to fix that you need a tax code that says the taxes have to be paid to the country where whatever subset of their operations you want to tax is actually present. But then it's not "corporate income tax" anymore. If you want to tax them in the location they have workers it's payroll tax, if it's where they have buildings it's property tax, if it's where they have customers it's VAT, etc. You need it to be something they can't so easily move out of your jurisdiction. Because if you say that it's profit then they'll just arrange to make their profits in Ireland or Bermuda.
Or the US could tax it's corporations just like it taxes it's citizens.
Doesn't care that the citizens pay tax in whatever country they live in. If they earn over some 6 figure sum, they have to pay tax in the US as well.
That would put US corporations at a distinct disadvantage on the global scene, so it won't happen. Disadvantaging citizens doesn't seem to matter as much.
The thing the US does to its citizens is bizarre and atypical and it should stop doing that.
But how would that even work for a corporation? Suppose you did that; is anything multinational going to remain a US corporation? Of course not, they'll just register in some other country. The CEO of Stellantis nee Chrysler is in Michigan but how many people can guess which country the corporation is registered in without looking it up?
Of course it won’t help. If you have an audit target to meet you want target meta?
This exactly why ICE agents tends to target illegal immigrants that actually get a job and contribute to the society instead of criminals. Because the former are easy targets.
Also fundamentally the tax law in the US are intrinsically favor capital owners, especially large corporations, adding more IRS agents only cost more tax payer’s money and give regular people more headaches.
> If you have an audit target to meet you want target meta?
I don't believe the approach the IRS takes is to set targets and only audit the lowest hanging fruit up to some target. They have different sub-organizations pursuing different goals, and some sort of vision about fairness that means going after tough cases.
> This exactly why ICE agents tends to target illegal immigrants that actually get a job and contribute to the society instead of criminals. Because the former are easy targets.
This is completely orthogonal, but also untrue. It's way easier to go after criminals, as long as states cooperate. The recent Trumpian ICE is more expensive and less effective than earlier regimes.
> adding more IRS agents only cost more tax payer’s money and give regular people more headaches.
Many, many regular people underpay the taxes they owe. Additional IRS agents help close the gap between taxes owed and taxes paid, at a cost lower than the additional revenue. Your argument is just "individual tax cheats should be able to get away with it," which I can't agree with.
Yes great, and our local governments are also focusing on going after US persons who decide to register their vehicles in Montana and transfer ownership rights to LLC for privacy reasons. "Tax evasion" is the only legitimate use of that, they say, only to the small man of course.
> [The IRS] say the company failed to report roughly $54 billion in income and owes nearly $16 billion in back taxes and penalties.
That's... just not very much? The claim is that Meta's global ex-US income for the last 15+ years is less than a single year's US income? I really wonder how they came up with this number.
Disappointingly little detail in the article about how the IRS justifies the claim that the 2010 price was low (obviously, later profits would not be completely foreseeable at the time -- in 2010 Facebook was simply a much smaller business), or any detail about the 1986 law. It seems pretty farcical to retcon a purchase for being too cheap with evidence from 16 years later.
the B is specifically the delta on the IP transfer pricing -- the IRS is saying the 2010 valuation of the intangibles moved to Ireland was too low, and then projecting forward what the income should have been attributed to the US entity under arm's-length pricing. it's not Meta's total ex-US income, it's the gap between what was reported and what IRS thinks a proper cost-sharing arrangement would have produced. the hard part for IRS is always that the 2010 valuation is inherently speculative -- Facebook was pre-IPO and the IP value is defined by future performance you can't know at transfer.
Well that was a 100% certifiably genuine ridiculous loss.
It is interesting how corporations develop personalities, that can do some things well but reliably fail at others. No matter the funding, personnel or efforts. And in this case, by developing a personality I mean enabling Zuck.
About $16 billion a year, every year since 2022 or whatever. You can see RL spending in their public financials. Every company deducts ("writes off") R&D spending.
Tax evasion is so pervasive at large companies that I have come to the conclusion that we need to start criminally charging the c-suite. Without personal consequences they're never going to change.
The less they tax corporations the more the burden will fall on income tax. These big multinationals have been defrauding countries worldwide for decades. The issue is at the core of the political turmoil we are experiencing.
I'd like to know how much less income tax would be, if we could tax multinationals properly.
The tax avoidance schemes used by most major US companies are to avoid US taxes on foreign income. Most developed countries have territorial tax systems so their companies do not even need to use these fancy legal maneuvers because the income is largely exempt anyways.
In any given year corporate income tax is like 6-10% of federal receipts so even if that was doubled there would not be a huge decline in income taxes needed. The way the US does corporate tax is really also not that great from an economic perspective because it is a form of double taxation. The Estonian model of only taxing distributions incentivizes investment and avoids many debates over depreciation etc.
That's a bit tenuous. Corporate taxes are a cost after profit, which usually means whatever is left over after expenses. This means companies could pay higher salaries specifically to avoid corporate taxes, or invest in things instead.
The agency has lost more than a quarter of its staff, withdrawn directives to auditors to crack down on aggressive tax shelters and permitted other auditing efforts to falter.
Remember the fear mongering ads [0] Republicans ran during the 2022 midterms about arming IRS agents to act as a shadow army to go after every day law abiding people? As it turns out, Republicans were just talking about their own plans for ICE. Remember, every accusation from Republicans is an admission. Additionally, they don't care about crime, as they are specifically turning a blind eye to rich people and corporations breaking the law.
Note that the issue at hand here is almost entirely about corporations earning money overseas and then trying to "import" the money back into the U.S. whilst dodging taxes. It's quite germane to the same concept as tariffs, although not the exact same thing.
Mega is big enough to buy entire islands, and be its own country. A corporate country. One with a very specific constitution, enshrining rights, but also?
No corporate taxes.
If done right, you could lure away Western judges, police, and more as they retire. Or retire early. You could lure them away not with high salaries, but with shorter work days, AI assistance, and with it being a tropical paradise.
Compared to the billions Meta would pay in taxes annually, this endeavour would be far cheaper. And citizens would still pay taxes, of course.
Now imagine if Google, Musk Corps, Meta, and others all created a consortium to do just this, and, to build and fund the initial island.
I agree, not fully plausible. But... these guys can do a lot of interesting things, and I think if it was truly a tropical paradise, and land and housing was cheap and aplenty, lots might be interested in moving there.
Certainly, hiring the "glue" of society would be easy. I know so many people who retire to third world nations, but anyhow...
Yes, holes but, maybe something to ponder.
Corporate towns have existed, why not corporate nations?
edit:
As I've said elsewhere, it's -20C outside my door, so a tropical paradise with cheap housing and flying cars, and AGI and beaches and free coconuts may be masking my thoughts a bit.
So downvote me, as you are. It burns, but by god it's -20C outside so that's just fine.
Operating a military, maintaining positive diplomatic relations with other countries, and keeping your workforce pacified might be more expensive than you think.
Not to mention that a lot of people prefer to live in a democracy instead of a giant company town, unless you compensate them really, really, well, and even then, well-heeled people are notorious for starting revolutions.
The problem with this warm Galt Gulch idea is that someone has to do the actual work, and if the top level government is just a corrupt sinecure designed to shield the corporation from actually paying taxes, then nothing works properly. Comfortable island living is also surprisingly expensive, you have to import everything.
This would not work. Investors are still based in actual countries. Jurisdictions will also always have the ability to tax a % of revenue at source / where it was generated and not on profit rolled up through spvs to a couple low tax havens ;)
> Corporate towns have existed, why not corporate nations?
because they dont need to do that. They can already obtain what they want with smaller tax havens that have already established trade/tax treaties, have existing facilities, infrastructures, etc.
> Mega is big enough to buy entire islands, and be its own country. A corporate country. One with a very specific constitution, enshrining rights, but also?
It's a charming thought. But it can't possibly survive the brute reality that the world is full of people with guns, planes, drones, boats/ships, missiles, etc., who feel entitled to call the shots, and sometimes to take whatever they can from whomever they can.
Listen my friend. It's -20C outside my house, so I'll kindly ask you to allow this fantasy to continue unabated in my mind, OK? A tech haven, filled with flying cars, and AGI, and warm sandy beaches, and...
One question is: does the US wants to keep its big tech leader ship or not? Thankfully for the US the EU is nowhere in tech (biggest market cap is SAP and it's tiny compared to the US giants). But China is becoming big and quickly.
RAM makers are going to feel the heat from China soon. Batteries makers. China is eating the world with its EVs. Drones, etc.
If you're not nice with your corporations, they incorporate elsewhere: that's why the EU is nowhere in tech. Insane taxes since forever and a very strong anti-entrepreneurship mindset (in the EU you're a loser if you tried and fail, for example).
Companies like Meta, Google, MSFT, Apple, etc. should receive medals and thanks from the US government for the insane amount of money they syphon of the other countries and the wealth they create for the US.
Some countries are understanding this: in the UAE for example Dubai is now the world's busiest airport in the world for international passenger traffic. Some countries really fucked up big times to allow this to happen. Dubai is also now a very important hub for commodities trading. And diamonds: Antwerpen/Anvers (Belgium) used to be the city where the most diamonds exchanged hands, now it's... Dubai.
There is such a thing as competition between nation states and at some point entrepreneurs simply pick the best place to launch their businesses. And having the IRS using "tactics" to say that Meta owes them tens of billions does not send a nice message to people wondering in which country it's best to incorporate.
I now live in the country with the 2nd or 3rd highest GDP per capita in the world and that requires a mindset where businesses are welcome, entrepreneurs are welcome and the IRS doesn't feel like they're out there to get you at any cost.
And I'm here because I voted with my feet, my wealth and the future wealth I was going to create.
Everything in correct. But one omission there is politics. People occupy nations and don't all have the same interest. Those (felt, or actually) left aside, not benefiting enough from the macro growth speak and act in their interest.
The people in the E.U arguably are more successful at getting their demands met. They typically are less fooled by the "American dream", they see Zuckerberg and the others for what they are, a tiny number of lucky, or privileged, sometimes just very gifted unicorns, the extreme majority won't make it so they want social welfare, this tax.
The IRS going after big corp may simply be the result of this MAGA movement, which underneath really is just a popular uprise for the little guy to get a slice of the lie.
Of course the current head of state is a master manipulator so this news may just be fluff to make his electorate happy
There is being hospitable to startups, and there is being hospitable to massive corporate giants.
Turns out there is a big difference in what “hospitable” actually means in these two cases. Although the tech giants don’t want people to think so. They work hard to keep up their “scrappy” underdog patinas.
I am not for punishing any organization for being successful, or for being big. But actual neutral tax parity, for the middle class up, would be good. The rich have so many tax-not-neutral alternate ways to do the same thing, but with lower or no taxes, it is ridiculous.
Progressive taxation isn’t effective for the most part. And when it is, the high disparity in application is its own kind of unfairness.
But inescapable neutral tax treatment would remove so many high paying financial, legal and lobbying jobs. Who would subsidize political careers if we eliminated that work, and cut of those perverse incentives? Not a likely scenario.
http://digital-majority.wikidot.com/forum/t-5766/software-pa...
In the meantime, Ireland removed their 0% tax over patent royalties, but Holland kept it at 0%.
https://en.wikipedia.org/wiki/Double_Irish_arrangement
The reason it's worth it for these companies is because the number of zeroes involved. The legal costs are a rounding error for them.
At the same time they were telling HMRC (the British tax authority) that IP rights, etc. were incredibly valuable and a significant cost of doing business (in the form of payments back to the mothership), and that's why they made very little profit in the UK and didn't need to pay much tax.
That mentions the digital services tax; I remember some of HN being quite angry that "Europe" was trying to get a share of the immense wealth extracted from it by American multinationals.
Simple enough lesson to me!
https://archive.ph/2026.02.24-124153/https://www.nytimes.com...
Absolutely not about this, as is clearly reported in the linked article.
Because... the article clearly says the case began under the FORMER administration, and goes further to say that it's not clear whether the CURRENT administration is going to drop the case.
Kafka was trained as an attorney, after all.
It seems to me that if you can't timely procure your own records in a court case the case should be allowed to proceed with any assumptions based on them in your opponent's favor. Whats really the difference between taking 2+ years to procure a document and deleting that document?
Suppose you have a corporate mail server with all your mail on it, and a competitor sues you. Your emails are going to be full of trade secrets, prices negotiated with suppliers, etc. Things that are irrelevant to the litigation and can't be given to the competitor. Meanwhile there are other emails they're entitled to see because they're directly relevant to the litigation.
What option do you have other than to have someone go read ten years worth of emails to decide which ones they get?
> Whats really the difference between taking 2+ years to procure a document and deleting that document?
The difference is obviously that they get the document in the 2nd+ year of the trial instead of never.
To maximize throughput, proceedings are structured like batch processing systems. You submit work, it waits in the queue until the system gets to it, some intermediate decision is rendered, and then you submit some more work. For constitutional reasons, criminal cases cut in line, which can further increase the latency of civil cases. That means that, in a four-year case, the lawyers don't actually work on the case for four years straight. They do batches of work a couple of months at a time, and then work on other cases while waiting for the output.
Moreover, court case are, to a degree, inherently serial. Motions to dismiss--briefs that argue a case must be dismissed because its legally defective--must be filed before you start deposing witnesses or exchanging documents. You generally need to do depositions of witnesses after you've reviewed all the relevant documents. And all the fact gathering must be done before you file summary judgment motions--briefs that argue a case can be decided on the factual record without a trial.[1]
Part of the inherent delay is that the legal system is already an "exception path" in the ordinary course of business. A lot of time is spent waiting for people outside your organization who don't work for you. For example, when you're deposing a witness, they have work responsibilities, vacation plans, etc., and everyone has to work around that.
It's possible to structure cases where everything can be done in a year. That's what happens at the International Trade Commission, for example. Arbitration proceedings can also be structured like that.
[1] This also means that legal teams aren't very big. Massive corporate cases with billions of dollars on the line are handled with core teams of a dozen or so lawyers--with maybe another dozen or two parachuting in to help with specific phases like trial. Technology was squeezed out a lot of the parallelizable work. The days of 20 junior attorneys sitting in rooms reviewing boxes of paper documents are gone.
I take it you've never been party to a civil lawsuit between business entities or with the government.
>> Probably less about tax revenue and more about the executive branch squeezing tech companies to assert influence.
The case existed and presumably had the same lawyers all the while. How, then, can the case become less about tax revenue?
You may say that there are ulterior motives, but, at the most, one can say that additional concerns have complicated the tax revenue concern. We're well into fascist times, but the OP comment simply ignores the facts.
When you see a government doing this, you know they're not interested in collecting Tax from their rich buddies.
This case will sit in limbo for 20x years.
However, the IRS has had reductions in staff and funding which made it harder to go after the bigger accounts who have more forensic accounting needing to be done to find the money in the various tax shelters.
https://www.pbs.org/newshour/nation/irs-faces-challenges-in-...
> "The IRS is simultaneously confronting a reduction of 27% of its workforce, leadership turnover, and the implementation of extensive and complex tax law changes" mandated by Republicans' tax and spending measure that President Donald Trump signed into law last summer, Collins said in her report.
https://www.americanprogress.org/article/the-fiscal-impact-o... (May 2025)
> The Global High Wealth department of the IRS is designed to audit ultrawealthy individuals and corporations, who often hire highly sophisticated tax advisors to devise ways to avoid taxes and to respond to the IRS if they are challenged. But, as of late March, the department was cut by nearly 40 percent—and likely more by now with the additional RIFs.
I would be willing to contend that while they've got a 93% overall, that's historical numbers and the teams that would go against Meta and others are severely understaffed.
The above might be a salient point, but as for the 1/4 auditors lost and the rest:
The low income (under 25k) with EITC, were the largest audited group with 298,485 of 626,204 audits performed in 2022. The rest of those earning under 200k had 250,391 audits.[] 48% of audits were under 25k income w/ EITC. 87% of audits were people under 200k income.
Kind of interferes with the idea these audits were all about going after the "rich buddies." They were way more about going after the poor than they were about going after the rich.
[] IRS management audit reports obtained via FOIA by via TRAC / https://tracreports.org/reports/706/
In fact my first college side-job was exactly that, responding to taxpayers who were "caught" by the automated system and needed a payment delay.
*edit: since my words were take in bad faith
Of course, it may not make sense to select returns uniformly at random for audits...
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.... they were audits according to IRS. This is from the FOIA'd audit numbers from IRS via TRAC.
I think you misread the parent comment, who said exactly the opposite.
Democrats increased IRS funding so it could go after more tax evaders. Conservative estimates are that eliminating tax evasion (evasion, not avoidance) by the ultra-wealthy could allow the U.S. to reduce rate brackets by 2-3% across the board while maintaining revenue.
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>I'm very confused about where you're going with this. Are you upset that too many rich people are getting audited, or that tax cheats under 400k income might also get audited?
... this was a direct response to parent stating increased funding was added specifically for going after rich people. Yes I would be upset if I was told they were adding new funding specifically to go after rich tax cheats but then turns out to be something like "welp actually we refuse to codify that or make anything binding that it will be used for those purposes, but for the cameras we will pinky swear it will be used for that and please don't look at the historical data for inferences."
This is a lie. They didn't refuse. They didn't have it codified because they were trying to figure out how to define that. For example, one of the challenges IRS was having was someone reporting $390,000 but they actually earned $450,000. How do you deteremine that without an audit? Do you need a waiver? How does that get resolved without breaking the promise.
> Look at what they do, not what they say.
They were actively working on how to respect the promise in a reasonable way.
The IRS didn't follow the intended policy, getting bogged down in the details of how they would define that threshold (primarily, would somebody who understated their income to get below the threshold count as "under 400k and audited").
Not really sure why the OP is so upset - either way, the payback on additional funding to the IRS is almost universally stated as revenue-positive.
Which would suggest that perhaps that level of wealth doesn't need to exist in our society.
But then the inquisition arrives saying this is socialism or whatever.
Some other societies have different ways of measuring authority and delegating power, but in general currency is more efficient and if they have to interface with the rest of the world then money will be critical. That's why money is usually a proxy for power.
You're saying auditing megacorps is hard, but somehow more staff won't help? I don't buy it.
It's not so much that it's hard, it's that it has a lower return on investment, because the IRS gets money from finding mistakes or intentional fraud. Megacorps have entire legal teams dedicated to preventing those things from happening, while lowering their taxes by finding lawful ways of reducing their taxes to almost nothing by pouring over the unfathomable complexity of the tax code to find obscure credits or chain together the right sequence of things so their profits end up in a jurisdiction where they're not taxed.
If you audit them you spend an enormous amount of resources because their accounts are so complicated and then only get money if they screwed up, which they're less likely to have done than someone with fewer lawyers, and even then it will typically be something like you found a credit they weren't allowed to take and they owe $50,000 but the thing where they have a hundred billion in revenue and 0.2% of that in taxable profit was all by the book.
Meanwhile smaller entities are far more likely to have screwed up because they have fewer resources to navigate the complexity of the tax code, and their accounts are less complicated, which makes it easier for the IRS to find mistakes and therefore get money. So if you give the IRS more resources and tell them to do audits to maximize recovery, those are the people they audit.
But that also involves auditing a ton of individuals and small businesses who didn't do anything wrong in order to find the ones that did, and they rightfully hate that because nobody is paying them for the actual costs of the audit where the IRS found nothing, which is why they keep lobbying to stop the IRS from getting more resources to do that to them. And if the IRS had to pay the taxpayer's side of the audit costs then their "recovery efficiency rate" would go way down.
Or: Megacorps have entire teams of people looking for ways to reduce their taxes, many of which are legally dubious but the risk of being caught * the size of the fine means it makes business sense to do it regardless of legality.
Isn't this exactly what all megacorps are hoping for everyone thinks? I am not saying that you are wrong but these megacorps are some of the most evil the Civilization has ever seen (see Meta) and now you and I are hired as tax attorneys - pretty soon (if not right away) one of us will go "this shit's very much so illegal but who is actually going to audit us? - the answer, per your comment is basically no one because we think these megacorps and their lawyers are there to play by the book...
The general problem is this. You have a company with its headquarters in Ireland that designs a product in California, manufactures it in China and sells it in Germany. In which country did they make a profit and therefore owe taxes? It depends on what each subsidiary bought from the others and how much they paid, so they're going to structure their operations so that the profit ends up in the one with the lowest taxes. That's the defect in "corporate income tax" for international companies, and why it gives international companies an advantage over domestic ones.
In order to fix that you need a tax code that says the taxes have to be paid to the country where whatever subset of their operations you want to tax is actually present. But then it's not "corporate income tax" anymore. If you want to tax them in the location they have workers it's payroll tax, if it's where they have buildings it's property tax, if it's where they have customers it's VAT, etc. You need it to be something they can't so easily move out of your jurisdiction. Because if you say that it's profit then they'll just arrange to make their profits in Ireland or Bermuda.
Doesn't care that the citizens pay tax in whatever country they live in. If they earn over some 6 figure sum, they have to pay tax in the US as well.
That would put US corporations at a distinct disadvantage on the global scene, so it won't happen. Disadvantaging citizens doesn't seem to matter as much.
But how would that even work for a corporation? Suppose you did that; is anything multinational going to remain a US corporation? Of course not, they'll just register in some other country. The CEO of Stellantis nee Chrysler is in Michigan but how many people can guess which country the corporation is registered in without looking it up?
This exactly why ICE agents tends to target illegal immigrants that actually get a job and contribute to the society instead of criminals. Because the former are easy targets.
Also fundamentally the tax law in the US are intrinsically favor capital owners, especially large corporations, adding more IRS agents only cost more tax payer’s money and give regular people more headaches.
I don't believe the approach the IRS takes is to set targets and only audit the lowest hanging fruit up to some target. They have different sub-organizations pursuing different goals, and some sort of vision about fairness that means going after tough cases.
> This exactly why ICE agents tends to target illegal immigrants that actually get a job and contribute to the society instead of criminals. Because the former are easy targets.
This is completely orthogonal, but also untrue. It's way easier to go after criminals, as long as states cooperate. The recent Trumpian ICE is more expensive and less effective than earlier regimes.
> adding more IRS agents only cost more tax payer’s money and give regular people more headaches.
Many, many regular people underpay the taxes they owe. Additional IRS agents help close the gap between taxes owed and taxes paid, at a cost lower than the additional revenue. Your argument is just "individual tax cheats should be able to get away with it," which I can't agree with.
Soon: "I.R.S. auditors have been pursuing Meta for about [a decade + length of current administration term]"
There. I fixed it for you. Now you have a meaningful headline
That's... just not very much? The claim is that Meta's global ex-US income for the last 15+ years is less than a single year's US income? I really wonder how they came up with this number.
Disappointingly little detail in the article about how the IRS justifies the claim that the 2010 price was low (obviously, later profits would not be completely foreseeable at the time -- in 2010 Facebook was simply a much smaller business), or any detail about the 1986 law. It seems pretty farcical to retcon a purchase for being too cheap with evidence from 16 years later.
It is interesting how corporations develop personalities, that can do some things well but reliably fail at others. No matter the funding, personnel or efforts. And in this case, by developing a personality I mean enabling Zuck.
I'd like to know how much less income tax would be, if we could tax multinationals properly.
In any given year corporate income tax is like 6-10% of federal receipts so even if that was doubled there would not be a huge decline in income taxes needed. The way the US does corporate tax is really also not that great from an economic perspective because it is a form of double taxation. The Estonian model of only taxing distributions incentivizes investment and avoids many debates over depreciation etc.
Remember the fear mongering ads [0] Republicans ran during the 2022 midterms about arming IRS agents to act as a shadow army to go after every day law abiding people? As it turns out, Republicans were just talking about their own plans for ICE. Remember, every accusation from Republicans is an admission. Additionally, they don't care about crime, as they are specifically turning a blind eye to rich people and corporations breaking the law.
0 - https://www.cbsnews.com/news/republicans-87000-irs-agents-mi...
Billionaires silo-ing massive wealthy beyond multiple lifetimes must pay their taxes
and Trillionaire corporations
Each state now has several Billionaires, there are almost 1,000 in the USA
They need to pay their damn taxes, a flat tax without deductions for everything over a million dollars of income per year
https://en.wikipedia.org/wiki/List_of_U.S._states_by_the_num...
https://worldpopulationreview.com/state-rankings/most-billio...
Mega is big enough to buy entire islands, and be its own country. A corporate country. One with a very specific constitution, enshrining rights, but also?
No corporate taxes.
If done right, you could lure away Western judges, police, and more as they retire. Or retire early. You could lure them away not with high salaries, but with shorter work days, AI assistance, and with it being a tropical paradise.
Compared to the billions Meta would pay in taxes annually, this endeavour would be far cheaper. And citizens would still pay taxes, of course.
Now imagine if Google, Musk Corps, Meta, and others all created a consortium to do just this, and, to build and fund the initial island.
I agree, not fully plausible. But... these guys can do a lot of interesting things, and I think if it was truly a tropical paradise, and land and housing was cheap and aplenty, lots might be interested in moving there.
Certainly, hiring the "glue" of society would be easy. I know so many people who retire to third world nations, but anyhow...
Yes, holes but, maybe something to ponder.
Corporate towns have existed, why not corporate nations?
edit:
As I've said elsewhere, it's -20C outside my door, so a tropical paradise with cheap housing and flying cars, and AGI and beaches and free coconuts may be masking my thoughts a bit.
So downvote me, as you are. It burns, but by god it's -20C outside so that's just fine.
(warms hands over burning post)
Not to mention that a lot of people prefer to live in a democracy instead of a giant company town, unless you compensate them really, really, well, and even then, well-heeled people are notorious for starting revolutions.
The problem with this warm Galt Gulch idea is that someone has to do the actual work, and if the top level government is just a corrupt sinecure designed to shield the corporation from actually paying taxes, then nothing works properly. Comfortable island living is also surprisingly expensive, you have to import everything.
because they dont need to do that. They can already obtain what they want with smaller tax havens that have already established trade/tax treaties, have existing facilities, infrastructures, etc.
It's a charming thought. But it can't possibly survive the brute reality that the world is full of people with guns, planes, drones, boats/ships, missiles, etc., who feel entitled to call the shots, and sometimes to take whatever they can from whomever they can.
Will those nations survive Maduragate? Won't in essence it make easier to deal with if they aren't under souvereign law, only international?
RAM makers are going to feel the heat from China soon. Batteries makers. China is eating the world with its EVs. Drones, etc.
If you're not nice with your corporations, they incorporate elsewhere: that's why the EU is nowhere in tech. Insane taxes since forever and a very strong anti-entrepreneurship mindset (in the EU you're a loser if you tried and fail, for example).
Companies like Meta, Google, MSFT, Apple, etc. should receive medals and thanks from the US government for the insane amount of money they syphon of the other countries and the wealth they create for the US.
Some countries are understanding this: in the UAE for example Dubai is now the world's busiest airport in the world for international passenger traffic. Some countries really fucked up big times to allow this to happen. Dubai is also now a very important hub for commodities trading. And diamonds: Antwerpen/Anvers (Belgium) used to be the city where the most diamonds exchanged hands, now it's... Dubai.
There is such a thing as competition between nation states and at some point entrepreneurs simply pick the best place to launch their businesses. And having the IRS using "tactics" to say that Meta owes them tens of billions does not send a nice message to people wondering in which country it's best to incorporate.
I now live in the country with the 2nd or 3rd highest GDP per capita in the world and that requires a mindset where businesses are welcome, entrepreneurs are welcome and the IRS doesn't feel like they're out there to get you at any cost.
And I'm here because I voted with my feet, my wealth and the future wealth I was going to create.
The people in the E.U arguably are more successful at getting their demands met. They typically are less fooled by the "American dream", they see Zuckerberg and the others for what they are, a tiny number of lucky, or privileged, sometimes just very gifted unicorns, the extreme majority won't make it so they want social welfare, this tax.
The IRS going after big corp may simply be the result of this MAGA movement, which underneath really is just a popular uprise for the little guy to get a slice of the lie.
Of course the current head of state is a master manipulator so this news may just be fluff to make his electorate happy
Turns out there is a big difference in what “hospitable” actually means in these two cases. Although the tech giants don’t want people to think so. They work hard to keep up their “scrappy” underdog patinas.
I am not for punishing any organization for being successful, or for being big. But actual neutral tax parity, for the middle class up, would be good. The rich have so many tax-not-neutral alternate ways to do the same thing, but with lower or no taxes, it is ridiculous.
Progressive taxation isn’t effective for the most part. And when it is, the high disparity in application is its own kind of unfairness.
But inescapable neutral tax treatment would remove so many high paying financial, legal and lobbying jobs. Who would subsidize political careers if we eliminated that work, and cut of those perverse incentives? Not a likely scenario.
> China
China has capital controls and can still have billionaires "disappeared" (Jack Ma). And yet its industrial strategy seems to be working.