The problem with closing loopholes that are being exploited is that it can be hard to do without causing unwelcome side effects.

In other words, the loophole exists for a reason. If you "close" it you may cause good in one area but harm in others.

So at the very least one should move slowly to at least understand the issue properly, beyond just the obvious exploitation.

For example (and since I know nothing about small parcel imports, I'll use something I'm more familiar with) there's often a knee-jerk reaction to the exploitation of IP laws (trademark, copyright, patents). Some suggest killing it all. Some favor dumping patents but keeping the rest, and so on.

But any change will have "unexpected" consequences. These tools are used by businesses of all sizes and means. Killing copyright because you dont like Microsoft would equally kill things like Free Software (because it would invalidate the freedoms enforced by the GPL.)

So while "immediate action" seems like a good thing at first glance, it seldom works out that way. Throwing tarrifs on imported goods protects local jobs, but equally drives up prices (aka inflation).

So charitably I interpret "intentionally not neighbors changed" to "being changed intentionally, with care to achieve the desired effect not some unwelcome side effect.

> Killing copyright because you dont like Microsoft would equally kill things like Free Software (because it would invalidate the freedoms enforced by the GPL.)

The point is a good one but the example was chosen a little quickly. It'd kill the GPL because the GPL is part of copyright law. That much is simple to see. But it'd probably be a net win for user freedom.

Right now, people choose to use free software either because it is good (and would see no difference if the GPL disappeared) or because it is free (and, again, would make decisions the same way in a no-IP world - only use software where the source is available). So the only risk is people copying an OSS project as free riders, withholding source changes and using some sort of embrace-extend-extinguish strategy.

But EEE relies on proprietary extensions, so that strategy probably doesn't work without the support of IP law. The OS projects could clone features back in. Proprietary providers could fight back with a client server model - but AWS for example already does that so it isn't really new and the equilibrium is generally to contribute upstream anyway.

I would expect software freedoms to improve if we lost the GPL as part of a big removal of IP laws. There'd be tactical instances where people were worse off, maybe. But strategically the OSS community would just be in a better position. They can keep doing what they do, it is harder to sue them and difficult to profit off their work in ways that aren't already possible.

The word “loophole” usually means a bypass of a law/rule in its spirit due to its language, thus leading to a void / gray area of enforcement that is beneficial to the exploiter.

I say that because everytime the topic of “closing a loophole” comes up, HNers act like it’s metaphysically impossible. But if you just think a little bit more, you’d realize that the existence of a loophole shows that the said law is specifically NOT covering the edge cases, but is covering the general cases without problems. Hence, fixing it would most likely affect the exploited case, not the beneficial case.

The possibility you’re not acknowledging is that the “spirit of the law” is trying to achieve something that cannot be done, or at least not done without massively modifying the way a system works to an unacceptable level. Law makers know this, but it’s not really a problem for them because they can write their bad law, leave it full of “loopholes” to be “exploited”, and then just cry about some loophole exploiting boogeyman to their constituents and donors as the reason their law making efforts have failed. If you wanted to be cynical you might even suggest that this is the desired outcome and a way of managing circumstances where donor and constituent interest are in conflict, or perhaps just a way of signalling that you’re delivering on a policy promise, when in reality you can’t.

Corporate tax avoidance is a great example of this. The only feature you need your laws to have to facilitate corporate tax avoidance is the ability to incur a deductible expense to an offshore entity. The only thing corporate tax law loophole closing ever achieves is to make corporate tax avoidance procedures more complicated, thus making them only accessible to more sophisticated tax avoiders. There is no conceivable way of closing these “loopholes” without extreme protectionism or isolationism. It would basically require ending globalization or at least removing your country from the globalized economy. A solution that most people would find completely unacceptable.

I fully agree that these loopholes are intentional, but I definitely don’t think they’re unavoidable.

The problem is just that the ones (politicians and companies) writing the laws are the ones who want the loopholes. The lawyers who could work on improving laws, are instead helping companies find creative avoidance techniques.

They’re not unavoidable, they can just potentially come at an unacceptable cost. In the corporate tax instance, literally the only thing you need to implement corporate tax avoidance is the ability to incur a deductible expense to an offshore company. No matter what other laws you write, if you can do that you can avoid corporate tax. If you can’t do that then you don’t have economic globalization (or you’re not participating in it at least).

This unrealistic wishful thinking you seem to be exhibiting is something I think politicians intentionally prey on. If some politician can convince you that it is possible to “fix this”, but without the all the obviously mandatory costs and tradeoffs, then they can also potentially convince you that they can and will do it. This particular policy issue has been a part of many political platforms, yet nobody has ever “fixed it”, because it cannot be fixed (at least not without also ruining a lot of other things).

> the only thing you need to implement corporate tax avoidance is the ability to incur a deductible expense to an offshore company

> This unrealistic wishful thinking

Quite the contrary, for some reason you seem to have a cognitive dissonance about the sheer complexity of tax laws. The loophole is not as simple as “anything can be offshored” - there’s a significant nuance involved in what is possible even now.

I own several companies that have a large pile of transfer pricing agreements, I’m very familiar with the nature and complexity of international tax laws. All corporate tax avoidance is, is incurring offshore expenses to shuffle profits offshore. As long as you can do that, there is literally no way to prevent the tax avoidance. The only thing you can do is make it more complicated.

This is also the reason most developed economies have given up on regulating transfer pricing any more than they already have, and instead the strategy has shifted to trying to get the tax havens to implement or increase their corporate taxes. That’s why the “global minimum corporate tax rate” idea has recently emerged, and why the EU uses their black and grey lists to coerce foreign jurisdictions to write new tax laws. This strategy is arguably more effective, but still a complete failure, because you have some tax haven jurisdictions that simply ignore the pressure, and other tax havens are simply never sanctioned because they have sufficient leverage in the global economy to avoid the attention entirely.

It is very literally a choice between corporate tax, or globalization. There is no way to have both.

The issue is neither corporate tax nor globalization, but the difference between corporate tax rates, which provides an incentive in the first place to shuffle profits offshore.

A solution could be to tax offshore expenses with the difference in tax rates, i.e., min(0, corporate tax rate -destination company's corporate tax rate)%. That would eliminate the advantage of lower tax rates at the destination.

Another way would be to allow deducting only min(100, 100 - corporate tax rate + destination company's corporate tax rate)% of the offshore expenses. That still provides benefits for shuffling profits offshore, but the origin location gets some of it.

This is just a reinvention of the global minimum corporate tax effort, and it would fail for exactly the same reasons. Except, with the added benefit of making corporate tax avoidance procedures more complicated, without actually accomplishing anything (now you need to offshore your profits to a friendly high tax jurisdiction before offshoring them again to a low tax one).

Also, aside from the fact that this policy would fail, what you’re describing is a rather extreme import tarrif, which is a highly protectionist policy.

Thanks for the insight!

Honestly, I just don’t buy it’s impossible to properly handle global taxation.

Governments do it just fine for normal individuals. Small to medium businesses also pay their taxes pretty fairly. It says something profound about the system, if the avoidance needs large complicated structures to do so.

Something something lack of moral compass.

Then explain your solution for doing so, or show me a jurisdiction that has managed it and explain how. In reality no jurisdiction has ever achieved this, and for the reasons I have explained.

Real people also manage to avoid their taxes all the time. People complain about the rich not paying their taxes every day. People can also offshore their income in mostly the same way a company can, with the only additional complication being residency requirements. I just finished watching the F1 qualifying, a sport that has 1 Monegasque athlete, but nearly half of its currently active athlete living in Monaco.

If you want a system of global tax governance, then you’d need a global government. Something we don’t have, will not have, and a lot of people tend to be especially resentful towards any of the efforts to create one (or something that behaves like one).

> existence of a loophole shows that the said law is specifically NOT covering the edge cases, but is covering the general cases without problems. Hence, fixing it would most likely affect the exploited case, not the beneficial case.

I don't think that follows.

Certainly that is true sometimes, but sometimes fixing edge cases can mess up the general case. Or at least its not always immediately obvious how to close the loop hole without unintended consequences.

Not always. Many times a loophole is something that exists as a logical consequence of other laws and regulations, and people (actually normally corporations) abuse those to their own benefit.

> Killing copyright because you dont like Microsoft would equally kill things like Free Software (because it would invalidate the freedoms enforced by the GPL.)

Without copyright, the GPL wouldn't need to exist because the freedoms it protects would be impossible to suppress.

I'm not sure I see how that's true. The GPL puts a legal onus on modifiers to publish their modifications to the source with distributions of the software. Without copyright, any other party might be legally entitled to use and redistribute said modifications, but the modifier wouldn't be compelled to publish them.

That's not really the problem the GPL is intended to fight against. The source code can usually somehow be recovered via decompiling. But that's illegal in the presence of copyright, and even reverse engineering is a legal minefield further encumbered by patents.

> source code can usually somehow be recovered via decompiling

Absent IP, ceteris paribus, you'd run as much code as possible on your servers and obfuscate what you deliver to a client. There would be an entire industry in producing technical DRM.

That's what the AGPL is designed to cover, and I think it's a major reason why a lot of software nowadays runs in the cloud. This is already a common way to circumvent the GPL.

Obfuscation only gets you so far. But faithfully recovering the original source code is not really the point. Even heavily obfuscated code is useful and can be worked with since in the end the program is still doing what it's supposed to do.

This is already possible with GPL and copyright, and companies do it. Hence the SSPL.

Ok, so why is are GPL licenses so popular compared to BSD and MIT licenses? Why did the GNU foundation even bother writing a license at all?

Those other licenses do not require republishing, so it seems that authors of OSS value the additional republication requirements provided by the GPL license. Even in under the current copyright regime, one can (perhaps other-than-legally) decompile binary to recover source-like code, and then launder and reinject the learned improvements back into the open source project.

And the GPL license does not universally grant patent rights back to the source project.

The primary difference between GPL and OSS (BSD, MIT et al) is one of philosophy.

The FSF believes that closed-source software should not exist at all. Their license is explicitly designed to make it completely incompatible with closed source software. Updates to the license (GPLv3, AGPL etc) are specifically designed to close loopholes which closed-source companies were exploiting.

OSS by contrast sees Open Source as a public good, but lives in a world that tolerates closed-source entities. It's possible to use an MIT licensed gzip library in a closed-source program, with GPL you cannot.

OSS says "Open Source us better, but closed Source is better than nothing." The FSF says "it should be Free, or you should not use it at all."

Both OSS and Free licenses mandate that users should be able to build binaries from Source. If I make a change to the gzip library then my users are entitled to those changes. (There's no "giving back", only giving forward.)

It absolutely is a problem intended to be addressed by the GPL. That's why it is specified in the GPL that the source code means the code in its preferred form for making changes.

The idea is that without copyright there is no benefit in keeping the source code secret. It justs makes it a little bit harder for the customer to recover it. The GPL is ultimately intended to be customer-friendly, therefore sharing source code together with the build system is preferred.

It's still a form of proprietary lock-in similar to not offering data export, but it's not an unsurmountable hurdle anymore.

> The idea is that without copyright there is no benefit in keeping the source code secret.

Why not? You can decompile a cookie to try to see what method was used to make it, but Nabisco or whoever still treats that method and the ingredient ratios as trade secrets. In fact, the whole idea of trade secrets are things that are kept secret because IP protections don't cover them.

That's not really comparable; by reverse-engineering a cookie one would have to fight against entropy. The issue with software is that it's magnitudes easier to figure out any trade secrets inside of it. Reverse-engineering LLMs is much more akin to the cookie example.

Exactly what I meant. GPL requires modifications to be released. That us precisely what differentiates it from public domain.

This "loophole" is likely to be motivated be the cost of processing small transactions.

If customs officers spend two minutes per parcel, then it makes sense to exempt parcels for which the expected revenue doesn't even cover one minute's labour cost.

Where I live, parcels with an expected revenue below the price of a cup of espresso are exempt. The definition is different, of course.

The de minimas threshold allows for lots of things that would otherwise be difficult to document or not worth the effort, from grandma mailing a sweater for Christmas to getting a replacement part shipped directly.

This may have an inflationary effect. Perhaps they want to delay it as much as possible: Can we produce Milwaukee branded silicone spatulas 3-for-$6.99?

There is no “may” be inflationary. The entirety of Western civilization is built on and its future is predicated on a perpetual cheaper labor class both at home and abroad. That’s the only way the people can even survive right now.

The moment things change, like minimum wage, oil prices, input costs - anything produced (even partially locally) jumps in cost. We have been seeing this happen constantly over the past decade.

That used to be true, but automation is real. Low cost labour simply delays automation.

I’m not sure if you’ve seen the news over the past decade, but most low cost labor countries like China are aeons ahead in automation. They’re just optimizing further and further, while the West just offshores and outsources everything.

Yes, that is why increasing tariffs and using that savings to subsidize automation in the US is the correct policy.

I don’t think tariffs will solve much, since people still want to buy those goods. USA just needs to start building ASAP - eat the initial losses, but put the effort in and make local manufacturing happen. Then it’s just classic capitalistic competition, which the USA claims to be the best at doing.

It's not China collapsing but local brands eclipsing western ones.

OP did not say collapsing; everyone agrees with the current situation of severe weakness.

Consumer spending as dropped dramatically, deflation is occurring, population is decreasing millions per year and set to accelerate, foreign direct investment is down 10x, inept foreign policy has strengthened China’s neighbors relationship with the US, entrepreneurs are demoralized, etc.