Amazon and Tax-Avoidance: Is it immoral to buy amazon?

[pidgeon92]

If I avoided every company that exploited tax loopholes, I don't think I'd ever be able to buy anything again.

[taustin]

Originally Posted by Rizla

I'm not avoiding two billion dollars worth of tax.

So, what it's really about is that they have more money that you do, and you want to redistribute it?

[murraypaul]

Originally Posted by JoeD

I do agree that if a company is running as a "shell" for the sole purpose of been run at cost or a loss in order to bolster the revenue of a company based outside the same country that needs looking into and laws changing. However, that's not what Amazon is accused of/doing is it?

Well, actually...
Yes, they do something very similar.
They set up a company called 'Amazon Europe Holding Technologies', as a type of Luxembourg company that is free from taxes.
It then set up a taxable Luxembourg company called 'Amazon EU SARL'.
It transferred ownership of all its European operations to SARL.
It then 'transferred' all its intellectual property to Holding.
SARL used to pay licensing costs to the US division which used to hold the IP. That meant those payments were liable to be taxed in the US. Now it pays Holding instead. Holding pays less than half of that back to the US division, and the rest stays, tax-free, in Luxembourg.
With all the cash accumulated in Holding, Amazon lends money to SARL. The interest SARL pays reduces its profit, and thus tax rates, but Holding pays no tax on the interest received.

http://www.reuters.com/article/2012/...8B50AR20121206

Edit: All of the profit from sales on Amazon UK actually goes to SARL, at Luxembourg tax rates. Amazon UK just act as a fulfillment company and are paid for their services.
(Despite the fact that there are 15,000 employees in the UK and only 500 in Luxembourg)

Edit: Other, more amusingly named tax avoidance strategies include the Double Irish and the Dutch Sandwich.
And yes, to answer another post, at least in the tech world you would have noone left to do business with if you avoided companies using these strategies. Amazon, Apple, Google, Microsoft, Oracle, all use them.

[taustin]

Originally Posted by pidgeon92

If I avoided every company that exploited tax loopholes, I don't think I'd ever be able to buy anything again.

I would certanly hope that would be the case.

[murraypaul]

Originally Posted by taustin

The trick is, who decides what's a "reasonable" level of taxation? The only real answer is, the government, specifically, the legislative body that enacts tax codes. And they have quite definitively decided that what Amazon is doing now is reasonable.

The IRS would disagree with you:
http://www.zdnet.com/amazon-fighting...rt-7000009834/

[taustin]

Originally Posted by murraypaul

The IRS would disagree with you:
http://www.zdnet.com/amazon-fighting...rt-7000009834/

The IRS doesn't care about European VAT rates.

And that's a dispute over what various assets are worth. It will eventually be resolved, by a court if necessary, and Amazon will, again, obey the law.

In any event, that's not a dispute about tax rates, but rather about what is taxable in the first place.

[pdurrant]

Originally Posted by HarryT

ISTR that they did take action against Spain, when they lowered the VAT rate on ebooks a couple of years ago.

Spain talked about doing it back at the end of 2009. And they talked about doing it in mid to late 2011. As far as I can tell, Spain has never actually done it.

[HarryT]

I was under the impression that the reason they didn't do it is because the European Commission told them they couldn't, but I may be mistaken.

[frahse]

It is not immoral to protect your pocketbook by buying "legally" and "cheaply."
It is not immoral to protect your health by avoiding the company of smokers.
I could of course go on.

These are your choices. Good, legal and quite moral.

[fjtorres]

Originally Posted by murraypaul

And yes, to answer another post, at least in the tech world you would have noone left to do business with if you avoided companies using these strategies. Amazon, Apple, Google, Microsoft, Oracle, all use them.

Car companies, too.
It turns out that most japanese car companies make almost zero profit selling cars in the US.
I know, we're all "shocked, shocked, I tell you". Right?

I would suggest that anybody offended by these common business practices not sully their soul and not even think of any product from such companies. That way they can sleep soundly with clean hands.

It's not as if any of those products are actually essential to staying alive. Air, food, water are all essential. Everything else is optional.

Caveat: Pharmaceutical multinationals do this all the time. But I don't think avoiding *their* products will be helpful to extending one's lifespan. So anybody looking for a true ethical quandary should start there.

[Rizla]

You've made some interesting comments and my opinion has shifted a little. But not much. I do recognize that Amazon like any corporation is going to avoid tax as much as it can. What is questionable is that they are allowed to avoid such a huge amount of tax. As a trend, what does that mean for our society? I find it alarming that such an amoral entity is increasingly controlling the future of the printed word. I also find it bizarre that normal people defend it.

I think the argument that avoiding $2 billion or $2,000 is the same except for degree is spurious. This is the real world and a difference of degree does make all the difference. Who is worse? The murderer that kills 2 people or the murderer that kills 200,000? Obviously the latter causes more suffering.

[shalym]

Originally Posted by Rizla

You've made some interesting comments and my opinion has shifted a little. But not much. I do recognize that Amazon like any corporation is going to avoid tax as much as it can. What is questionable is that they are allowed to avoid such a huge amount of tax. As a trend, what does that mean for our society? I find it alarming that such an amoral entity is increasingly controlling the future of the printed word. I also find it bizarre that normal people defend it.

I think the argument that avoiding $2 billion or $2,000 is the same except for degree is spurious. This is the real world and a difference of degree does make all the difference. Who is worse? The murderer that kills 2 people or the murderer that kills 200,000? Obviously the latter causes more suffering.

Actually, a murderer is a murderer, in the eyes of the law. The person who murders 200,000, though, is usually called a "politician".

Now...if you want to get into the "morality" of a company, maybe you should look at their charitable contributions and the causes they support...to me, what they give back to society is MUCH more important than what they pay to a government--governments are at best, amoral, and at worst, immoral by nature.

Shari

[Rizla]

It also seems that defending Amazon by saying all companies do it is misleading. Amazon has designed its business around tax-evasion: Amazon.com: America’s #1 Tax Evader?

Starbucks, Google, and Amazon Face Investigation For 'Immoral' Tax Evasion in the UK

Amazon has paid £1.8m, despite bringing a total revenue of £200m in the UK in 2011.

That's less than 1%, and they earned £200m How is that defensible?

The strategy of Amazon and other companies like them doesn't surprise me. What surprises me is that people defend them. They are stealing from the community. It's daylight robbery!

[murraypaul]

Originally Posted by Rizla

You've made some interesting comments and my opinion has shifted a little. But not much. I do recognize that Amazon like any corporation is going to avoid tax as much as it can. What is questionable is that they are allowed to avoid such a huge amount of tax.

It is the problem of tax policies being set at national levels by individual governments, but applied to corporations which can move at will to any nation they choose. There will always be another Luxembourg ready to offer even lower rates to drag in business, and suck all the tax revenue away from the countries it was actually generated in. For them, it is money for nothing, and because they have a very small local business base, they don't lose any significant current tax income when lowering rates.
And moves to counter that, and have each country 'ring-fence' its financial borders, would drastically hit legitimate business as well.
Also, more fundamentally, the largest corporations between can afford better lawyers and accountants than governments can, so whatever laws are passed, they will find loopholes in them, and whenever those loopholes are closed, others will be poked open.
Up to that point, all's fair in love and war, the more pernicious problem is when those corporations start buying loopholes, by appealing to politicians who are more concerned about their reelection campaign coffers than their electorate.

[murraypaul]

Originally Posted by Rizla

That's less than 1%, and they earned £200m How is that justifiable?

Because they earned £200 million in revenue from UK customers, but their UK business did not earn £200 million in revenue. All of that revenue went to the Luxembourg company, which then paid the UK company to actually fulfill the orders. The profit all stays in Luxembourg, and is taxed there.