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Are companies such as Amazon, Apple, and Google morally bankrupt because of their attempts to minimize their income tax?


Absolutely not. 
 
There is a deep underlying problem here. And that problem is called ‘The Income Tax’. Taxing income is the worst sort of tax that there is. First, it is impossible to define ‘income’ consistently because it is typically considered to be 'gross income minus expenses'. But what is an expense? In the United States a Realtor can subtract the cost of car travel from his income. But someone who drives to work and back home cannot. What’s fair

It’s so difficult to determine what’s fair that the income tax code in the US is more than 2,000,000 words long. There’s not a single person in the world who understands it. 

The worst thing about it is that it gives almost everyone the idea that just because a person or company earns lots of money, they owe you, me, the country, or the world, money. And why is that? There is no moral reason that they should be taxed just because they earned money. 

One could more easily argue the opposite: those individuals and companies that earn money do so because they are providing a product or service that people want. 

Rather than tax them on their profits, we should be thankful for such companies, because of the jobs and services that they provide. But an income tax punishes them.

Rather than be envious (a sin) that an honest person or company is prosperous, we should be happy that they were rewarded for their efforts to provide us with their service. And then we might be motivated to work harder, earn more money, and enjoy the fruits of our labor. 

I'm glad Apple has a presence in Ireland to try to minimize their income tax. When the income tax rate is 0% for all, I’ll be happy.

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You might ask, “But we need taxes, so what’s a good alternative?” We do need taxes, but they need to be moral taxes. 

And what taxes are moral? Taxes are moral if they are essentially ‘user fees’ for the use of some government provided service. 

For example, a road tax, that charges per mile traveled per weight of a vehicle, is a fair tax. It is a tax that pays for the amount of road used up by a vehicle.

A land tax charged for the private use of land is also a fair tax. Because the owner of land did not create the land, it is appropriate to charge a monthly or yearly land tax, so that the land owner compensates the rest of us for the fact that the owner is given control over that land. 

One last example is a natural resource tax on those companies that extract scarce natural resources from the ground. For example, a company might gain the right to extract bauxite, an ore of aluminum, so that they can refine it and sell the aluminum. This is good because aluminum is a metal we need. And it is appropriate to charge a tax per ton of aluminum extracted, because the company did not create the aluminum. So again, the tax compensates the rest of us for the right to extract a natural resource.

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Let's get rid of the immoral and unworkable income tax, and replace it with taxes that are moral, and that do not discourage the creation of a product or service.




Tim Farage is a Senior Lecturer in the Computer Science Department at The University of Texas at Dallas, and a former Professor of Mathematics. The views expressed herein are those of the author. Some of his main interests are in online education, and the reconciliation between science and spirituality. You are welcome to comment upon this blog entry and/or to contact him at tfarage@hotmail.com.

Comments

Anonymous said…
Our company decided not to invert our headquarters to a low tax country in Europe about 15 years ago. Maybe we should have.
Carroll said…
Tim, this is the best of your blogs that I have seen, in my view! It gave me a lot to think about.
Paul said…
Long time reader, first time commenter,

So taxes are complex, and while I understand your reasoning for moral vs unmoral taxes I think your unfairly siding with corporations on this argument. Apple didn't pick its site (of ireland) because the do not have a unmoral tax on income they placed in ireland to avoid paying taxes in general(specifically income). Is Apple still morally right if they relocate to a location with 0 property tax and mine/buy resources from other locations that don't charge a resource tax? Justifying taxes as moral/unmoral is perhaps the wrong stance to take with taxes. Being able to improves ones life is a motivation for itself. Taxes should be designed to be both partially equal and partially fair with this being a optimization equation in regards to getting enough money to pay for things required by government/people without unduly detrimentally charging any one group. Just my two cents (taxes will probably always be difficult but as part of the social contract you wanna play in the US you should be willing to pay the US etc.
Tim Farage said…
Paul,

I do agree that taxes are necessary. It's mainly the income tax that I have a problem with.

If Apple pays no income tax in Ireland that's fine with me. But if they pay no property tax, that would not be fair. Are you sure Apple pays no property tax in Ireland?

Tim

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