I don't understand the whole "If you behave logically as a business we hate you" sentiment.
You enact business unfriendly practices business leave. It is the job of a business to make money, the most money possible, at all costs. That is its single purpose existing.
Just because you "behave logically" does not mean you behave morally or ethically. Perhaps you should reflect on why immoral behavior would result in people hating you.
Are you saying that a company moving money around in an advantageous way is immoral? How so? Presumably you deduct the maximum amount you can from your taxes. That's what the business is doing: shuffling it's money around in a way that minimizes their costs.
Sure, I can see the argument of people who don't really like it, but to say it's immoral seems a bridge too far for me.
"Minimizes their costs" can also be read as "minimizes their contributions back to the society they're benefiting greatly from", hence the ethical concerns.
I think the companies would argue (not necessarily myself, for the record) that they do contribute to society via high-paying jobs, collecting payroll & sales taxes and income taxes. According to [1], Apple paid roughly $14.2b in 2012 income taxes, and according to [2], they paid $1 out of every $40 collected (using Apple numbers, although I'd imagine other companies are similar).
> via high-paying jobs, collecting payroll & sales taxes and income taxes.
In other words, doing what's absolutely necessary and expedient in order to make profit and not flagrantly disregarding certain portions of tax law?
And in the case of tech companies such as Apple, the "high paying jobs" bit comes with an extra bit of irony since they were doing the exact opposite to a criminal extent.
Median Apple salary is ~$110k[1]. Sure, there was the lawsuit about colluding to depress salaries, but according to [2], the median personal income of a person with a bachelor's degree or more is $56k. That's essentially double.
Wow. Are you really claiming Apple gets moral high ground for its salaries even after criminal collusion to keep them low?
As Apple's aptly demonstrated, it doesn't pay those salaries for any other reason than that it must, and even then it will break the law to pay less.
Finally, most US Apple employees are located in California, where cost of living is substantially higher than most of the country. There's far less disparity in your figure when taking cost of living & the common academic pedigree of Apple's employees into account.
That's his point though. Can't you say the same thing about you hiring a tax accountant (or hell, TurboTax) to get you the deductions that you're eligible for?
There could be ten thousand other companies or just individuals who bring significant benefits to society, but who are forced to pay more in tax to make up the deficit from big corps avoiding it. It doesn't add up - you can't measure the benefit a corp has to society.
Of course there's the counter argument that corps can be a drag on society - for example, it's pretty clear that pesticides are causing significant problems for bee populations, yet the costs aren't paid by the big corps producing those (cough Monsanto). The big corps don't pay for their drag on society unless they're doing something illegal or due to negligence, in which case they usually pay a fine, which is a pittance, and still won't cover the overall losses society has. Banks are another example - does society really gain shit by bailing them out? Shouldn't they in fact, be paying way more - the same tax gambling establishments pay.
> for example, it's pretty clear that pesticides are causing significant problems for bee populations
You are attempting to refute what was said by replacing it with a different argument. What you are touching on is what should happen as a result of theft and/or damage to property. I was pointing out that OPs original statement could be equally valid when reversed.
Because you're shifting that burden onto somebody else.
If you're a company that primarily does business in the US, you're benefiting from access to all of those customers and a friendly business legal infrastructure. You should be paying tax for that privilege. If you want to move out of the US and lose all of that, I don't have a problem of that, but what Mark Cuban is talking about is different.
Multi-billion dollar product and finance companies move to the Cayman Islands or Ireland or elsewhere and do virtually no business there. It's purely to shed tax liability.
It's not much different than banks and lenders who choose to incorporate in places like South Dakota or on Native American reservations where there are lax/no usury laws so they can charge absurd interest rates (the latter of which 50-100% are common) that have been voted illegal in the places where they actually have their customers.
It's immoral as it gets. I used to work in Finance and those companies justify it as ethical because "everyone else is doing it". It's bullshit, they just don't want to be the nail that sticks out...
There's a big difference between the government asking you what deductions you qualify for - those are intended under the law - and a corporation making convoluted corporate structures to avoid paying the intended amount of tax. Generally, double irish sandwiches and the like don't pass the smell test.
If the convoluted corporate structures are legal then they are paying the intended amount of tax because they are following the law. It may not pass the smell test but they are legal. The complaint needs to be placed upon the laws and those write them, not the companies who abide by the law.
Just because a law exploit is possible doesn't mean it's acceptable to exploit it en masse. Yes, the law writers should fix their laws, as browser writers should fix holes in their browsers, but that in no way gives the exploiter a free pass.
It's very immoral to benefit from the utilities, roads, emergency services, etc provided for by tax money and work very hard to not contribute.
Think starting a business is hard? Try starting a business without any infrastructure.
What's worse is that companies like Walmart get cities and towns to build infra to new Walmart locations and funnel lots of the money away from the areas that provide the infra.
There's a difference between immoral and irrational.
It is rational for a company to maximize their returns for shareholders and to skip taxes wherever legally possible.
Morality is relative, but if you went simply by utilitarian ethics, then a company would be acting irrational by maximizing the amount of good it provides.
There is crossover between rationality and ethical behavior for companies (especially B-Corps). A good case would be plastic water bottles. It's good that they are using thinner plastic lids now, and is rational because it cuts costs, but non-biodegradable water bottles are a huge filler for landfills, and probably are not maximizing the good.
"Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes."
Helvering v. Gregory, 69 F.2d 809, 810-11 (2d Cir. 1934).
"Over and over again courts have said that there is nothing sinister in so arranging one's affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant."
This discussion thread started with:
>I don't understand the whole "If you behave logically as a business we hate you" sentiment.
Yes, companies can legally and rationally reduce their taxes to the absolute minimum. Viewing as immoral the act of taking from society while maneuvering to give nothing back seems completely reasonable. Disliking someone you see acting immorally should be perfectly understandable.
HOLY SELECTIVE QUOTING BATMAN!
The Supreme Court decided exactly opposite of what you try to covey with your quotes (from the dissenting judge of a lower court):
In these circumstances, the facts speak for themselves and are susceptible of but one interpretation. The whole undertaking, though conducted according to the terms of subdivision (B), was in fact an elaborate and devious form of conveyance masquerading as a corporate reorganization, and nothing else. The rule which excludes from consideration the motive of tax avoidance is not pertinent to the situation, because the transaction upon its face lies outside the plain intent of the statute. To hold otherwise would be to exalt artifice above reality and to deprive the statutory provision in question of all serious purpose. GREGORY v. HELVERING, 293 U.S. 465 (1935)
As if a dissenting judge's reasoning has no merit.
So, in that case, did the company actually break the law in some way? Because if they did not, then the reasoning behind their "devious" reorganization and the morality behind it is irrelevant. Unless we want to say that the line dictating illegal tax avoidance is whatever the Supreme Court happens to say it is that year based on their own personal moral fiber.
From what I'm reading of that decision; it wasn't made because the transaction was deemed a somehow "immoral" abuse of the law to avoid taxes, but because the reorganization wasn't valid under the relevant statute. Conducting the reorganization solely for reducing tax liabilities is apparently not a valid reason for the reorganization under the statute. Someone could attempt the same reorganization for reasons other than reducing tax liabilities and it would still not be valid, under the same statute, if it did not meet the requirements.
I feel the quotes are fine within the apparent intent of the original thought, that hating a company because it does logical things that some feel are immoral makes little sense. Hating a company because it breaks the law to avoid paying taxes is a different matter.
I would also through back "HOLY SELECTIVE QUOTING BATMAN!" since you address one quote while ignoring the one from Commissioner v. Newman, 159 F2d 848 (1947). Although I'm not going to read through that decision so it could be a bad quote for all I know.
He quoted from the dissent in Commissioner v. Newman. He found a single judge who wrote an opinion at one point in American history that fit his mindset. An opinion to which that judge's peers disagreed. Selective quoting if I've ever seen it. I didn't think I needed a quote considering the decision itself is entirely written in opposition of the dissent.
Your inability to differentiate between legal and moral has been sufficiently addressed by other posts.
Again, as if a dissenting judge's reasoning has no merit.
I'll take note that in the future one has to provide numerous quotes to avoid being labeled as selective quoting. Even though you provided one quote to counter his one "selective" quote. I don't necessarily disagree with what you state in that context, I simply disagree with the selective quoting label.
I was trying to point out that the majority opinion was not really relevant to the point because it was not decided on morality, but on not following the law. Therefore, a quote from the dissenting judge that was relevant to the topic at hand, i.e. whether it is moral or not to reduce one's tax liabilities, was fair. Using the majority opinion to counter the poster's point is not fair because the opinion is not relevant to the point.
I shall attempt to provide an example. Let's say there's a court case about the legalities of puppy mills. The majority opinion is that they are illegal. In the dissent there's a statement concerning the desire for a certain breed and that's why the defendants ran a puppy mill. I quote the dissenting judge about people's desire of that certain breed, not mentioning puppy mills. You state my use of the quote is not valid because the majority decided that puppy mills are illegal. That's all I'm saying.
Finally, I know that the law should have nothing to do with morals. Morals are subjective and attempts to legislate morals almost always results in unintended consequences. I simply disagree with judging a company by moral standards based on their actions under the law. As for other posters, I think there the opinions all over the board about what people feel on moral/legal activities in their own worldview. Which is why I think that judging morality on legal matters is not always a good idea.
I claimed that a single individual disagrees with the proposition that legally reducing one's tax burden is immoral.
I provide quotes from that individual to support that. If you think that the individual does not hold the point of view that I claimed, and that I cherry picked two quotes in an attempt to misrepresent his opinion, then I have selectively quoted.
Note I never claimed that the Supreme Court found this to be true, nor that it was the law of the land in the US.
[edit]
I would also like to point out that I didn't pick the individual at random. He is one of the more respected judicial philosophers of the 20th century, and easily the most influential judge to never have served on the supreme court.
>I claimed that a single individual disagrees with the proposition that legally reducing one's tax burden is immoral.
You are butchering his position even worse than I thought. He never said what you claim. The best case you can argue with his support is that the bluster of morals cannot be used to legally force someone to do more than the law requires.
Never once does he come anywhere near "disagree[ing] with the proposition that legally reducing one's tax burden is immoral". He makes no moral judgement on the matter whatsoever.
And I don't see how trawling nearly 100 years back in time to find a dissenting and disregarded opinion is anything other than selective quoting. You may as well have quoted yourself from 10 minutes prior.
I'm disagreeing with viewing as immoral legally reducing your tax burden. I picked a few quotes for that.
The IRS goes after (and the courts have supported doing so) those attempting to use loopholes to reduce their tax burden. If the IRS isn't going after the money of corporations doing this, then it likely is within the bounds of the tax code.
If items being referred to as loopholes are legal, then they are not loopholes but part of the tax code.
I've never liked the term "loophole" when it comes to the law. Either it is legal or it is not. The best I can do in terms of that is referring to the act of a politician inserting an exception to benefit a few as "inserting a loophole". But once that has been placed, voted on, and signed into law it is at that point the law.
That would be true if everybody concerned interprets that specific law exactly the same. One problem is there can and is ambiguity in natural language, and another is you cannot cover all possibilities in a single bill.
In short there are a lot unsaid, and what is said is not always clear.
One could say the same about the continued use of the word loophole in this context.
But I agree, that's part of my point. Just because one person feels it is a "loophole" that has some sort of negativity connected to it doesn't mean that everyone else will feel the same.
I agree with you again, that no law can be 100% clear and that's why we have the courts to decide on such things on a case-by-case basis. Until a court decides that the so-called loophole is illegal, then it is a legal thing to do. You cannot hold a person and/or company responsible for what was unsaid in a law nor when what is said is not always clear. If the thought is that the companies in question are not abiding by the law then take them to court, that's what the judges are there.
This whole meme that a company is immoral for not following the unsaid spirit of a law is just a result of people not knowing the proper thing to complain about when it comes to such laws.
It's really strange to attach morality to a corporate headquarters location. I am not sure it's any more moral for a corporation to be headquartered in the US than in Ireland. Congress is free to prohibit corporate inversions.
Woa there. So judges define what's moral and what's not now?
I believe judges quite specifically help define what's legal. Whether they include a little addendum about morality in their verdicts or not is completely besides the point: This whole thread is about that ethics and law aren't the same.
There's a huge difference between not paying the intended amount of taxes, and executing Herculanean acrobatics through (probably lobbying-induced) loopholes.
Also, these (implicit) appeals to the authority of judges always confuse me. Judges have political opinions, just like anyone else, and land on both sides.
You're conflating "permitted" and "encouraged". Both of those rulings said that people may arrange their affairs so as to minimize their tax burdens. In no way is that saying one should.
That said, murder & paying the least amount of taxes possible are slightly different scales of morality - don't you think?
Should you be judged morally because you have a tax accountant maximize your tax refund every year or should you just pay as much as possible without regard to being fiscally responsible to your own self?
I'm sure it's not intentional, but you don't actually give a source.
I'm not sure why I find the missing citation so funny (probably because the claim is pretty surprising), but I laughed really hard and up-voted you in case it was a joke and not a mistake.
He probably meant to link to something about the Yellowstone anomaly. The idea is you kill someone in the 50 square miles of Yellowstone National Park that is in the state of Idaho (most of Yellowstone is in the state of Wyoming).
The Sixth Amendment says in a criminal trial the defendant has a right to a trial by a jury from the State and district where the crime was committed.
The problem is that all of Yellowstone is in the District of Wyoming, including the 50 square miles that is in the State of Idaho. Hence, the jury must consist of people that are from that 50 square mile region of the park and state.
The permanent population of that region is 0, and it is a part of the park that is rarely visited so the transient population is close to 0.
No jury can be impaneled for your trial, and without a trial, you cannot be convicted.
Why assume paying higher taxes than necessary to a government is moral? It is not as if governments are widely considered to be admirable ethical organizations. Just the alternative, really.
yet, downloading software and music for free, without compensating the author/creator, is seen around here as 'moral'. So is using Adblock on websites, depriving that company of revenue.
"It is the job of a business to make money, the most money possible, at all costs. That is its single purpose existing."
I don't know if you are terribly inexperienced or trolling, but this is provably false. Besides the obvious examples of non-profits, one can easily imagine a business model that desires market-share over margin (looking at Japanese business models or even Amazon). I think you should read more before you take such an amoral view towards business and I sincerely hope you are never at the helm of a business I invest in.
At its heart, business is about creating value and exchanging that value for currency. You build a great house, mine raw ore and create steel, invent a new medicine... your product is your goal and future growth is just as important (if not more!) than your current revenues.
What missing here is any reference to time. Amazon is taking a short term loss on profit to maximize their long term ability to make as much money as possible. That's what maximizing market share is about.
> I don't understand the whole "If you behave logically as a business we hate you" sentiment.
I agree with this. Businesses will work to maximize their benefits under a system (just like most humans will).
> It is the job of a business to make money, the most money possible, at all costs. That is its single purpose existing.
I think that is the market-pressure for what businesses should do and the single goal of many investors. But I am not sure convinced that is truly the single purpose of a business.
Yes, the concept of a Benefit Corporation [1] does exist, and we should encourage more of them, and more business to write their charters to act like them. Maximizing investor profit is only one metric of a business.
each corporation has a charter spelling out its aims. any agent of the corporation is compelled to further those aims. many charters principally aim to maximize monetary profits but not all.
>It is the job of a business to make money, the most money possible, at all costs. That is its single purpose existing.
I don't think that's the single purpose of a business existing. I hear this all the time and I'm not sure where it comes from. Lots of businesses exist to change things or provide ways to solve problems with money being the means to allow them to do this.
It's why you can have businesses that take long bets on better tech (Tesla, Space X) or work to fix large broken systems that are hard to enter (Palantir). Google also started with similar goals.
This is a false premise. OP said absolutely nothing about changing / eliminating existing laws. Even if OP said something about tax laws your argument would be a slippery slope fallacy.
> I don't understand the whole "If you behave logically as a business we hate you" sentiment.
FWIG, Cuban's attitude sounds like "what is good for the business isn't always good for the investor". In a less twitter-friendly format, filing offshore creates a tax-shortfall that will be borne by your stakeholders. While this cost might not be felt by Mr. Cuban, in this case he would be acting logically (in a sense).
> It is the job of a business to make money, the most money possible, at all costs.
First time I've heard that one. Here I thought the purpose of a business was to create value for its stakeholders. Mind you, value can be products for your consumers, jobs for your employees, or capital for your owners. Usually this means money, but not always.
Business' goal is to make money, but countries let business exist to employ people and sustain the economy. Clients deal with businesses to have services provided. Employees work for businesses to sustain their lives, etc.
Businesses don't exist in a vacuum, they don't only exist for themselves and should act more like a part of a whole. If a business breaks the social or economic tissue around it, it will eventually be seen as harmful and face sanctions. If a business is unwilling to benefit the society, it might be a good thing to let it leave for somewhere else.
It is not the job of a business to make "the most money possible." That tired bullshit meme needs to die.
Yes, businesses need to make money. I'm not saying otherwise. But even the fiduciary duty that publicly traded corporations have to their shareholders isn't "maximize profit above all other considerations." The kind of short-term, next-quarterly-results-are-all-that-matters thinking behind that notion is possibly one of the most destructive ideas in the history of markets.
It is not expressly the job of a business to make, "the most money possible at all costs." There's a component of to what degree, and priority. Apple, for instance, could probably make even more money than they do, using cheaper, lower quality parts/builds, or with lower manufacturing standards, but they don't do that because of the priorities they have, driven by their corporate values. It's a trade off.
Mr. Cuban, as an investor and citizen of the US, is willing to make a personal and professional trade off investing in companies that have a lower P/E multiple (earnings) at the expense of staying in country and keeping jobs there. This is based on his values.
I bring Apple up intentionally because they're an example of a company that uses international tax law & vehicles to basically have no U.S. liability. So, they don't share the same values as Mr. Cuban, but they do make other trade offs in their business that come at the expense of the absolute maximization of profit, because of different ones.
That's weird that you sort of put your foot in the water here and are more right than 8 or so of these replies. A business, that Cuban's referencing, job is to optimize shareholder value. There might be rare occasions where that means paying higher costs or having lower revenues than is possible but for the most part the best way to do that is to make as much money (profit) as possible within the law.
That's assuming that shareholders care most about positive returns, he's stating that for at least his shares that isn't necessarily the case. It also has the side effect of hurting the company's bottom line if he does drop the shares.
Sure, and as Cuban spells out pretty clearly in his tweets, he is taking into account the higher taxes he will personally pay in the calculation of his overall returns.
An extra 5% return on 2% of your portfolio may be dwarfed by increased income taxes as the result of multiple large corporations re-domeciling.
He's saying their economic behavior will hurt his overall wealth in the long run so he wants to discourage their behavior. Both are acting as rational economic actors.
You enact business unfriendly practices business leave. It is the job of a business to make money, the most money possible, at all costs. That is its single purpose existing.