Bill Gates: Corporate tax is not a moral issue Microsoft founder Bill Gates says he gladly paid a whopping $6bn in personal tax, but added that he reckons corporate tax is a legal issue and not a matter of morality. Gates spent 14 hours in Australia on Tuesday suggesting to Australian politicians that they devote more of the nation's budget to foreign aid. He gave several …
People running corporations have a *duty* to maximize shareholder value. To the extent that they do not, the corporation's viability is affected. Corporations that are reckless enough to take shareholder money and send it away unnecessarily are ultimately doomed. They will be out-competed by corporations that behave more rationally.
For many years I have called corporations 'evil robots' because in my opinion that is what they are. More to the point, as currently laws are structured, that is what they *must* be if they are to survive.
I do not think that corporations should be able to come close to the excesses we currently allow. However, the solution is, as Bill Gates has said, to change the rules. Unless you level the playing field, you guarantee that only the most ruthless of corporations will survive. I have, as I write this, in mind a particular Biotech company that sets an astonishing standard for corporate Evil.
Like government, we get the corporations we deserve. If we set up rules to allow non-human entities to ride roughshod over human beings, guess what happens?
Forget corporate law, there's no particular reason to return more than what the law requires of personal income either. Giving to the state is not a moral issue and corporations are just legal fiction - they can't have morals.
Corporation profit is just a convenient and efficient place to identify and collect tax - at least it was.
One way to put a damper on things would be to only allow one set of books. Stop allowing companies to tell the tax office one thing and shareholders another.
Then you could deal with IP - all payments sent abroad for the use of IP will be credited as profit on imported units in which that IP is used, pro-rata.
It's late and I may not be thinking straight.
There is, of course, a moral obligation on people to help those in need.
"People running corporations have a *duty* to maximize shareholder value. To the extent that they do not, the corporation's viability is affected. Corporations that are reckless enough to take shareholder money and send it away unnecessarily are ultimately doomed. They will be out-competed by corporations that behave more rationally."
And this is the problem, no one knows what SHAME is anymore, or they don't care!
Everyone/corp have a DUTY to pay the tax due of them and not weasel their way out of it!
Avoiding your responsibilities makes you a "Jeremy Kyle" dad and shame and scorn should be piled onto them. Tax the corporation then TAX TAX TAX the shareholders.
People should shut up and pay up or be thrown in the nick.
And this is the problem, no one knows what SHAME is anymore, or they don't care!
You mean like those politicians who will easily organize a going away party for 100 people, estimated costs are approximately E75.000,-, even when the country they claim to be serving is in a very rough financial climate, to such an extend that taxes had to be raised and government spendings (where it matters of course) had to be cut.
Because that is the other side of the medal; people need to pay taxes but also see that taxpayer money wasted and thrown away as if it was nothing.
This isn't saying I don't agree with you perse, but it works both ways.
And this is the problem, no one knows what SHAME is anymore, or they don't care!
Everyone/corp have a DUTY to pay the tax due of them and not weasel their way out of it!
I don't think I'd call paying the taxes required by law and not one penny more 'weaseling' their way out of taxes, and that's what Bill is talking about. If nations are so concerned about big multinationals using legal loopholes to pay lower tax rates then those nations need to close those loopholes, end of story. You can't craft your tax law so that it allows corporations to pay less taxes and then complain when they use it.
The US is a perfect example of this. We have all sorts of tax loopholes intentionally put it place so that the business owners in Congress and their cronies can pay less taxes, but whenever some company without Congressional connections use those same loopholes they get hauled before the Senate to explain why they're using those perfectly legal loopholes, as Google was recently. Schmidt did the right thing telling them off. If you don't like company's using the loopholes you set up to pay less taxes then you need to close those loopholes.
@sisk - "If nations are so concerned about big multinationals using legal loopholes to pay lower tax rates then those nations need to close those loopholes, end of story"
You're right of course, there's just 1 more detail to consider. Legislators who introduce legislation to remove loopholes and catch more of corporate profit in the tax net will see their campaign funding dwindle as the multinationals redirect their campaign contribitions / *cough* bribes *cough* towards those legislators who will vote for the tax loopholes that they desire, and against tax reforms that will negatively affect their bottom lines.
Of course not all legislators are thusly influenced, not all companies give campaign contributions based only on that etc etc... but the net effect in the long run is the current mess
Not all nations follow the US model of "pay your campaign". Most (West)European countries have a finance system and access to TV time during elections "for free". So they are less restricted there (in theorie)
This sometimes is abused by "4.95 percent" parties in germany - you get money based on the percentage/number of votes as soon as you go over IIRC 0.5 percent and you do not have to work unless you get 5 percent (or 3 direct mandates).
"You can't craft your tax law so that it allows corporations to pay less taxes and then complain when they use it."
The problem isn't that simple. Tax laws start simple and become a convoluted mess in an attempt to encourage foreign business.
Say, McBurger comes to the UK but is based in the US and complains that they're paying tax on what they sell in the UK and their profit in the US. They see this as unfair (rightly so), so the government (on both ends) agree to change the tax rules to be fairer to how the company operates across borders. This works great until some shrewd/immoral/cunning/evil (delete as applicable) accountant realises that there is a way to misdeclare or offset the money taken in one region in order to pay less tax.
As the rules around how companies operate across borders expands to cover other scenarios, the number of loopholes increases. (As a developer, I want to say "due to poor unit testing")
Take a look at how Starbucks reduced their tax bill by renting their UK property from a foreign company (themselves) based in a country with lower tax. Perfectly legal, but clearly not what the system was designed for.
"If nations are so concerned about big multinationals using legal loopholes to pay lower tax rates then those nations need to close those loopholes, end of story."
No, the story *starts* with an entire economic establishment - q.v. the Chicago School and the Austrians - which was created deliberately and knowingly as a propaganda exercise to promote the idea that corporate taxation is bad, public spending is bad, and tax should be as low as possible for rich people because they 'create jobs', etc.
Basically everything in mainstream economics and corporate policy is a tissue of lies and nonsense. None of it works the way it's claimed to work, and all of it is socially and economically corrosive and destructive. You can see the results by looking at Greece and Cyprus.
So what do you do when governments can't change the rules, because they're ideologically unable to imagine better rules, and institutionally corrupted by revolving door appointments that move the same people into and out of corporate upper management and politics + the civil service?
If you can answer that question in a practical make-a-real-difference kind of a way, we can have democracy and real prosperity back again.
> I don't think I'd call paying the taxes required by law and not one penny more 'weaseling' their way out of taxes,
Except this is about shuffling money around bogus corporate entities in order to gain the most favorable status possible. For most people this seems inherently unfair because most of us aren't in a position to do this. This includes a good number of small businesses to. Although governments that set themselves up as havens for tax scofflaws deserve just as much derision as the megacorps that exploit them.
"People should shut up and pay up or be thrown in the nick."
I don't know why but this comment reminds me of the old bearded convict in Life of Brian, who has just been turned the right way up after 20 years by his Roman jailers and who is full of praise for the Roman race.
"Everyone/corp have a DUTY to pay the tax due of them and not weasel their way out of it!"
And just what exactly is the tax due of them?...
I think you'll find that all the companies being investigated in the UK, US and EU do pay the tax due of them - as defined by the various national laws.
Likewise the many contractors who pay themselves small salaries and large dividends...
In my opinion it is an anomaly that a company's annual accounts give no real information on the taxes actually paid. Given the current debate it would be interesting to see a full breakdown of taxes paid (eg. VAT, NI, PAYE, Corp tax etc.).
Obviously!: "People should shut up and pay up or be thrown in the nick."
I really don't disagree with you, I really don't, but have you ever asked yourself....Pay up for what? Also, is it really that they should pay up on the taxes, or stop hoarding the money and put it back into the countries economy?
Our (U.S.A.) EMT services seem strong. When a tornado or hurricane hits, there is help and obvious attention. Police forces seem to be everywhere, it seems hard not to see a cop on a daily basis. As far as the firefighters go, well I'm not sure why there is so many volunteer units, but they all seem to do a great job. Our healthcare isn't outrageous, and it surely will remain privatized for the majority no matter what laws come.
I don't disagree that companies should "Pay up", I just feel they should do it directly with return investments and jobs, but sadly, they almost never do. Now, would companies paying more to the government benefit anything? Do we need to give even more military equipment away (fighter jets, tanks, basically anything) to foreign countries and give them training on operations as well? Our government gives away billions already, and puts not so much back in. So would more money in the hands of our current government do great things, or just further proportional spending down the wrong path?
What our government could do (very ballsy though), is to force companies to put the money directly back in the U.S.A. economy, here land side, instead of hoarding it and filtering it internationally. That way our fumbling government can't waste it away, and companies can create new jobs and investments. However, sitting here right now, it looks like the fumbling and hoarding will continue as normal. S.N.A.F.U.
"Similarly every parent has a duty to squeeze as many benefits out of the welfare system as they can."
Kind of get the sentiment - but one is taking more than you need from the collective pot, the other is giving extra to it.
Company A makes widgets and pays 100% of their tax
Company B makes widgets and pays 120% of their tax
Which one is going to expand and survive, and which is going to get bought out by the other at best.
It's more like -
Company A pays 100% of the assessed tax on their profits in country A because they're based with country A.
Company B pays 2% to various accountants and 10% to country B, even though the profits were generated in country A.
Firstly this skews the market in favour of incumbent multinationals and away from competitive local business, and secondly it effectively puts the tax rates on individuals in country A up as the government is denied funds from business.
Except that government in most of the world doesn't need funds.
It's that misconception that causes most of the problem. The causality is actually the other way around - government spending creates the liquidity with which taxes are paid. Government spending is actually limited by the amount of free stuff and resources its currency can command.
Taxation is a distributional issue. It is unfair that Company A pays less than Company B all other things being equal.
But it has no effect of the ability of government to do stuff - however much the politicians spin the line that it does.
It's more like -
Company A pays 100% of the assessed tax on their profits in country A because they're based with country A.
Company B pays 2% to various accountants and 10% to country B, even though the profits were generated in country A.
Firstly this skews the market in favour of incumbent multinationals and away from competitive local business, and secondly it effectively puts the tax rates on individuals in country A up as the government is denied funds from business.
Absolutely, David.
Adam Smith would be turning in his grave at this (although of course the twats down at the Adam Smith Institute like to pretend otherwise).
"People running corporations have a *duty* to maximize shareholder value."
I agree entirely, the issue is not the companies behaviour but the rules they are requried to obey, but...
How exactly do they justify the ridiculous salaries that they take for their board members and certain "key" staff (traders for example) when all the available evidence suggests that after a certain point (usually cited as about 20 times the average salary) inflated wages are in no way linked to increased performance?
Well, someone obviously thinks they ARE worth the money. Because unless you are the sole owner of the company someone else writes your contract and paycheck. Maybe they are really good negotiators, maybe they have certain skills in a crisis
And if people get payed by performance - most politicians would be on Dole
The companies are just finding ways to transfer-price their way around it. It's not like the UK tax system was specifically set up with this in mind, it's one of multiple work-arounds.
I agree utterly that the law should be changed, but bleating about how it's not a required amount because that's the way the system was set up to work is more than a touch disingenuous.
Hardly. What the likes of Google and Apple are doing is still (apparently) legal. Only government can make it illegal, and this can only be achieved through better international tax agreements. The politicians can moralise all they want, but unless they show a little backbone, and stand up for the rule of law, through legislation, then all they are doing is surrendering their own legitimacy to the very corporations they criticise.
Nobody is saying that it's illegal (possible exception of the Google sales taking place exclusively in Ireland, which may be iffy).
But I'm saying its entirely disingenuous for the likes of Bill Gates and Eric Schmidt to say they're playing by the rules and paying a fair amount when the companies structure themselves and do all sorts of financial acrobatics specifically to avoid paying the amount they would usually be assessed.
Bill even says "This is not a morality thing, this is about the law,” he said. If nations set new tax levels “companies will be happy to comply", which is rubbish*. They use loopholes in international law to avoid paying tax in the places they do business.
So again - the solution absolutely is to change the law, but that doesn't change the fact that these statements are disingenuous.
(*hint, what's missing is "and we can't find a way to weasel out of it")
Oh please. Loop holes exist because governments leave them there, if not put them there in the first place. What is a tax incentive if its not a loop hole?
The real issues is that nations do not co-operate, but compete for business using taxes. Ireland attracts business because of its tax regime. Trust me, its not the weather. Any why invest in the UK and not say Germany? What incentive can we give? UKIP? The Channel? The great UK customer service? The apparently poorly educated population who the government says have been doing dumbed down qualifications for the last 20 years?
If people want this sorted, all nations must have identical tax regimes, which could begin to be achieved by a *more* integrated EU. Heh, like this country would like that.
Still waiting to know why its great news that the Star Wars films will be filmed in the UK in no small part due to a tax deal.
This entire debate is a disingenuous politically motivated joke.
In the case of the Star Wars film this was a deliberate policy by the UK government. The jobs created, the employment retained and taxes will ensure a lot of income.
If the makers of Star Wars made the film here but then claimed everyone was actually doing the work in Ireland then that's obviously a lie and that's the sort of trick Google and others are pulling.
>If the makers of Star Wars made the film here but then claimed everyone was actually doing the work in Ireland then that's obviously a lie and that's the sort of trick Google and others are pulling.
That's almost what they did - Star Wars still hasn't made a profit, so some of the English actors involved still haven't received any royalties
The incentive is that they can still profit from the populace, just not as much. Take Starbucks, if they were forced to cease all operations in the UK unless they paid their full tax, rather than use loopholes for tax avoidance, do you think Starbucks would allow all there stores to be closed when there is still a profit to be made?
Probably not, I am sure they would comply. If on the other hand they refused to pay the proper amount of tax and were happy for their stores to close, then this service would be provided by UK businesses, from entrepreneurs to large businesses, as it is a commercially viable service.
The thing is in some ways things are working like the EU was set up to work.
There is certain things that you have to allow as one of the main points of the EU.
But somehow they can stop tobacco and booze being ordered from the EU. (Perhaps the EU has agreed to ignore it in that instance but it is still illegal if you pay the tax in the country of origin).
Still think legalising all drugs and taxing them in such a way as to make it very difficult for organised crime to compete would solve most budgetary problems overnight. Could make an obscene amount take nearly all the black market money.
The UK government can't have it both ways though.
On the one hand, they say we are now an IP economy ( ie we have little left to sell) and that IP has considerable value.
On the other, government taxes are hammered when others also recognise the high "value" of IP, especially when they ship that value out to low or non-existent tax economies.
The problem is that a national tax system that couldn't be gamed would cause investment drift to those nations that had tax systems that could be gamed.
For example, if a UK government introduced a way to stop Google booking sales profits in Ireland that were actually made in London, Google would leave the UK for somewhere else.
This is why several western countries are getting stroppy in public about certain multinationals even though the problem is with their own tax systems which they know full well how they work. Politicians are probably just as guilty as multinationals over creatively avoiding taxes.
None of this public debate is for the benefit of the public. When every country's had its inquiry and they're all sure they're all going to do the same thing at the same time, that's when there'll finally be a change in all of their tax systems.
These megacorps spend half their time lobbying governments for tax breaks, reductions and law changes. Then they turn round and blame governments for the tax laws.
The government gets the tax companies who work for these corporation in to consult on new laws..while at the same time letting these tax giants know the loopholes before to "add value" to their services.
The whole thing is a sham
Actually, in some cases, it's because the don't do it enough.
http://www.opensecrets.org/lobby/clientsum.php?id=D000022008&year=2013 - Google
http://www.opensecrets.org/lobby/clientsum.php?id=D000021754&year=2013 - Apple
http://www.opensecrets.org/lobby/clientsum.php?id=D000000115&year=2013 - Microsoft
FTR - Google are out-spending Apple around 10:1 and Microsoft around 2:1. I'd add that if they do it with government, they'll do it with the press. Make of that what you will...
“It is not incumbent on those companies to take shareholder money and pay huge amounts that are not required.”
So the solution to situations like Foxconn (with their human rights abuse record) is not to improve the situation of those people - since that probably is going to cost money - but to find a better location with with more relaxed laws, where the people can be more easily exploited for less.
Is this really what the founder of the Bill and Melinda Gates foundation is suggesting?
Is this really what the founder of the Bill and Melinda Gates foundation is suggesting?
No. Now if you're finished playing with your straw man, put him away and go get ready for dinner.
What he's suggesting is that companies are amoral entities, and as such, any social requirement for ethical behavior on their part has to be implemented via external regulation, because there is no internal drive for such behavior.
What is sad is that he even has to mention this. It's capitalism 101 -- every adult in a capitalist society should already know this.
> Human beings work inside companies, not magical robots,
The vast majority of these corporations are so large that they cannot have a moral focus.
Each person working for it has such a narrow view of the corporate identity that they don't have a moral influence on it whatsoever. Even board members only contribute to one part of the picture.
I fear you are confusing the morality of the corner shop because it is run by a single guy: the morality of the shop is a reflection of the morality of the owner.
Saying that Google or Amazon has a morality is like saying an ants nests has morality. It makes no sense.
"Saying that Google or Amazon has a morality is like saying an ants nests has morality. It makes no sense."
Are you trying to tell me there's nobody in google that has a decent overview of their finance and tax situation?
Why, they must have no idea of whether they're making any money or not, it's chaos! They won't last long that way!
(In other words BULLSHIT, of course the country level CFOs, accountants etc know what's going on and set the policies)
Companies must be profitable otherwise they die. So they can not afford "moral" because that would kill them and has already killed a few. Chinas companies do not care about people or environment - and have already put quite a few western companies out of business (Solar industrie, coal mining, Shipbuilding is next)
Companies must follow the laws, that is all. The lawmakers must take moral into consideration - and then dampen it down with a healthy dose of "Realpolitik"
"any social requirement for ethical behavior on their part has to be implemented via external regulation"
He doesn't say this. He says they have to comply with local laws. My example of Foxconn, et al, demonstrates a scenario where American companies put pressure on their suppliers to improve the status quo *not* in response to any local law, but to public outcry. There is no law that says a company has to be ruthless to create shareholder value. (btw, lots of companies have ethics policies in place that go above and beyond the bare that is required by law.)
My point is that Gates and the rest seem to feel they get a free pass to exploit the government because, well, it's the government and nobody likes them. They would never make the same claims about exploiting human victims (i.e., if you don't like it, change the law). But money going to the government does potentially help people. Just because they've been abstracted and made faceless doesn't give corporations a free pass in my book.
ps. no need to be a dick in your replies
Since when is it the job of politicians to cast moral judgements? Never. The mere fact that they appear to think that they are in a position of moral superiority to pass such judgements is pretty appalling. By definition politicians cannot be morally superior to anyone or anything.
What is morally repugnant is acknowledging a problem has existed for so long, attempting to shift the blame onto others, attempting to guilt-trip companies and individuals to pay more than they are legally obliged to in tax, whilst paying the minimum amount of tax themselves, and failing to change the rules that they are responsible for.
If the rules are really complicated and difficult to change, then just say so. Don't just sit there for years and constantly whinge about companies that don't appear to be breaking any rules.
"Politicians are not born. They are excreted."
- Marcus Tullius Cicero
"Since when is it the job of politicians to cast moral judgements? Never."
******
Why was the slave trade abolished if not as part of a moral judgement by MPs? Or enabling women to vote?
Politicians are always making moral judgements and then enacting laws to force those judgements on people, it's basically what their job is, after all we have a civil service to actually run the country.
I'm not saying the moral judgement is always right, for example Iain Duncan Smith seems to have an amazing talent for always ending on up on the wrong side of a moral argument, but pushing through laws which back up his own twisted ideology, but to say it's not the job of a politician to make moral judgements seems to miss a huge part of their job description.
On the other hand what are politicians trying to do with this tax by intimidation stuff?
It looks as if (UK) politicians seek to harm the business model some corporations are using in the UK.
Meld that with an almost fascist preoccupation with political powers and it seems UK MPs have gone into fascist mode (note to MPs: wake up - this is a democracy)
Strange melodrama all the same with much pondering about why it is getting so much media attention
Total bollocks - a company has a legal obligation to maximise its profits for the benefit of shareholders. This means a company is obliged to game the tax system because if they didn't the shareholders could sue them for not providing the best shareholder value!
If the tax laws allow gaming, its a the tax authoritiy's responsibility to FIX the tax laws, not the company's duty to pay more than they legally need to.
So by the same token, if it was cheaper to pay the fines they should remove any safety procedures?
Redundancy payments were very expensive so we sent all the managers on a training course to the arctic on a Liberian freighter - the freighter met the minimum Liberian safety requirements and it's not our fault that it sank.
I~ don't know about other nations but a cost-benefit analysis probably underlies every spend of public dosh in the UK.
Yes, that includes armoured kit for squadies in combat zones, cost-benefit analysis to establish that it is cheaper to use surface based transport than air transport in some war zones.
On a less contentious area:
cost of repairing UK roads and highways = many billions or earthling pounds
compared to
cost of meeting road accident claims of not repairing quite as many UK roads and highways = not quite as much earthling pounds
Therefore: don't repair the smaller A and B roads, estate roads and contest any accidents caused by potholes?
How many potholes are in the roads near where you live?
Actually that is what killed west european coal mining - the Chinese do not care if three and four digit numbers of miners die each year, tens of thousands of coal burn up and pollute the environment of the country looks like Mars when they are done. So they are extremly cheap in money.
Do not get me wrong I think the high security standards and good environmental once are a MUST! But if we want the jobs(1) than the lawmakers must make sure the companies can compete. If you want the security - put a fee on non-EU imports based on stuff like
+ Difference in pollution / environmental protection
+ Difference in work safty costs (percentage NOT total)
+ Difference in money earned for the worker
If you do not do that - say good buy to a few ten thousand "manual labor" jobs(2)
(1) And those where decend paying jobs for the less "intellectually inclined" people
(2) Not that mining is "manual labor" - there is a lot of maschinery involved
That's exactly how transport economics works. They don't fix road junctions on the off chance. They wait until the economic return of the casualties and potential casualties makes it worth the money spent.
Taxation is best if it avoids morality. Just make the system simple so Joe Plumber can work it out on the back of his fag packet.
Leave it to levies and duty to punish 'bad behaviour' and correct for negative externalities.
"The problem is that a national tax system that couldn't be gamed would cause investment drift to those nations that had tax systems that could be gamed.
For example, if a UK government introduced a way to stop Google booking sales profits in Ireland that were actually made in London, Google would leave the UK for somewhere else."
Easy solution - if you don't pay tax in our country, you can't trade in our country!
Simple as that.
It doesn't matter what you say, no business will give up the honey pot that is the UK and will pay their share or see their competitors grab all of the UK business and wipe them out.
Problem is, no one has teh bollocks to do anything because our politicians are the largest shareholders in these coporations and wouldn't risk their nest eggs. The same nest eggs gained by denying your 84 grandmother a hip replacement.
This post has been deleted by its author
Just take some time to look at what his foundation is achieving, then jump off your high horse.
But it's not his money he's giving away. It's the squillions he made by arm twisting manufacturers into making you buy yet another copy of Windows every time you bought a Wintel computer.
It's your money he's giving away.
Saint Bill, my arse.
Just take some time to look at what his foundation is achieving, then jump off your high horse.
Quite a few druglords were able to earn the locals' loyalty by using their ill-gotten gains to build hospitals, clinics and making their hometowns a better place. Even when they engaged in these altruistic acts, they were still ruthless criminals in the business.
So while Gates' foundation might be doing good stuff, it doesn't serve as an automatic bad karma antidote.
Corporations have a duty to maximize profits. If you want them to pay more tax change the rules, don't expect them to contribute more out of some misplaced moral duty. And I say misplaced because these critics seem to imply that paying more money in tax is putting that money to good use, I very much doubt that. I'm sure money can be put to far better good than taxes.
Yes, obviously it's far, far better for everyone that the money to be spirited out of the UK entirely, than it is for them to pay taxes on their earning here!
And obviously they have a duty to go as far as legally possible to create profit. This is why nobody should ever get upset when sweatshops are used or when companies dump pollutants in rivers in less developed countries or any of that stuff, we can't expect the human beings in charge of these things to think about morality or ethics or any of that fucking hippie liberal bullshit, no, we need MORE MONEY DAMMIT and FUCK THE REST OF YOU.
Over here in the real world, corporations are made up of people, and people absolutely can be judged for being amoral, money-grubbing, irresponsible fuckwits.
Yes, companies ARE required to do that. And have always been. It's called being profitable and companies that are not - die.
It is the job of the LAWMAKERS (and by extension of the citizens) to make laws that restrict what a company can do. If you do not want sweatshops - make them illegal. Pass environmental laws and enforce them. If we do not - our fault.
"Yes, companies ARE required to do that. And have always been. It's called being profitable and companies that are not - die."
Not at the expense of all else. They are absolutely not required to be unethical or harmful to society. How these are viewed by individual people working for these companies is obviously very variable. But they are not, repeat NOT required to (for instance) use sweatshops or places they can pump effluent into the water.
People make the decisions to do these things. Regardless of the laws we can and should hold the people that run businesses to a moral standard. And we can do this holding by not giving them our custom.
Okay so I do not shop at
Amazon
Samsung
Lenovo
Apple
.....
Hmmm - I might get rich but what to do with the money while sitting in a cave
And that is assuming "Moral behaviour" is the right thing to do. Quite a few famous people are famous because they behaved amoral and by doing so did the right thing.
Churchill as an example - NOT defending Coventry was the right decision but allowing hundrets of people that COULD have been safed to die is amoral. Yet NOT compromising ULTRA was more important. Same for bombing german cities - amoral since it killed innocents by the score yet better than the alternative
"Churchill as an example - NOT defending Coventry was the right decision but allowing hundrets of people that COULD have been safed to die is amoral. Yet NOT compromising ULTRA was more important. Same for bombing german cities - amoral since it killed innocents by the score yet better than the alternative"
This is not the same as what you said about celebrities and getting famous justifying whatever means it took to get there. This is also nothing to do with the situation at hand.
The coventry thing was a terrible decision to have to make and the ethics/morality would have been heavily weighed up and decisions taken painfully and with the best outcome for all people decided upon.
That you try to draw some sort of parallel between the "fuck you, I've got mine" culture of corporate multinationals, and painful decisions of wartime britain is pretty sick.
Hint: This new fangled language from that funny island of France is not my primary language.
This is EXACTLY what I was referring to - famous people (And Churchill IS famous) making amoral decisions because they are the right thing to do.
And it IS the same for companies. Companies must follow the laws but within the laws they should act to THEIR best interest. Otherwise they loose out to companies that do. And if they loose - so do the workers.
If you want "moral" behaviour from a company - have the politicians draft the laws right.
There is no legal requirement in the UK for corporations to maximise their profit.
According to the Company's Act 2006 (par 172) it is the duty of directors of a corporation to " promote the success of the company for the benefit of its members". when exercising that duty, they are to have regard to the long-term consequences of their decisions, to consider the interests of the employees and consider the impact of the company's operations on the community.
Exploiting loopholes to maximise profit may actually contravene the Companies Act. Minimising tax liability is harmful to members (and employees) if they have to pay more personal tax as a result. By depriving the State of resources, the company may ultimately be damage it's long term commercial prospects and impact as the wider community.
While profits are important, there is more to a successful company than just maximised profits.
http://www.legislation.gov.uk/ukpga/2006/46/section/172
The thing is, it is up to the members of the company to decide what does and what does not meet their best interests.
If the members wish for uncompromised maximal profits then that is what the members want and what the directors have to aim for.
There is also the slight of hand anomalyof why pay £2 for something when the invoice tells you it should be £1.
If directors decide to overpay to any entity be it taxman, supplier or employees the members of the company can decide that the directors need to pay that difference out of their own money and not company money.
Democracies are sort of messy things are they not?
"If the members wish for uncompromised maximal profits then that is what the members want and what the directors have to aim for."
It sure is. Now, how often do the boards actually pay any attention to what shareholders want? LOL.
And if the members do actually want this and demand it of the board, then the members can also be called immoral, unethical assholes. Because all of the actors here are human beings and we can and should expect them to behave like reasonable examples of the species. When they start externalising the costs and not keeping up their end of the implied social contract, they should expect legislation.
"There is also the slight of hand anomalyof why pay £2 for something when the invoice tells you it should be £1.
If directors decide to overpay..."
BZZZZT. Analogy fail. There is no overpayment here if you abide by the tax laws as intended. In fact it takes a FUCK of a lot of time, effort and money to do what they do to avoid paying tax at the same level a company without the crazy international acrobatics would have to.
No actually in the US , companies are required by law to do this
Even if (and I'm not convinced) there was a legal requirement to maximise profit, it does not not necessarily follow that there is a legal requirement to minimise tax liability; that's tantamount to making failure to practice tax avoidance an offence.
Operating to the "best interests of the shareholders" is often found. And that is generally interpreted as "making as much profit as legally possible". So if it is legal not to pay taxes a company should do so. Otherwise shareholders can level "dereliction of duty".
Same for non incorporated forms of companies like Ltd(GmbH) etc. There the businessman running the shop is expected by the co-owners to work for the best of the companie. And making money is good. If legally minimizing expenses can help - that is your job.
Single owner "mom and pa" shops are the single exception. But in those the owner often is liable with all he owns so maximsing income is important, even more since most have litte "spare" cash. You can go bankrupt as a butcher if you are a bad businessman...
The important word is LEGALLY!
"best interests of the shareholders" is different from minimize tax this year.
If the result of these tax games was a ban on government contracts, a monopolies commission investigation into your advertising business or a boycott of your coffee shops by consumers - then your shareholders might decide that you haven't done your best fiduciary duty.
If maximum profit was the only driver then drug smuggling would seem to be the best business plan. A few of your employees might end up in Singapore jails but the shareholders would do very nicely.
"Yes, companies ARE required to do that. And have always been."
Urban myth. Imagine this: a big company has a bad year and makes 0 profit. The idea that they are required to make a profit means that they must then instantly sell off all their assets to make the profit they didn't make from selling widgets.
Clearly this is nonsense. The requirement to look after a company's finances is far more broadly defined than some brain-dead "make the maximum profit at all times" matra rolled out in these threads by apologists for the big law-breakers like Vodafone and Amazon (and, yes, of course they're breaking the law - don't be so childish to think they're not). A company's board has to act in a responsible financial way but what "responsible" means is not defined. If the shareholders think that the company has been run unresponsibly then they can take the board to court and argue about what is going wrong. But they have to make a case - they don't just go "they could have made £5 more by selling some t-shirts".
"It's called being profitable and companies that are not - die."
Tell that to Ford, or pretty well any bank. There are lots of companies that make short-term losses, sometime massive ones, but keep going. That's what is so stupid about the "duty to make a profit" bullshit - it ignores what term the profit should be made over and that is a matter for the shareholders to decide, not the law.
Companies that do not try their best to be profitable end up bankrupt. Lean years can happen but even than a company tries hard to make as much money as it can to keep money drain small. That is true for the craftsman next door and it is true for the big players.
So yes, a CEOs duty IS to make as much money as he can. If the company is traded "best effort" is expected by the shareholders and "Effort to earn money" (Gewinnerzielungsabsicht) is considered a sign of a trader (Kaufmann) by german law.
I understand US Tax law is one of the few that allows people and corps to voluntarily pay more tax than they have to. Last I saw the amount actually received was @ 40k.
BillG, Warren (" tax is unfair, my receptionist pays a higher rate than I do") Buffett, and all the hollywood "intelligentsia" who want to increase govt spending or taxes have the perfect opportunity to donate a little something to the coffers and ease their consciences.
Crickets ........
Corp taxes are built into the price they charge for goods and services. Ultimately taxes are only paid by individuals. Blather all you want to the contrary but I run a business and that's exactly what I do. Raise my taxes? Fine. I raise my prices to cover it. I'm not running a charity.
No you're wrong.
Ultimately taxes are only paid by corporations. That's why the wages of staff are at the value they are. They raise their wages to cover the cost of taxes.
Of course I jest slightly. In reality taxes are paid at the point in the spending cycle you decide to measure them - and any point is as good as any other.
There is no legal obligation to maximise shareholder wealth - it is an economic idea known as shareholder primacy initially proposed by the economist milton friedman.
It has become the standard of economic thought on the primary objectives of corporate entities and is being challenged by ideas of corporate social responsibility.
What this means in practice is that companies think you will get a warm fuzzy feeling if they maximise shareholder wealth BUT ALSO make token charitable donations.
Multinationals can easily recalculate their profits to appear in a more favourable country, and legislators and career bureaucrats (even the non-corrupt ones) are unable to predict the outcome of changing the rules they control in a complex, international environment. Accountants are part of the problem anyway.
What we need is a single, clearly-defined ruleset written in {insert your preferred programming language} that can be applied globally. El-reg commentards are clearly well-placed to do this. We should begin work immediately, and aim to install the ruleset in all world governments (with or without their knowledge and approval) by the end of the year.
What could possibly go wrong?
Quote
What could possibly go wrong?
Unquote
Vested interest.
Said accountants probably auditors and their respected companies and corporations do very well out of having a complex and complicated tax regime.
Why, in a reasonable world one wonders, would the dark art of declaring a financial transaction or stock level be a dark art?
Potential ans: because there is a lot of money in it to some.
It really is all a bit silly. If guvmint wants to espouse and posit morality where else is there a better/best start than with its own UK civil servantry. The guvmint has full (or is it fool?) control (or is it full fool or fool full?) over civil servantry.
Some moral issues it may wish to tackle head-on and promptly might be postcode lotteries regarding health care, postcode lotteries regarding social care, observable event for legislation to slate the poor and favour the rich (it has a historical (hysterical?) footprint), the observable phenomena that civil servants are prepared to put lives at risk to save a shekel or two.
Example: potholes. Present practice is to put lives of road users and/or pedestrians (I'm including horse riders too of all ages) at risk, to have increased incidence of damaged or maimed people, increased incidence of damaged property all through pothole related accidents as a gamble to save money.
Astute readers might note that while the private sector seems prepared to take less income the public sector ploughs on regardless?
The Register 
Biting the hand that feeds IT
Copyright. All rights reserved © 1998–2024
