[koralatov]

I know for sure that if I underdeclare the value of my holdings or my income, I'll be punished when caught, and I don't consider that unfair. I might disagree with the amount I'm taxed, but I don't disagree that I should contribute something to society through paying tax.

The difference as I see it is that companies usually operate as if they believe they shouldn't pay any tax. I realise that minimising tax burden is a form of efficiency, but the challenging part here is deciding where 'efficient' ends and 'dishonest' starts. I honestly don't know, but I'd say it's pretty clear that, at some point, underdeclaring the value of corporate holdings starts being dishonest.

[derefr]

> where 'efficient' ends and 'dishonest' starts

Companies don't know from 'dishonest.' The only question is where 'efficient' ends and illegal starts. Other than that, companies don't care.

(...and even then, in countries with corporate liability protection and simple fines for most corporate crimes, "illegal" is just another name for an economic cost going into the efficiency calculus.)

[edanm]

People think of these issues too much in terms of black and white.

You should think of it as a negotiation. Many transactions, even on a smaller scale, are complex, and deciding on the "true value" is often impossible. So the tax authorities are negotiating with Facebook, and Facebook's report is simply its opening offer. You wouldn't consider a salesmen who overpriced his product to be doing something necessarily unethical (assuming they weren't outright committing fraud or otherwise doing something illegal).

Disclaimer: Not a lawyer or accountant, and I'm totally generalizing here from other transactions I know more about. I actually know almost nothing specific about the US tax system or this situation with Facebook, I'm trying to convey the general attitude that most companies have.

[koralatov]

Oh, I absolutely realise I'm oversimplifying it, but the point stands that, in most cases, it's in Facebook's interest to massively underreport value as part of that negotiation.

For example, say they invent a new way of compressing jpegs which saves them bandwidth and storage costs. Facebook could report that as costing them money: "Oh, that cost us $120,000 in programmer time to devise and implement".

It's entirely possible that this is true, but it's only half the picture: that new compression algorithm might have saved them twice that or more in bandwidth costs.

In this instance, it's 'efficient' for Facebook to report one part and then conveniently ignore the other. But the question remains is it honest? Surely the value of that technology is somewhere between the cost to create and the costs it's saved?