Etsy: Too Big and Crafty to Pay Taxes?

Chuck Sheketoff

At a recent City Club of Portland talk, the former chief financial correspondent of The New York Times, Floyd Norris, spoke about the “corporate tax illusion.” The phrase refers to the accounting and legal tricks that corporate giants like Apple and Starbucks use to game the tax system and avoid paying taxes.

Norris explained that while the offshore tax avoidance mechanisms used by corporations are quite complex, at the end of the day corporate tax avoidance reflects the view — attributed to the late Leona Helmsley — that “only the little people pay taxes.”

Earlier this year, Etsy — the online marketer of handmade and vintage products — held its IPO. Now that it’s gone public, it looks as if Etsy thinks it’s too big to pay taxes.

As Frank Clemente of Americans for Tax Fairness explains in a Huffington Post column,

The Brooklyn-based company recently changed the structure of its subsidiary in corporate-friendly Ireland so that it doesn't have to publicly report certain financial data, making it easier to avoid taxes. In using the Emerald Isle to dodge American taxes, Etsy joins other infamous offshore corporate tax-avoiders like Apple, Google and Microsoft.

Etsy’s tax dodging is particularly galling, given the company’s rhetoric, Clemente notes:

But few if any of those other companies make such bold ethical claims as Etsy, whose website declares: "We are building a human, authentic and community-centric global and local marketplace." And: "By building and supporting this people-powered economy, we hope to inspire global business practices that are sustainable, responsible and profitable."

Etsy has even gone to the trouble of being certified a "B Corporation"—"B" referring to social benefit and meaning the company has a moral responsibility for the well-being of its workers, communities and environment.

Want to learn more about how large companies use Ireland and other countries to dodge taxes? Watch the free-on-Hulu documentary We’re Not Broke.

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Chuck Sheketoff is the executive director of the Oregon Center for Public Policy. You can sign up to receive email notification of OCPP materials at www.ocpp.org.

By Chuck Sheketoff Aug. 28, 2015