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Wealth & Economics > Is tax planning legit?

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message 1: by Nik (new)

Nik Krasno | 13775 comments As you can imagine, it's never aimed to pay more, it's always to pay less or not to pay at all. Tax planning is an expensive toy too. A small/medium size biz might not be able to afford its development and implementation. As a result a small biz running a restaurant may pay relatively much more tax than a huge manufacturing or retail biz, giving bigger players a huge competitive advantage. Individuals working for a salary are not in the game at all.
Big players are also often into 'domicile shopping', electing the most tax favorable location to establish (often artificially) the headquarters..
Realizing how craftily the globalization is being used to legally avoid paying taxes or minimize them, on a country level there are plans how to tackle this phenomenon, one of them being BEPS: https://en.wikipedia.org/wiki/Base_er...
Who knows how long it'll take to unify the countries on this issue.

Is big guys paying less a legit technique or is it at least on par with poor guys cheating welfare system?


message 2: by Philip (new)

Philip (phenweb) Nik wrote: "As you can imagine, it's never aimed to pay more, it's always to pay less or not to pay at all. Tax planning is an expensive toy too. A small/medium size biz might not be able to afford its develop..."

In terms of scale and states missing tax income then big business and high wealth individuals are way ahead of the welfare cheat. But as with all things the numbers quickly switch when added up or focus is shone. One million fraudsters each @$10 is the same as one big business of $10m and it's easier to chase the welfare cheat as a whole army of civil servants and systems measure every penny. For the big business they have an army of lawyers and accountants to fight for the money.


message 3: by Nik (new)

Nik Krasno | 13775 comments Philip wrote: "For the big business they have an army of lawyers and accountants to fight for the money...."

Yes, global corporations are often beyond any specific country's league


message 4: by Ian (new)

Ian Miller | 9751 comments I think tax planning is quite legit, provided it obeys the law. The problem is, governments seem fixed on taxing where the book entry is made, as opposed to where the activity is. A quiet change of law would do wonders here. If a New Zealand company pays for a service, and presumably claims a tax deduction in NZ, the other company almost certainly can't claim everything was done in Vaduz. The problem then is, some work will be done in some other country, so you require some way of enforcing an honest counting of what happens in which country, and that would have to involve all payments to go through an office in each country. Now there is the problem of transfer pricing, and that is harder to stamp down on, and it needs international cooperation, and an assessment that everything was done in the country where costs were incurred if payments involve a non-cooperating country. There would be a lot of work to make something like that work, but if they want to be politicians, why can't they actually do some useful work for their citizens for once?


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