I wonder how these "office raids" would work for remote first companies that don't have much of an office presence and with little or no physical documents and everything being stored in the cloud somewhere.
That's basically what happened when they tried (twice I think ?) to raid Uber offices in France, their boss pressed a kill switch and everything went down in seconds. It completely blocked the investigation.
Afterward Uber helped Macron campaign who then ordered National Financial Prosecutor's office to "stop bothering them" so I don't think anything new happened since.
Edit: Some sources in below replies for infos on both. Turn out I'm wrong for 2nd part it started earlier than his campaign.
That sounds so illegal, it's crazy there aren't consequences for that.
EDIT: Article on the kills switch https://www.theguardian.com/news/2022/jul/10/uber-bosses-tol...
Nothing uber does is crazy anymore
Not by comparison to Uber at least. 'Historical' documentaries about it are going to be wild. And probably on Netflix.
History is written by the winners sadly enough.
I meant they have redefined the bar for crazy to be so high no one will ever cross it. They are the GOAT for crazy.
If you haven't seen superpumped or read the book and are interested in Uber's story, it's worth a read/watch, though it's dramatized for tv.
If you are a little person in the USA, I believe that would be spoliation of evidence.
I don’t think any of these kill switches involved deleting data, just temporarily removing access of systems in the affected office.
Not a lawyer, but let’s say the cops were searching my house. If I threw the keys to my unbreakable safe out the window, such that they could never be found, I doubt a judge would care for the distinction. That the evidence exists but cannot be accessed is still going to find you in contempt.
Now let's say that instead you threw the keys to your unbreakable safe to your friend across the Atlantic Ocean. And you say that you didn't know that the people entering were cops. And your friend won't give the keys back. The evidence may exist, you cannot access it, neither can the police. The court has no jurisdiction over your friend and you have no authority to force your friend to give you the keys back.
At that point, whether you are in contempt or not depends on the answer to the question "did you know that the cops were entering to look for evidence before you threw the keys?" Whether the judge holds you in contempt or not is a function of the free choice of the judge and is not related to the answer to the first question (though whether or not the judge should hold you in contempt is a function of what the judge believes about what you believed).
If it were keys to a safe that existed outside of the warrant requirements (in another country in fact), then it would likely not be illegal. The regulators would unlikely be able to legally access that safe anyways without extra due process, so it’s mostly about protecting against unwarranted access.
Do the folks at Brussels have the concept of "fruit of the poisoned tree" and parallel construction?
The keys still exist and are accessible. What the kill switches does is make a fishing expedition harder. If the police knew of the existence of a specific document, or even all documents pertaining to certain terms, they could issue a targeted subpoena which Uber would have to comply with (at least in the US).
That metaphor doesn't seem directly applicable to cutting off cloud access.
If we're trying for a metaphor that would be a similar situation pre-digitization, the cloud servers containing business documents could be considered head office, and the office being raided would be the branch office. The branch office would continually be communicating with head office for their operations, and that communication would be shut down during the raid.
This isn't a great metaphor because the "head office" has become sort of stateless and ephemeral with digitization, but that's part of the interesting question the OP was posing, how does law enforcement collect evidence when that evidence is hosted on cloud servers in nebulous datacenters?
By creating a law for seizing the IT system of a company. “Provide everything”, and if we later find that any other document existed back at that time, then it’s contempt of court.
In the US such a law would likely be declared unconstitutional by the fifth amendment due to being overly broad:
“””
United States v. Bridges, 344 F.3d 1010 (9th Cir. 2003)
There was probable cause to search the defendant’s office based on the information in the application that documented his efforts to provide illegal tax advice to various clients, including undercover agents. The search warrant in this case, however, was overly broad. It listed, among the items to be seized, “All records . . . documents . . . computer hardware and software . . .” Though this list was detailed, it was too expansive. There was simply no boundary to what could be seized. In addition, the warrant did not specify the crimes that were the subject of the search (nor did the warrant incorporate the application) so there was no limitation in that manner. Though the application was detailed, the warrant was not. All evidence should have been suppressed. (No discussion of Leon).
“””
https://casetext.com/analysis/search-and-seizure-particulari...
What about if you're within 100 miles of a border?
>By creating a law for seizing the IT system of a company
There's already "a law for seizing the IT system of a company", it's called discovery or a subpoena.
As long as no police has confiscated (in most countries this involves the police man touching it, I bet) the equipment you can break it or make it inaccessibility however you like. It's your stuff, after all.
This is like not giving them the password to your phone which I thought was protected at least in the US. They’re both literally keys.
Your password is sort of protected. A judge can hold you in prison for contempt for refusing to provide a password but there is an 18 month jail limit, at least in federal court.[0]
[0]https://arstechnica.com/tech-policy/2020/02/man-who-refused-...
This theorycrafting is cute, but in reality you've mixed up corporate entities and yourself as a person in a criminal case.
And if a corporate entity finds a way to openly defy a national government, it tends to happen that those governments find a way to change the law (they're the ones making it, right? :P) for that defiance to become punishable by other parts of those governments which can sanction the corporation, prevent their operations within the country or even throw people in jail.
You're conflating two different things here.
One is, what does the law say? Did they violate it? Is it illegal for a foreign subsidiary to temporarily shut off access to a branch office? How would we like this to work? Policy arguments about law enforcement vs. due process and government overreach.
The other is, politics. If the local government is captured by a cartel of taxi medallion holders who don't like Uber, the government is going to find a way to screw Uber, regardless of whether Uber is complying with existing law. But then it's politics and Uber is a multi-billion dollar corporation, so they have the option to capture the government themselves.
Of course, that leaves the meta argument. Maybe deciding what should happen based on the second method is worse than the first, so how do we prevent that from being what happens?
> I doubt a judge would care for the distinction.
If the judge receives a call from the ministry of justice, they will care a great deal about the distinction.
Even if you do it before you could have known you were being served a warrant?
IIRC, they did it in the US too.
Ok I'll bite... wtf
you'd think a judge could order you to provide the documents and then jail you for contempt of court until you do?
The alternative, giving them a password that gives them read/write access to sensitive systems, would be insane. Subpoena for particular data.
You are aware of the fact that tax evasion means these companies are freeloading on the tax money the rest of us (including: you) are paying? Especially in the case of uber which is essentially using public infrastructure to make their money having them pay taxes should be normal.
I agree that customer data needs to be protected, but it is bold to assume that is the case at all with these powerful corporate entities: if they lie to the state when filing taxes what makes you believe they are ernest when it comes to the protection of their users privacy?
Maybe it is a weird ideology I am holding here, but the more powerful an entity is, the more transparent it should become — nowaday we got this completely reversed with poor people being naked in front of the state and big corps literally fooling everyone.
Edit: some also seem to think the state is the behemoth that jumps on the poor little companies here. To that I just have to think about the account of the German public prosecutor Bäumler-Hösl (of wirecard fame) where she told about a raid on a bank where she and 4 collegues were opposed by 130 (!) company lawyers.
> if they lie to the state when filing taxes
In general this is not what they do. What they do is read the tax code carefully and structure their operations in such a way as to minimize taxes, e.g. because tax is paid on "profits" (revenues minus expenses) so they shift more expenses into jurisdictions with high tax rates etc., causing "profits" to go down in those jurisdictions and up somewhere else.
Then they don't pay any taxes in the jurisdictions with higher tax rates and politicians go on TV and complain about the companies following the laws that the politicians enacted. Because if they actually fixed the laws, the taxes would be paid based on the extent to which the company does business in that jurisdiction, and then companies could only avoid taxes by not doing business there (costing the country jobs) or, for taxes associated with local sales, by raising prices there. Neither of which the politicians actually want to do, so instead they pass laws that allow companies to avoid taxes and then complain about it when the companies do it.
The law was always there to step on the little man, the VIPs always had it easier. Stop thinking too much about it.
Thinking the systems that a company has are so sensitive that the company is basically above the law is the insane thing.
It is just a company--a group of people granted certain rights. They have databases...fancy filing cabinets. Just because the company is famous shouldn't preclude their filing cabinets from being searched (presuming legal processes are used and not abused).
> They have databases...fancy filing cabinets. Just because the company is famous shouldn't preclude their filing cabinets from being searched (presuming legal processes are used and not abused).
That analogy doesn't work, because the "filing cabinets" are actually sitting somewhere else, possibly in another country/continent. It's not obvious that authorities in one country has authority over documents stored in another country.
I and many others think the government should have 0 business in my filing cabinet. That difference in world view might be what makes this topic more complex than you seem to think.
[Not parent poster] So even the most heinous act of violence become unprosecutable when the suspects/accomplices have moved all remaining evidence into a magically inviolable filing cabinet?
No? Then the world is a lot more complex than property rights trumping everything else.
Uber has a history of serving falsified data to the justice, though. Their offices are raided because they can’t be trusted with a subpoena.
The real issue is that technology has rendered office raiding useless. People are welcome to explore alternatives.
> People are welcome to explore alternatives.
For companies that deliberately obstruct justice work? Have the board and a healthy amount of executives serve 20 years in a high security prison, seize the assets and investigate their investors' due dilligence process. Gather proof with infiltrated workers.
Tech leaders need to learn that criminal conspiracy is not part of a good business plan. If they start using mafia tactics, so can Justice.
You can give them read access tokens that expire every couple of hours....
The problem is deeper than that. When a physical space is raided, its scope is obvious. Digital spaces don't have that characteristic. There can always be hidden indexes.
Yeah it's hard to see how any French official would have authority to conduct searches 10 meters beyond French borders, let alone over all of Uber's computers located in dozens of other countries.
If a company is doing business here, the actual location of file is irrelevant.
Also when the government is really motivated, he can arrested the founders or executives directly (Pavel Durov). Which is what they should do to Netflix execs if they are doing business illegally.
That sounds like a pretty poor precedent when e.g. Russia or China raids the local office of a social media company to get data on a dissident.
>Also when the government is really motivated, he can arrested the founders or executives directly (Pavel Durov). Which is what they should do to Netflix execs if they are doing business illegally.
You're in favor of holding executives hostage to demand access to data? If they actually did something illegal, they can be arrested/tried for that, but arresting executives as a means to coerce companies into doing stuff is a total perversion of the rule of law.
> You're in favor of holding executives hostage to demand access to data? If they actually did something illegal, they can be arrested/tried for that, but arresting executives as a means to coerce companies into doing stuff is a total perversion of the rule of law.
Turns out that witholding data as a company executive is outright illegal, so yeah, we're in favor of it and they can get arrested and charged for for it.
> You're in favor of holding executives hostage to demand access to data?
This is a very emotional way of saying "you're in favour of enforcing contempt of court rulings against people who try to obstruct the judicial process".
The executives are the company.
What if it is illegal to withhold the data during an investigation? Isn't the executive then committing a crime?
Irrelevant according to who?
Hard to see how a company can imagine it can do business in a country and not follow that country’s record keeping laws and be subject to criminal and civil statutes in that country.
How is this relevant to Uber's files and computers located in other jurisdictions?
If you do business in France, you are accountable in France. Your problem to provide the asked documents if it's the law to provide them. That you are using computers elsewhere to store stuff should not be any relevant.
You shouldn't really be able to have it both ways, should you?
Uber's files and computers located in French territory are of course accountable to French authorities, but that's simply not the case for those located in other jurisdictions…
Unless there is some international law or treaty mandating that?
Authorities might not be able to seize computers and files in another country, although I think interpol can get involved in tax fraud or tax evasion matters.
Preventing access to your accounts during an audit is quite fishy, especially for an onsite audit without warning which, in France, is supposed to happen only if the authorities have doubts that you could make some evidences disappear. During an audit, the CEO is supposed to provide the documents, the inspectors are not supposed to access your files themselves I think.
(So blocking access for security reasons is bullshit, to answer someone else, the right thing to do is to have all the pieces in order for when an audit happens anyway)
Unless it’s legally mandatory in such a way that superior authorities can’t overrule it, then it doesn’t seem to matter? (such as the President, appellate courts, etc…)
Clearly in this case Uber got a superior authority to do so, and in any future case that will still be a possibility.
It's not a matter of what's located in France. It's a matter of what documentation about your company requires you to keep. Regardless of where the computers you use are physically located if you can't produce the required documents you get to be fined, be shut down, and/or go to prison. No company gets to play the game of "we're doing business in Uzbekistan but our accounting servers are in Sealand so we don't have to file any taxes or provide any other records." Not only is the idea absurd, anyone who thinks that is congenitally stupid or stupid by choice.
The ableist part of your comment is not necessary, no need to insult people, the rest of your comment (with which I agree) is solid enough without it ;-)
I believe the parent comment is faithful and honest, it merits a respectful answer. I think it actually focuses on a specific aspect of the question that you missed. It actually made me look up how audits in France work more deeply than what I knew.
Attempted insults only decrease the credibility of the writer… anyways I didn’t claim Uber is supplying less than the legally required amount of paperwork?
Nor is it likely.
All the accounting, insurance, banking, regulatory, etc… paperwork legally necessary for even a large company in France can easily fit in a set of binders that fit in a single bookcase.
So it’s literally possible for all of it to be ready and available for inspection before anyone even touches a keyboard. And in fact that was the case for every company in France pre 1960s.
> Afterward Uber helped Macron campaign who then ordered National Financial Prosecutor's office to "stop bothering them" so I don't think anything new happened since.
Isn’t that kinda definiton of corruption?
I do need to correct myself, look like "friendship" started before his election: https://www.euronews.com/2023/07/18/a-privileged-relationshi...
Pretty crazy to support a business designed to never pay tax. This bring nothing beside "precarious employment".
Ahahahah you fool, don't be ridiculous, in civilized western countries we call it lobbying
Woah, slow down there citizen.
It’s been rebranded to “lobbying” and “campaign contributions”. Much cleaner. Better optics.
No. Corruption is when the others are doing it. /s
How the hell can any of what you just described be legal?
Do you have any articles about this? Because this is insane if true.
It kinda sounds like you can't raid Uber / Netflix without hackers, Ghost in the shell type raid. Which is probably the future of raids.
This is one of the prime threat models for things like encryption of data at rest on servers
Why should it be illegal? Isn't it akin to "right to remain silent"? Why the need to present any information to police unless it is asked by court. Assuming that they didn't delete the data, just moved it to somewhere safe where it couldn't directly be taken away.
We had a raid in one of my previous company due to copyright violation due to a user uploaded content. Authorities came in to take in all the codebase, reports and even employee devices. Basically once given court permission, police would try to collect all the unrelated things which could be taken in the permission, so that they could extort you later.
It can be destruction of evidence, which is illegal.
Denying access to data that could still be specifically subpoenaed isn't destruction of evidence, it's a normal security measure. They still have the warrant to search everything in the office, but not the right to use those computers to access uber's entire worldwide infrastructure.
I have no idea what french law says about it but I think it's morally fine and don't care that uber did it.
I think this is an example of law lagging technology. A warrant gives the police the right to inspect and seize contents of a safe inside a house. Similarly, the law should be updated so that a warrant gives the police the right to inspect and seize contents of local computers. Local computers surely have valid certificates that allow the computers to connect to the mothership, right?
Does a search warrant for your house give the police the right to search your car, if they found your car keys in your house? What about your neighbour's or your employer's car - perhaps on the other side of the world - if you happened to have those keys? To compel you not to tell your employer to change the locks, so the seized keys won't work?
These seem like closer real-world analogies for what exactly a warrant to search someone's computer should entitle the police to do.
Your analogy doesn’t work. Your neighbor is not you.
$COMPANY is $COMPANY all around the world and if $COMPANY wants to do business in $COUNTRY (which is not an obligation, they choose to), then yes, they have to entirely cooperate with $COUNTRY.
If they don’t want to, they can still do business elsewhere.
> $COMPANY is $COMPANY all around the world
This is the thing which is not the case. The subsidiary in the US is nearly always a different company than the one(s) in Europe. They'll have different management and different lawyers etc. Sometimes they even have different owners, e.g. because one of them is a joint venture with some other company, or a franchise. And they have to be different, because different countries have different laws and those laws often conflict with each other. So the subsidiary in the US follows US law and the one in France follows the law in France.
You could try to make it otherwise, but it's pretty obvious what would happen then. Companies couldn't formally operate in multiple countries because their laws are incompatible, so instead there would be a straw front company in any given country that nominally isn't owned by the conglomerate, but is effectively just reselling their product/service in that country for an additional margin that only pays the salary of local management. To prevent this you would have to ban companies from having foreign suppliers, which is not very practical.
And since countries know that's what would happen, they allow foreign subsidiaries to be regarded as separate entities even if they have shared ownership, instead of demanding the charade.
In absolute, I agree with you. But personally if I had to chose between tax evasion (permitted by those schemes) and having less multinational companies because it’d be more difficult… well, my country was doing pretty okay before multinationals and is not doing okay since every taxes are evaded.
Well Netflix is nice and all but I prefer social security and teachers in school.
Federal revenue as a percent of GDP:
https://fred.stlouisfed.org/series/FYFRGDA188S
Basically flat since the end of WWII, significantly lower before the war. At the height of the New Deal, less than half of what it is now. And that's in the face of significant growth in real GDP per capita. Probably not a dissimilar story in most other Western countries.
The problem isn't in the amount of taxes being collected, it's in where the money is going.
I don't think a warrant to search an office should let them use the keys they find there on a company truck five miles away, either. Despite being the same company. (If it's in the parking lot then it's a maybe.)
Not necessarily. Depending on how the org's set up, the system may be permissioned to access too much stuff. I think justice systems should lean less on a general warrant - too much of a fishing expedition - and instead focus on subpoenas specifically related to their area of investigation. E.g. if they seize the CEO's computer on accounting or tax concerns, I sincerely doubt they showed a judge probable cause to seize, I don't know, new product designs. As such they should not be able to access them.
The point you're making is valid, but also exposes a common theme in litigation against big tech. It's pretty common to hear something like "company XYZ used data ABC to train a model about their users and is court ordered to delete it". It's unlikely that anyone in the justice system has even the slightest clue how to ascertain if this actually happened and certainly no way to prove it has been deleted. The court gives the order, the company says they have complied, & everyone pretends to go back to the way things were before hand.
let me just extrapolate this out a bit for you. I live in the US (yes I visited France once long ago, it was nice). I use Uber. My phone is an Android phone running Uber's app.
Can a French prosecutor use Uber's systems to deliver a malicious payload to my phone to gather evidence? If so, is Uber required to assist them in this task?
I just have a hard time believing that any of us could get away with that.
Wasn't half of the concern with the arrest of Ross Ulbricht figuring when they could get him with his computer unlocked, without time to lock/wipe it? They'd have a pretty hard time proving destruction of evidence if 1. they didn't know for sure evidence was on that specific computer and 2. it was destroyed rather than just that the decryption key was removed from memory.
Regardless, the government violating an individual's rights doesn't mean we should yell at uber, it means we should yell at the government.
These two issues are very far apart.
Ross could argue he forgot his password to unlock the data in a single users case.
In the corporate case it would be hard for Uber to argue that the entire company now has no access to any of the subpoenaed data.
Yeah that doesn’t really shift my opinion lol If I activated a kill switch to wipe my local computers when the FBI entered my house I can’t even imagine the hell I’d reap, let alone that my data would be safe because it’s scattered on servers in other countries.
Also we can claim whatever we want but that doesn’t mean it’ll protect us in court.
Unless it wasn’t destroyed, in which case it might be interring with an investigation, which is probably also illegal in France.
It's definitely interference/obstruction at least of the raid itself yeah, but looking at the text and not being a lawyer I have a feeling it may be extremely hard to prosecute for something more substantial than a fine low enough for a french exec have it a as a guaranteed expense (bn€ in tax fraud vs a few k€ in fine). The law does also mention prison but it's not the kind of stuff that ever end up being applied for fiscal related cases.
> I have a feeling it may be extremely hard to prosecute for something more substantial than a fine low enough for a french exec have it a as a guaranteed expense
I know nothing about French law, but this whole thing gives me “organised crime” vibes. In many jurisdictions the punishment dramatically increases when a crime is commited as an organised group whose purpose is to commit said crime. As i said i know nothing about French law so i don’t know if the same concept is present there, let alone if the letter of the law would fit the situation.
But yeah i agree with you they won’t care unless they are sitting in a cell with the chance of sitting a lot more in a cell.
Because the government already has a warrant to obtain this evidence(they can't raid the office otherwise) and you as the company pushing this button are failing to turn over that evidence.
It doesn’t work like that.
The warrant is based on probable cause, meaning that law enforcement is very confident in what they will find. So, if they don’t find anything, tough luck. You have absoluteley no obligation to help the prosecutors in any way.
The single notable exception that I am aware is the UK where you don’t have the right to not incriminate yourself and if you don’t provide a password to am encrypted device you can be jailed until you do.
You have a right to not help them, but you can’t actively destroy evidence. Do you think it would be fine to begin burning documents once the police comes to you office?
I guess locally encrypted files in my computer is a problem as well then
In many jurisdictions it actually is a problem
And if raids are court ordered?
I assume when the office was raided there was a warrant that would give police the right to inspect and seize property...
My impression was that they were trying to get remote access to ubers US servers/infrastructure/data?
Might be wrong...
Presumably the French police aren't randomly deciding on a Tuesday for no reason to check the company for proof of them being tax cheats without some court somewhere requesting it, but even if they were, we're talking about a company here, not a person. A person has the right to remain silent, it doesn't make sense for a company to have that same right.
And the 2nd half just reads like pure corruption to me, they paid off some politician (who just so happens to wield the most power in the whole country) to pressure him to get them to stop their investigation into their illegal acts? In what universe could that 2nd sentence be construed as anything other than slimy, corrupt behavior?
> And the 2nd half just reads like pure corruption to me
Why did you conclude that?
There were some user uploaded pirated content in our platform. As far as I know, some media company won approval by some judge for a raid to discover the extent of piracy. It's just in the police rulebook to get everything during the raid where there could be pirated content, including employees laptops.
Sorry, I meant the 2nd sentence of the OP, where they mention Uber paying off Macron.
do you have a source for the "kill switch"?
Sounds like obstruction of justice or what not
That’s so interesting, probably a good move for them, it’s not their job to make governments lives easier
There was an interview with Anne Brorhilker, who used to be state's attorney and was investigating in CumEx cases. She stated that it is a huge pain, because you always need to ask the foreign agencies for assistance, which you sometimes simply won't get.
It was a good listen. At first she needed to go empty handed, but then teamed up with competent tech guys. After that the smug faces stating, that the amount of data would be to much to handle for her little department quickly turned into concerned faces.
That sounds fascinating, do you happen to have a link? (I'm getting a lot of German results, which unfortunately I don't have the fluency to parse to find the 'right' one.)
Here you go: https://logbuch-netzpolitik.de/lnp500-zombiecalypse-im-grune... (it's in German, tho)
that's fine! I can handle translating an individual page (or interview) if I've high confidence it's the right/relevant one, just parsing search results is harder cross-language (for me, anyway).
thanks much!
Here's a direct link to the transcript if you haven't found it yet: https://logbuch-netzpolitik.de/lnp500-zombiecalypse-im-grune...
Nice!
> Tim Pritlove: Okay, zweiter Bildungsweg. Welches Instrument haben Sie denn gespielt?
> Anne Brohrhilker: Klavierung, Pferdflöte.
Oh, AI transcribed. Nevermind.
Holy crap that’s an interesting interview. Genuinely hilarious comment from that CIO as well. I knew nothing about this case before. Thanks for sharing.
I'd imagine you'd get done for not being tax compliant. At least in Ireland you have to able to show all tax accounting for the last four years on request by Revenue. If you can't produce this and all the files 'have gone missing' or 'we can't find the cloud keys' I'd would expect to be fined out of existence and ordered to cease trading immediately. So that would be worse that getting dragged through the courts while you pay lawyers to figure out to mitigate any fines or sentences passed down. I think it can even result in prison time for the CEO and other company officers.
I'd expect it to something along the lines of "sorry Mario, but the princess is in a different castle" bit of shell game. "no no mister Revenue man, we have that information you want, but it's in a different office".
This is why companies are required to have registered addresses. As far as the law is considered, that address is where all your records can be accessed, and requested from.
If the state turns up at that address, and you tell them they’re at the wrong address, then the directors start becoming liable for fraudulent behaviour.
There is only so much you can play whack a mole -- virtually nobody 'cheats' the taxman. There are plenty of legal loopholes etc. if you are smart enough to use them.
If you aren't -- you'll find the enforcement end of the tax authorities in ANY country are pretty efficient. Even in third world countries where many services are falling down the tax authorities will be a well oiled machine as the stability of the entire country rests on the government even corrupt ones to collect taxes.
Accounting audits are done by the FISC agency in France. But those are just audits, not raids. This raid was ordered by a judge, which can probably be seized by FISC if they believe that the documents they have are falsified.
sure but politely demanding some documents is not the same as raiding an office
> everything being stored in the cloud somewhere
Sounds like it would make it easier for law enforcement. They no longer need a warrant against/for the company they're investigating, just the place where their data is stored. Get the warrant, raid the place and grab the drives, then continue the investigation. Done the right way, the company under investigation wouldn't even notice it.
Grab the drives from the cloud?
Isn't most data in the cloud heavily distributed and broken into shards across many racks and drives and such? And encrypted so is useless outside of the custom block storage system employed by the cloud provider?
They would need to decrypt and assemble the shards to get usable data out.
I have no clue how they would even know which drives out the tens of thousands to grab, and they would also have other customer's data on them.
They'll just get a warrant to search the live system as it is powered on rather than take a cold drive.
https://leb.fbi.gov/articles/featured-articles/executing-sea...
Or in China, just take the entire data center. https://www.theregister.com/2018/01/11/icloud_china_goes_to_...
It's simple, just grab all of S3.
The data is stored on a server in another country where the warrant isn’t worth the paper it’s printed on. Now what?
That is why countries are increasingly demanding (and mandating) those data (of citizens and business done there or that involves that nation or its citizens) to be stored inside their borders.
That's why I wonder if these raids are really more for show, can't they do this pretty much already?
Completely for show since they even make press releases about it.
And its sad to see the atrocious quality of the BBC article. Even high school students learn that a journalistic piece, should make sure it touches the Five Ws of good journalism...
https://en.wikipedia.org/wiki/Five_Ws
The Hollywood Reporter has much better quality reporting including context: https://www.hollywoodreporter.com/business/business-news/net...
First the data is stored in another country. Second are they really going to raid and take the drives at an AWS data center that has other customer’s information? How will they know which drive to take?
>First the data is stored in another country.
Plus you can engage in some jurisdiction arbitrage where all the documents pertaining to country A is stored in country B, and all the documents pertaining to country B is stored in country A.
> Second are they really going to raid and take the drives at an AWS data center that has other customer’s information?
You can also ask AWS to produce the files/documents for you.
And those files are hopefully encrypted at rest and probably using a customer managed key…
>using a customer managed key…
Not an AWS expert but how does that even work? Does AWS connect to your HSM remotely? Or is a cloud HSM that's also hosted by AWS?
(Source: I am a current high level employee at a third party AWS consulting company and former employee at AWS working in the Professional Services department)
I actually was imprecise with my wording.
A customer managed KMS key is any key that you make instead of using an AWS provided key. AWS still has the means to theoretically decrypt the data.
I am actually referring to a customer managed KMS key where you import your own key material
https://docs.aws.amazon.com/kms/latest/developerguide/import...
There is also CloudHSM
https://aws.amazon.com/cloudhsm/faqs/#:~:text=AWS%20CloudHSM....
I don’t know how far “AWS doesn’t have access to your keys go” when it comes to a government subpoena.
I do know that if anyone accesses anything on your account from AWS, all sorts of internal alarm bells go off at AWS and it would still show up in your CloudTrail logs.
I’m sure there is something that allows internal AWS employees to access your account in unauthorized ways. But I never heard about it in 3.5 years working there in the Professional Services department.
It depends on the type of business. In the EU, VAT registered companies are usually mandated to have a physical location and local representative within the country of operation. So you can be remote all you want, as long as your company and fiscal representative can be reached at a physical location.
Yes, but you can hire anyone as an administrator and promise them a whole of money if they end up having issues with the law.
I would hire homeless people to “run” the company.
A homeless person wouldn’t qualify as they don’t have a fixed address which is mandatory.
Ultimately, if you really have bad intentions, you find a way. It’s a question of risk and responsibility if you want to put yourself in such a position or not.
In Canada hire indigenous people as owner to save on taxes / get preferential treatment. See ArriveCAN (non-)scandal.
I don't know how it works in other countries, but in the US you likely still need to provide a real address for many purposes (tax, immigration if applicable, etc)
The police could just find the correct targets and raid their home instead.
I have a virtualmailbox.com address - all my banks, the IRS, state voting commission and USCIS (immigration authorities) are all perfectly fine with it.
Wouldn’t your identity documents required to open a bank account show a residential address?
Can't say for sure. I opened all my bank accounts while still having a proper residential address, but after relocating to another country changed the address to a virtual one, no one said a word.
If everything is synchronised to third party could storage an "office raid" can be as easy as getting a court order telling the cloud provider to make a snapshot of everything stored available to the police.
Is there a product allowing for client-side encrypted mounts? Or just use a SAAS outside of the country that doesn't allow for exporting any data under any circumstances?
The whole point (or at least the main point) of the tax paperwork is to be able to produce them to tax investigators. If you don't want to share anything, then it's easier not to do the accounting. Which I guess is severally illegal globally.
Being unable/unwilling to produce mandatory records is fraud. Technical measures to be unable to produce records (e.g. offshore and encrypted archival) are evidence of criminal intent and possibly separate crimes.
So why did every company in the world start auto-deleting emails ~10 years ago? I don't believe many people were sued for fraud. These days cloud services have auto-delete based on time functionality?
It's called "object lifecycle management", because I guess fraud was too catchy.
You mean the auto-deletion that DOJ considered as deliberate destruction of evidence in Google case? [0]
Or are you talking about deliberate destruction of accounting records, which are required to be held by the relevant law of the governments?
[0]:https://www.legaldive.com/news/doj-google-spoliation-hangout...
Usually tax laws have a cut-off date. You don't need to keep records forever, but you do need to keep them around for a few years.
Strange, because that sounds reasonable but the reasoning doesn't actually work, does it?
Either "the law" can be trusted, and there's no point to deleting data after a cut-off date, or the reverse is true and you're no worse off getting caught deleting data.
I believe the law actually provides a middle ground. You're liable for tax fraud for X years, but you're allowed to delete the data after Y years. Since X > Y you make it much harder for the tax office to sue you if you delete data. Plus make it pointless for them to use their other investigative powers against you, which is in reality more important, especially for smaller firms.
It's not the game you can win against the government
If you can get access to someone's laptop with SSO login access to the cloud storage (or their email inbox and Slack messages), then you have what you need.
IIUC email messages on cloud services older than 180 days don’t even require a US warrant(!) anyway.
https://www.eff.org/deeplinks/2013/05/update-email-privacy-l...
https://en.wikipedia.org/wiki/Electronic_Communications_Priv...
They just demand the data per warrant and if you don’t deliver you go to jail for obstruction of justice
How does that work if it's a cloud system and you're denied access because the IT admin from another continent locked you out? Are you going to keep the executive around as a hostage in hopes of getting them to release the files?
Why should the IT guy lock you out if you want to access your data?
yes? that's why countries require human presence
Is that true? I'm not a lawyer but AFAIU, you don't have to provide incriminating evidence against yourself?
It’s more or less the dictionary definition of ‘subpoena’ eg. [0]:
> under penalty (you shall bring with you)
[0]: https://www.merriam-webster.com/dictionary/subpoena%20duces%...
The IT guys aren’t the ones under investigation.
It doesn’t. Especially with multinationals, and doubly so as crypto gains adoption. Hence why the governments of the world are in a panic. Decentralization is a huge threat to bureaucracy since their tools of intimidation and control are less effective.
Multinationals yes, crypto not really. The problems with crypto are just an extension of the existing "war on drugs" that has never really succeeded at anything besides justifying why lots of tax money should be spent murdering citizens.
What do you think "the cloud" is? I'm reminded of an old meme, "the cloud is just someone else's computer". They could raid a data center and seize machines. They could also subpoena data they are looking for.
You'd likely be seizing a bunch of other innocent people's data too, then, no?
As an American, I'd be really surprised if we let that happen. I looked and found it apparently happened once, in 2009 in Texas: https://www.cio.com/article/278564/data-center-when-the-fbi-...
It resulted in another company essentially being shut down, and suing for their data back. Crazy. There has to be a better way of doing that digitally (I assume there is, these days, and we won't see something like this again).
The idea that running stuff in the cloud will protect you from a criminal investigation is totally absurd.
What if those machines are on another continent?
What a funny naive thinki. Cloud services don't protect from the official authorities. Unless you want to go to jail.
I mean, that would be way easier for the government agencies, no? Just send a subpoena to the service providers, they hand over all the data and you're done?
The authorities asks for access to these online documents? Similarly to how they ask to access to physical documents (they don't break down doors and break locks on file cabinets). If the personel of the company does not disclose some of the online documents, and these documents come up later (e.g. because they are referenced in some of the documents that did get disclosed), the people who did it get charged with tampering with an tax investigation.
Sounds like the tech companies won't be expanding outside of Ireland for a while ....
Well they certainly do want the revenues from users outside of Ireland
People with guns forcibly going through your things with threat of prison time tends to erase desire for revenue. See international business climate in China.
Around ~2012 we were chilling on the terrace of a fancy office in the brisk morning (after a quick server migration in the datacenter on the ground floor, which of course turned into an all-nighter) as people were coming in to work, and then suddenly the folks coming in all looked the same, greenish uniform, some had SMGs, oh well.
We worked for a small company, so we knew that they're here for the big company that does credit card transactions, but it was both surprising and ... absolutely uneventful, they didn't even talk to us. (As we were leaving we didn't even run into them - at least I don't recall any interaction.)
Later the sysadmins of the big company had amazing stories about how the tax authorities wanted copies of every hard drive. And when they told them that, sure, sure, but things are on a RAID and without the config and the card it'll be useless. They didn't care of course :)
I mean I think the point of the story is that they are pretending not to.
Wel,
But things are changing. It seems... These are the developments in The Netherlands. Most of it somewhere over the horizon. Interested to know if other countries with similar tax evasion rules change their rules?
It's in dutch so use your popular translation tool for these links:
- https://www.rijksoverheid.nl/documenten/brochures/2023/10/11... - https://theses.ubn.ru.nl/server/api/core/bitstreams/a384a151... - https://open.overheid.nl/documenten/44e45809-c66e-4378-9fc8-... - https://www.nu.nl/economie/6286473/nederland-nummer-een-bij-...
Dutch are extremely business friendly with streamlined simple bureaucracy but they won't tolerate tax evasion. The correct approach would be to negotiate with the tax service.
As a non-European, it seems like these raids happen regularly to large companies' offices in Europe (mostly US companies). Maybe some Europeans can chime in and answer something that's been bothering me: Does this happen to smaller companies, too? Is it a serious problem to getting work done, not knowing if regulators are going to shut you down and rifle through your filing cabinets?
Getting raided can happen to companies of any size, Mullvad comes to mind as an example of a company that's small, European and got raided, but it is incredibly rare. It's hard to overstate how exceptional it is, you need to either be on the police radar with a serious issue, or breaking the tax law considerably, or etc. I think the main reason you see this happen to a lot of American companies is that they expand to Europe, but try to do business the same way they did back home. Both the legal landscape and the moral landscape wrt it are very different in Europe, and trying to willingly evade taxes for example is tended to with a very heavy hand. If I'm not mistaken, that's what's happened to Netflix here: they already got caught evading taxes once, and now there's a suspicion that they're doing it again/still.
A raid is a lot of work and only happens when you know you find something.
For 99,9% of companies, you get audited every 5—25 years by getting a visit from your local tax authority.
Remember: Small/medium companies have comparable companies and you can easily spot the tax dodgers. Or tax dodging is unofficially tolerated to some degree — think restaurants only accepting cash.
Most companies are not as blatantly illegal as Uber..
Large multinational companies are accustomed to openly breaking the law and getting away with it in the USA; when they try to do the same in Europe they are very surprised when the law actually comes after them.
They also raid anyone else they don't like, such as people who run Tor exit nodes... but random small businesses are not in that group.
Maybe this explains why the US is out ahead in GDP, income, and is doing much better pre and post covid than Europe.
It's not so much breaking laws, but unnecessary restrictions and harassment by Europeans states.
The US is business friendly. It's industry friendly. We don't needlessly harass the business of sovereign individuals, and the state apparatus isn't being used as an excuse as to exert power or influence over the population. Not to the same paternalistic extent of Europe.
In Europe the liberal state apparatus that replaced the monarchies are acting an awful lot like the monarchies.
You call a tax fraud investigation "needlessly harassing the business of sovereign individuals?"
You're right, the U.S. is very business and industry friendly, which explains why the American people have been getting poorer and poorer while corporations and their shareholders get richer and richer.
The Average American is getting richer and richer, especially compared to European wage stagnation. I don’t think non-Americans understand how rich middle class americans are.
Only 50% of Americans have Passports. 80% in Europe.
We understand it, because we travel there on, our paid, vacations.
My last time in America I went to San Francisco, lots of money, I have not seen a worst place to live in my life.
Americans don't understand the quality of life other places have.
And other places don’t understand the sheer amount of wealth and freedom other people have. "It costs a lot of money to look this cheap" and San Francisco spends billions to look that cheap btw.
Especially Europe. Europeans don’t even seem to understand how large America is, which is why so few have passports.
Who do you think the corporations are? Who do you think the small businesses are? Usurping the free enterprise of the American people and selling it as "freedom" is a sly tactic. Those industries, those corporation, those businesses ARE the American people.
The government can never ever actually represent the people. It cannot act in the best interest of the people.
You know why?
Because it's made of people, and those people can only act in the best interest of themselves. They will never ever act in the best interest of other people, because people physically cannot.
So why are Americans getting "poorer"
Well they're not. This is absolutely false. The American people are getting richer. The American people have a widening wealth gap, but that is far from increasing poverty.
That increasing wealth gap is due to restrictions imposed by enlightened bureaucrats on people getting wealthy, in collusion with the old money old industry extremely wealthy incumbents.
In other words the State apparatus is hijacked by the incumbents that assume their survival is the survival the American people, hence they are "public". That state apparatus will never ever attempt to dismantle the very thing that feeds it.
That's why it hates newcomers and that's why the state apparatus must go.
Take a walk around San Francisco and then say poverty isn't a problem.
You know how much is spent on keeping San Francisco looking poor?
"Non-profits" are spending literal billions of dollars on the problem... so that it remains a problem rather.
Americans have been getting richer and richer according to most recent studies. At the same time, other socialist countries are getting, on average, poorer. I think you may be confusing social inequality with overall wealth.
As an American surrounded by Superfund sites I would like some of these unnecessary restrictions and harassment by the state. The US is so beholden to private interests we can't even repair the roads or mandate healthcare without making it into a market.
Do you know how we won World War 2? We retooled our industrial base because we had strong private sector industries. Do you know how the railroad infrastructure was built? We incentivized private sector industrial scale corporations to build out the railway. Guess how the roads in the country were built/who advocated for them in the first place.
Do you know who the industrialists are? They are the people of the United States. The industry IS the public.
That's why the US has so many millionaires. And that's why Europe is such a failure.
The US IS "beholden to private interests", because the CITIZENRY is itself the "private interests".
In other words that term "beholden to private interests" is in contrast to "beholden to public interest". The later "public" does not mean citizens or the people, but is a dog whistle for the exact opposite, that is the rule by an oligarchic "enlightened bureaucrats" that colludes with industries that has a sad case of mistaken identities, and narcissistically associates its survival, its wellbeing, with the public. When in fact it is the abuser of the public.
The reason the "private" is the "private" is to protect the American citizen from government.
> Do you know how we won World War 2?
https://en.wikipedia.org/wiki/Raising_a_Flag_over_the_Reichs...
I don't see any American flag here.
Who do you think supplied the Russian? Maybe they won by throwing pebbles and using horse-drawn chariots?
Lend-Lease. Who do you think they leased from and what do you think they leased?
>Do you know how we won World War 2?
We as in the Allied forces? The Great Alliance?
I also live within 200 miles of one of our Japanese Internment Camps.
It was America's industrial base that won the war. This is an absolute fact. To deny it is like denying that American tanks, trucks, guns, bullets, engines, etc. won the war or that they were made by the American government.
They weren't. America's industrial base, its people, came together and retooled themselves for this singular effort.
In other words the labor and industry of the American people was co-opted by the government. It turns out it's been co-opted for so long the government's begun to think of itself as the people. The entire point is that the government is not the people and can never ever be the people.
That's the basis of the very existence of America.
The Nazis hated America for its industrial base btw. It saw the capitalist machine as itself immoral.
>Do you know how the railroad infrastructure was built?
Abusing the heck out of immigrants and genociding the native people, I'm pretty sure. Also this (link is https://www.digitalhistory.uh.edu/disp_textbook.cfm?smtID=2&...):
>Construction of the railroad provided many opportunities for financial chicanery, corruption, graft, and bribery. The greatest financial scandal of the 19th century grew out of the railroad's construction. The president of the Union Pacific helped found a construction company, called Credit Mobilier, which allowed investors, including several members of Congress, to grant lucrative construction contracts to themselves, while nearly bankrupting the railroad.
I don't think the corporation/government good/evil dichotomy you have made is so clean cut.
"several members of Congress, to grant lucrative construction contracts"
The difference is that I see that part as the evil. As in who is the "corrupt", "graft" and "bribery" here referring to? It's the government.
The meat:
> Last year, French media outlet La Lettre reported that until 2021, Netflix in France minimised its tax payments by declaring its turnover generated in France to the Netherlands.
> investigators are trying to determine whether Netflix continued to attempt to minimise its profits after 2021.
Wasn't Uber or some other US company found doing something similar? First they were found to be in violation of some law/dodging taxes, said they'd fix it and later found to not have done anything about it? Is that behavior perhaps more accepted in the US than Europe?
> Wasn't Uber or some other US company found doing something similar?
Airbnb, they had to pay like 70k of tax a few years ago. There are employees who pay as much tax as single filers lol
They paid 18% less tax in 2016 than in 2013 while the number of flats available on the site went from 30k to 300k
https://www.lesechos.fr/2016/08/airbnb-na-paye-que-69168-eur...
> They paid 18% less tax in 2016 than in 2013 while the number of flats available on the site went from 30k to 300k
Completely meaningless without also saying what their costs and investments were.
Well no that's not really what happens, what happens is that legally the french entity is just a service provider for the irish HQ. They pretend it's a simple marketing agency and that the real value is provided by the irish entity
Doesn't matter - you can't make any judgement without knowing these numbers. They may have actually paid a higher tax rate than previously - we don't know.
Funny how it works, they lose money everywhere but one of the smallest country they operate in banks 50% of their worldwide revenues, it probably is just a coincidence that this is a tax heaven... we just don't know I guess
The French branch made 160k of profit while the Irish branch made more than all the other EU countries combined
FYI: france is the second market for airbnb after the US... do you really think they would even bother if they did make 160k there when they make 300m+ per year globally ? Do you really think their second market nets them < 0.1% of their total net income ? Do you really think the most touristic country in the world in absolute numbers brings 160k euros per year to airbnb ?
I dont't know much but I'm not a fool
https://en.wikipedia.org/wiki/World_Tourism_rankings
https://www.searchlogistics.com/learn/statistics/airbnb-stat...
https://www.rte.ie/news/business/2023/1127/1418779-revenues-...
https://www.breakingnews.ie/business/airbnb-ireland-records-...
I don't know why you're telling me this, I know it - and it's not relevant at all without knowing the numbers.
Well you said it doesn't matter because we don't know the numbers, yet the numbers we do know about don't match any scenario that doesn't involve large scale tax """optimisation"""
I guess it's just a crazy coincidence that most huge multinational corporations base their European operations in Ireland then? They just like drinking Guinness I suppose?
At some point governments will catch up and start taxing based on percentage of global revenue or even turnover.
I hope so. And that's not only USA-copanies phenomenon. I worked for a french company in Montreal which payed close to zero tax amount even though they are doing more than OK financially world-wide, including Canada.
All spending should be taxed instead of income. Income is too easy to move and hide. Spending tax could be unified framework encompassing all financial activity. If you purchase anything, labor, imports, energy, stock, politicians, you should be taxed.
Spending is the moment when the money shows its ugly head and does harm.
Isn’t that a hugely regressive tax?
I don't think so. Rich people buy vastly more. Not just food, shelter and entertainment but also real estate, entire companies and financial instruments. They'd end up paying vastly more tax.
If you add financial instruments into the tax (what is a tax on investing, not spending), it will become proportional. What is still not very good.
This blind kind of tax also has horrible impact on the production of goods with high added value.
> Rich people buy vastly more
Not enough, especially since everything is business expense for them.
Correct, and it could be implemented as a power law formula that makes it impossible for the super rich to avoid tax (since they are the only ones that can spend a lot). It also aligns incentives with environmentalism and reducing waste and consumption. And poorer people are automatically exempted from tax since the power law formula parameters be set to slowly ramp up.
This is also easily accomplished now that almost all payments are happening digitally, assigned to a taxpayer ID#. We can easily replace a W-2 or 1099 with total spending instead of taxing working.
Of course, this should also be paired with similarly designed land value and estate taxes to disincentivize hoarding.
So my effective tax rate on consumption is indexed on my ability to hide my assets?
Maybe my household LLC should buy all my groceries while I work for the LLC which employs me as the sole contractor and live in the house that I rent from the LLC which I am the sole owner of. For major purchases, I can hire a low-income person to do the purchase and then sell the item to me, or maybe they lease it to me.
I'm not a tax lawyer but it's pretty easy to see the many loopholes in alternative tax proposals.
>So my effective tax rate on consumption is indexed on my ability to hide my assets?
Where are you getting this from? Sales tax has nothing to do with one's assets. Also, land value taxes make hiding assets moot, since all real assets have to be stored on land. Of course, copyright protections would need to be reformed to be for far shorter durations of time.
>Maybe my household LLC should buy all my groceries while I work for the LLC which employs me as the sole contractor and live in the house that I rent from the LLC which I am the sole owner of.
Why should LLC's be exempt from the tax?
>For major purchases, I can hire a low-income person to do the purchase and then sell the item to me,
How does this help? You are still purchasing the item. If you are referring to purchasing it with cash and committing tax evasion, the same is possible with income tax today.
>or maybe they lease it to me.
Renting something is still considered a sale. You get charged sales tax at hotels. Renting apartments is not usually subject to sales tax, but that is a policy choice.
> Where are you getting this from? Sales tax has nothing to do with one's assets
Earlier you said
> And poorer people are automatically exempted from tax since the power law formula parameters be set to slowly ramp up
I too am very confused on how you envision this sales tax working where it's variable in some way that poor people don't get the tax but rich people do so I understand why OP is asking about asset tracking. If you're talking about it as a tax that increases the more you spend you've still got problems of hiding how much I'm spending through various legal entities. It also has a macro economic problem, at least how the consumer economy is structured, that could slow down the gears of business until society realigns (if it does) because people will be incentivized to consume less. You've got alternative models where you go after specific products and tax more for conspicuous consumption like yachts but that feels like it has all the inefficiencies of central planning a market.
>that poor people don't get the tax but rich people do
Because poor people can't spend money (since they don't have it), hence they pay much less (or even no tax). The curve of a power law formula can be modified to whatever is socially acceptable. Otherwise, rich people who are hoarding assets will get taxed via land value taxes utilizing the same framework.
>you've still got problems of hiding how much I'm spending through various legal entities.
Same with income tax. Completely stamping out tax evasion is not a realistic goal with any system. Also, various legal entities are all tied to beneficial owners with taxpayer ID numbers. Databases would make quick work of sorting this kind of stuff out.
>It also has a macro economic problem, at least how the consumer economy is structured, that could slow down the gears of business until society realigns (if it does) because people will be incentivized to consume less.
Yes, that is why it is a pipe dream. But it would actually accomplish environmental goals as opposed to just pay lip service and pretend.
>You've got alternative models where you go after specific products and tax more for conspicuous consumption like yachts but that feels like it has all the inefficiencies of central planning a market.
Completely unnecessary to complicate things which also opens up avenues for corruption. A yacht is super expensive, it's obviously going to be hit with a ton of tax. Just come up with a tax curve (like we already do with the various income tax deductions/brackets) that provides the tax revenue and still allows people to spend enough money to provide for their basic needs.
> Because poor people can't spend money (since they don't have it), hence they pay much less (or even no tax)
Poor people can buy a car. Middle class families can buy 2 cars. Neither can buy 100 exotic cars. Is the purchase of each additional car going to increase the tax paid? Are exotic cars taxed more? You keep stating to use a power law formula but you're critically omitting what the inputs are to determine your tax rate. And now you've also admitted that assets determine your sales tax whereas you seemed to be arguing earlier that that wasn't the case when asked if the sales tax rate is dependent on your ability to hide assets.
> Otherwise, rich people who are hoarding assets will get taxed via land value taxes utilizing the same framework
Rich people hoard assets in all sorts of ways including collecting physical items which you can store where land is cheap if you wanted. That's why the income tax is effective - it's taxation at the moment the money changes hands / you've realized a gain.
> Is the purchase of each additional car going to increase the tax paid?
Yes, tax liability = total spending during the year plugged into the power law tax formula.
>Are exotic cars taxed more?
Depends how much the taxpayer spends in a year. There is no tax rate for each specific item. The tax rate is for a total level of spending, which eliminates all loopholes.
> You keep stating to use a power law formula but you're critically omitting what the inputs are to determine your tax rate.
The input is total spend in a year. Just like right now, the input is income in a year.
> And now you've also admitted that assets determine your sales tax
No, I did not. The formula to calculate sales tax liability only requires inputting total spending. Land value taxes are a separate thing. We currently have land value taxes, except they are flat rate and too low because property taxes inefficiently tax improvements on the land more than the land itself.
> That's why the income tax is effective - it's taxation at the moment the money changes hands / you've realized a gain.
Sales tax can also be at the moment the money changes hands. It currently is. Even with the complication of a power law tax formula, I can’t see why the government can’t email you a monthly invoice.
Do you have any keywords for me that I could read up on?
I came up with the idea of puchase tax and progressive real estate tax myself, but I'm sure other people had same ideas before me.
Revenue tax? We had that before the fall of the wall - not again please. The VAT system works well and should be used more.
Purchase tax would work like reverse VAT. Companies could be awarded tax credits for their sales (not 100% though) and pay tax on their purchases. This would be harder to evade and additionally incentivise companies to do more with less which might be good for environmental transition.
Why not 100%? How is that even supposed to work in low-margin markets like construction, where the profit is 100x less than the costs, so even 1% tax would erase it? But any markets really, this makes innovation and business so risky that I'd probably close down my IT company too.
The strength of markets is that they adjust to environment. Taxation is a part of the environment. Taxation would be just priced in.
Why would it be risky to pay some percentage more on what you spend but not pay income tax at all?
Markets will adjust, sure. It will be priced in, but that's the problem. They will become less efficient, quality will be worse, everything will be slower, more risk averse, and thus more expensive to the customer - that is necessary to survive in this new environment. That also means that people's income gets lower and grows slower.
It'd be risky because I have no idea if I'm actually going to make money or not. European states set very draconian rules like 1% daily interest on unpaid taxes - no way I'm taking this shit on.
Just do the same thing but with VAT...
Two factors are responsible for the bulk ens*ttification of the markets: any barriers to competition and information asymmetry between purchaser and seller. Taxation is not a factor unless it's done with too much micromanagement that incentivises doing weird things to your product/service to avoid higher tax.
VAT is already a purchase tax, just collected from the end consumer. You could just raise VAT and do away with income tax. But since the burden is on the end consumer only (not along the chain, because of 100% deductions) it would have to be raised very high. And VAT is with us long enough that many ways to exploit its edge cases were discovered. General purchase tax collected at all steps of production chain could spread the tax burden away from final consumer to the people who exploit them (aka businessmen) thus fulfilling the role that income tax currently fulfills. It would also have way less edge cases and could replace things like import tariffs and social security fees, excise taxes and many more.
> It'd be risky because I have no idea if I'm actually going to make money or not.
That's the inherent risk of business. You have to decide if it's worth it regardless of whether a server costs you $x or $x+10% purchase tax.
> European states set very draconian rules like 1% daily interest on unpaid taxes - no way I'm taking this shit on.
You would never have unpaid taxes because they'd be automatically collected by the bank at the moment of purchase. If you don't have money to pay for purchase tax you don't have money to make a purchase.
> Just do the same thing but with VAT...
We could do some of that if we reduced VAT deductions from 100%. But it would be worse because VAT is very limited and thus has a lot of edge cases where it comes in contact in systems outside it's domain. Those can be used to get away from paying by doing superfluous operations.
... prices would increase to cover the tax?
...or you can just use a VAT, which are also paid at purchase. Tech companies have high margins and low expenses, so if the point is to tax tech companies, taxing purchases and giving a credit to sales is literally the exact opposite of what you want to do.
VAT with 100% deduction places entire tax burden on the end consumer. Income tax aims to extract additional tax from entities that extract money from consumers for investors.
VAT could do a lot of the same things that I'm proposing (if the deductions weren't 100%) but is limited in scope. And because of that it has a lot of interfaces to other domains like real estate, import, labor, financial intruments. Interfaces that can be exploited to avoid paying taxes.
General purchase tax could replace all taxes and fees transfered from the markets to governments (and effectively goverment managed buckets like social security or public healthcare).
Taxes have this strong moral objection that they are punishment for creating value. Purchase tax could help with that by ostensibly being punishment for using up value not for creating value. It might also compose well with transition to stable state economy that will have to replace old economy based on unbounded growth.
It's hard to accurately measure secretive crimes like this, but the estimates seem to put corporate tax evasion by percentage of GDP at either similar levels between the EU and US or actually higher in the EU.
The EU is just as corporatist as the US. The corporations just aren’t as big, but they control their local/national politics effectively.
Given Wirecard I wouldn’t assume the EU equally prosecutes or tracks crimes for EU and non-EU companies.
They obviously target the companies the highest revenues. Also you would be suprised. For example Klarna, a Swedish company, is often in trouble with the Swedish tax authorities.
A few years ago they had to pay huge amounts of money to the Swedish government because of some tax-dodging loophole was deemed illegal by court-order. So Klarna went into a desperate attempt to last-minute cut costs to not tank the stock value due to much lower expected returns that quarter.
It was kinda funny because the employees of Klarna are unionized they couldn't just fire anyone on short notice like that, but they did let go pretty much all consultants in one swoop. If this was the US the CEO would have just fired a bunch of people because the CFO f-ed up. For a few months there was a major glut of former-Klarna consultants around in Stockholm, two of them ended up at my company at the time.
I couldn't find details about this tax dodging online (it was around 5 years ago), but here is another article about Klarna being in trouble over GDPR violations:
https://www.reuters.com/technology/swedens-klarna-fined-7330...
Isn't the Wirecard case still pending with execs in jail waiting for trial?
Only after it all imploded did the government go after them.
Until that moment it did the exact opposite including opening criminal investigations into the journalists calling it a scam.
The protagonist was first the apple of Merkel's eye and then vanished in Russia.
Literally every single company that can afford to setup things like tax transfer schemes, are actively evading taxes.
It’s mind boggling how widespread it is, how accepted (legal) it is, and how it will seemingly never be fixed.
> Literally every single company that can afford to setup these tax transfer schemes, are actively evading taxes.
Yeah, but I think that's different than what happened in this case with Netflix. Declaring earnings from one country in another country is not just "tax optimizations" but straight up illegal. It's not using/abusing legal loopholes like most larger companies do, but going against the law.
Honestly, I’m not sure. I find the premise of such tax laws to be illogical at a basic level. There are apparently always multiple ways to create legal loopholes.
If we consider the Irish sandwich mechanism that was recently “stopped”, somehow that hasn’t materially affected any of the innumerable companies that were using it. As we saw in the Apple vs EU case, most practices might’ve never been actually legal either.
So my personal opinion is that (almost) all tax “optimization” is at the minimum immoral, but most likely illegal too.
Edit: This reminds me of the idea of temporarily embarrassed millionaires. Your personal optimization is not what I’m talking about - corporations have legal teams the size of SMBs lobbying/creating/looking for secret loopholes, and people are talking about public self service methods.
I'm sorry for my immoral behavior of generally holding investments for more than a year, contributing to my 401(k) and HSA accounts, buying an EV, and installing energy efficiency upgrades in my house, all of which are driven by tax optimization (at least in part).
If a government says do X and I will cut your takes by Y then is doing X immoral?
It depends on what X is.
If X is "install solar panels" or "provide affordable housing" or "reduce greenhouse gas emissions" then X is very likely moral.
If X is "lie to us about where your revenue came from" then X is very much immoral.
no government says "lie to us about where your revenue came from and we will cut your taxes"
@bryanrasmussen I wouldn't put it past the Irish one!
If a government “says”? These large companies actively campaign, draft, and lobby for the legal frameworks and loopholes that they exploit. The government and the companies are the same and are fighting for the same pot of tax money.
That's rich coming from French. Long time ago France Telecom bought Polish top phone network. Immediately rebranded it to Orange (despite the fact that the company had one of the strongest brands on market where it operated).
Unsurprisingly the licensing fees for using Orange brand that the Polish company had to pay to France Telecom amounted to large percentage of taxable profits that the Polish company had. Overt theft from Polish company and Polish taxpayers.
Is that related to the privatization wave after 1989? If so, the culprit here is the corrupt political caste that sold companies below their true value for kickbacks. Corruption has been an endemic problem in the east.
Nation state acts in its own interest, news at 11
No but seriously, this doesn't sound surprising? Why should France be against a French company buying up other companies and bringing revenue back to France
Do you want euroscepticism? Because that's how you get euroscepticism.
I don't understand the problem honestly. I'd understand it if Poland stepped in and didn't let the company be bought out, but this just seems like bog standard normal globalized free market stuff? It would be extremely weird for France to step in and prevent a French company from buying a Polish company due to fears of stoking Euroscepticism among the polish population wouldn't it? And I don't even know what this has to do with the EU, companies have been buying up companies from other countries both in and out of the EU forever?
I also don't expect nothing other from thief then continuing to steal.
I also expect thieves to be protective of their own assets.
I'm just saying they are still thieves and any outrage in their name is misplaced.
Screw the French when they are robbed for the benefit of other countries, because they steal from other countries using their public companies as well.
Ohhh the memory of their atrocious and extortive services still raises my adrenaline. The French bought the position of monopolist in the telecom market. That's (and similar privatization frauds) how the only true Russian-style oligarch in Poland was created - Jan Kulczyk. Thanks, French!
Yeah there's the so called "Dutch Sandwich"[1] which is a well-known tax "planning" methodology that corporates use with the so called "Double Irish" being another one. There's also a slightly less-well known one involving Mauritius and India. They're all ways of moving profits between companies in order to exploit tax treaties that countries put in place. In the case of the Dutch sandwich I think the Netherlands has a treaty with the Netherlands Antilles or something so people have a company in the Netherlands which then shifts things off-shore to the Antilles and avoids tax that way.
It's nonsense of course. Companies should (in my opinion) shoulder their fair share of tax because otherwise that burden falls disproportionately on individual income tax.
Your information is outdated -- Double Irish is no longer applicable according to your own source since 2010.
No, it’s much more complicated than that. If you scroll a bit further:
> After pressure from the EU,[22] the Double Irish BEPS tool was closed to new users in 2015,[citation needed] however, new Irish BEPS tools were created to replace it:[23][24]
Not only do the original evaders get to continue doing it, they’ve also found new loopholes already.
Right. Also I wasn't trying (nor am I equipped) to give some kind of current guide to tax dodging. I was explaining the basic sort of thing people do. The specifics change all the time because there is a sort of whack-a-mole that tax authorities try to play to get people to pay and people pay ever more and more inflated fees to various accountants and tax "planning" experts for ever more byzantine and artificial schemes of one kind or another.
My own experience with tax experts has left me pretty jaded about tax advice. It seems to me that often these companies have maybe 1 dude who actually understands tax and an army of people with powerpoint going out selling the "solution". I had a complex tax situation when setting up a business in the UK and US and got tax advice from one of the big four firms not to dodge tax but to make sure I understood the US system correctly and was paying everything I should. I paid so much tax that I got investigated in both the UK and US because they thought there must be some sort of fiddle because I seemed to be paying way more than I sholud be (this was what I told the accountants). I ended up getting rebates from the IRS and from the UK HMRC after the investigations but it took a couple of years to get it all sorted out.
It's like eruv. The loophole was planted there for us mortals to find and use it
None of these tax "planning" schemes are available anymore.
Moreover, tax authorities have increasingly taken the position that the use of these planning methods constitutes tax evasion. The Dutch Sandwich and Double Irish were grandfathered in (meaning, not treated as criminal tax evasion) but a company utilizing similar schemes today would ultimately result in one or more of their executives spending time in jail.
Critically, most of tax law is actually regulation that implements statutes. Tax planning schemes that satisfy the technical letter of regulations but which violate the plain intent of the written statute can, and have, been deemed illegal years or even decades later (see, for example, the Bermudan tax loss harvesting scheme), and this has repeatedly passed constitutional muster.
What’s the rationale for double taxing corporate profits vs other types?
No rationale for that, but likewise no rational reason that corporates sholud be able to use multinational structures to completely avoid tax, which is what these planning structures are all about. Typically there are inter-company transfer pricing arrangements that mean that the companies in the taxed jurisdictions pay fees to each other so their profits are minimised and as much profit as possible is expatriated to low- or no-tax jurisdictions.
Is it illegal, tho?
It isn't really accepted anywhere, but there is a group of people who will make it their goal in life to get up to any shady practice to try to shortchange or dodge their local host polity to their ultimate advantage. The tax dodge, if you will, becomes something of a pass time and point of pride for them.
This becomes more difficult as more tax authorities better integrate with one another, which admittedly, is something many in in the U.S. fidget over, even if it is realized that the need for it is almost entirely a byproduct of these types of people's actions that necessitate that happening.
Is a mini-series about this already greenlit?
yes but it was cancelled after becoming too popular
Is this what Emily was doing in Paris?
Emily moves from Paris to Rome and then this happens. Coincidence?
Does Emily store all of her boxes of important documents in the spare bathroom too?
did you literally just spoil this for me
President Macron spoiled this for everyone in an interview with Variety.
It's been out for 2 months, you had your chance
I know I'm likely alone in this opinion, but corporate income tax seems like a poorly designed tax to me. Why should companies pay taxes in a year with high profits, even if they face losses for the next ten years? Why should I pay corporate income tax when dividends and income are taxed anyway? Corporate income tax also seems to heavily influence business strategies as a consequence, which wasn't its intended purpose.
The world of tax is complex. Business exist in many shapes and sizes. So...
- because companies heavily use government resources like roads and stuff.
- because losses can be offset against profits. These tend to be middled out over multiple years. You can port losses to other years.
- a lot of companies (holdings etc.) don't pay out income tax and are basically just letterbox companies. These companies need to pay tax on dividends otherwise they would literally pay zero tax.
> - because losses can be offset against profits. These tend to be middled out over multiple years. You can port losses to other years.
These losses expire (different from country to country)!! Plus, inflation is not taken into account.
> a lot of companies (holdings etc.) don't pay out income tax and are basically just letterbox companies. These companies need to pay tax on dividends otherwise they would literally pay zero tax.
Tax on dividends is not corporate income tax. Dividend tax is classified as capital gains tax, which is entirely separate. My point is that anyone taking out money must pay taxes through personal income tax or dividend tax. So corporate income tax is just money that would be taxed anyway - or invested/used by the company. So no real purpose other than producing another cash inflow for the government.
Why shouldn't companies pay taxes? Especially since income is taxed already and your average Joe gets screwed way more than the poor downtrodden billion dollar companies.
Because a company just invests the money. You can't take out money from a company as an owner without taxing it anyway (because you anyway have to pay capital gains tax / personal income tax). My point was that I don't see a point in having corporate income tax (that's just an additional tax that prevents companies from investing in the business and employees).
"Invests the money" means it sits in their bank account until they've convinced enough politicians that the money should be taxed as it comes into the company, not when it goes out, and then they issue a massive dividend.
Any corporation uses roads, mail, police, courts, and other public services, and this usage is not offset by individual income taxes on that corporation's employees, since the employees also use these things. In fact I suspect more resources are spent on serving corporations than serving individual taxpayers - with the important caveat that I am specifically excluding government social insurance programs. But those are often a totally separate tax system.
It is baffling to think that for-profit corporations should be allowed to use public services without paying for them: before a company makes further internal investments with new revenue, it should chip in to society for building the infrastructure that made the revenue possible. A corporate income tax is perfectly natural.
Whether you earn and save a given dollar as a W2 worker or through a business you own seems pretty incidental, right? Your net worth is going up just the same; society has the same interest in containing inequality.
Because governments need money to fund services. They would put a tax on making HN comments if they could get away with it.
Link tax is a thing in some countries. HN is just to small to be taxed.
A lot of words to say: taxation is theft.
How about just get rid of double taxation in corporate taxes? Eventually, taxes will get paid via distributions or sale of stock by individuals.
Everything is double, triple, etc taxed. The corp->shareholder thing is an arbitrary point to focus on.
Some amount of revenue must be raised. Suggest an alternative. Not taxing corp profits will result is less overall tax income (it wont be made up in shareholder taxes).
You do know my income has already been taxed? Why am I paying double tax when buying alcohol? Why is my income taxed when the companies revenues were already taxed?
There is no double taxation. Transactions are taxed, not money.
Or never if the stock is owned by a foreign national, charity, sovereign wealth fund, etc.
Reasonable corporate taxes are a net positive for the economy of the county that issues them.
Then you would be in favor of only taxing retained profits. Corporations keep piles of money for future use. It would make sense to allow deductions for dividends distributed to shareholders. But could also fix the stock buyback loophole by not allow deduction.
Why not advocate for taxing only corporations, rather than the more oppressive direction of taxing only humans? Corporations intrinsically run on accounting report paperwork, meaning tax forms are an incremental cost rather than a novel burden. And they receive massive benefits from the state - liability protection, outsized access to the legal system, and often direct subsidies.
Because corporate taxes are paid on profit (revenue-expenses). So as a company I can claim a lot of stuff as a expenses. Executive salaries? Anything left after that? Lemme quickly create a separate company in some low tax jurisdiction and pay them for marketing expenses, and suddenly I have no profits, and nothing to tax. Regular people can't do that.
You also generally can't tax the revenue instead of profits (except perhaps few percent of revenue as the minimal tax), because different companies have hugely different amounts of revenue and expenses.
None of that is really a show stopper when talking about an overhaul of the tax system and what it targets.
Speaking of taxing revenue instead of profits, that's another reason the current tax regime is so galling (at least speaking from a USian perspective). Individuals essentially are taxed on revenue and can't deduct things that would otherwise be straightforward deductions in a business context, as necessary and proper expenses required to earn that revenue.