I've bought some flat-pack furniture from some of IKEA's competitors. After having struggled through putting that together I have to say I have new found respect for the amount of thought and design IKEA must put into how their furniture goes together.
I've observed that many people react badly when presented with instructions that come with a purchased product. ("I can't/don't read manuals," etc.) This bias tends to sabotage their attempts to follow them once they do concede that the instructions might be useful. ("See? These instructions are useless, that's why I never bother with them.") Combine this with the fact that spatial-temporal reasoning skill seems to vary quite a bit across the population.
Try buying some assemble-your-own furniture from Target or Wal-Mart. You'll get that much more appreciation for the ease of assembling IKEA furniture and how much sturdier the IKEA furniture is.
They really could use a few words on some of the instructions, but that would violate their "one package for all countries" philosophy.
Also, have you ever tried to hang a pair of doors straight? Their hinges have like 9 degrees of freedom, which doesn't really help. Plus I don't think it is actually possible on this TV cabinet I have, since it isn't actually square once you put a TV on it.
Pandering much? This is Hacker news, you have to show how you assembled several packages in a creative way to get in. But, yeah: “outside” there is an alarming proportion of people who get upset for hours, failing at what I did blindfolded at 11.
Most things are extremely easy, but there are some individual packages that are horrible. I remember putting up a wardrobe that seriously took a whole day to assemble. All parts were there though!
To be fair, Ikea founder Ingvar Kamprad just recently admitted (2011) to the existence of the ownership foundation.
> In an email from Ikea sent to the TT news agency, Kamprad admits that the Interogo Foundation in Liechtenstein exists and that it owns Inter Ikea Holding SA, which in turn owns Inter Ikea.
"Interogo Foundation is a company foundation whose only goal is to invest in the expansion of the company business and secure its long-term survival. In other words, the assets of the Interogo Foundation are held as financial security and are only used if Inter Ikea has financial difficulties," wrote Kamprad.
"The assets can also be used to support individual Ikea dealers who have financial difficulties or for philanthropic purposes. Interogo Foundation is controlled by my family and is administered by a board of directors consisting only of outside representatives." he added.
This is a pretty common scenario for international companies. Maybe most of them do not go as far as IKEA and lock their whole corporate structure, but most of them manage to achieve pretty low corporate tax rates. As an example Google was estimated to achieve an effective tax rate of only 2.4% [1]
The only thing unethical about it is that these tax avoidance schemes have inherit economies of scale - startups can't afford the advice.
The solution is not to eliminate the tax paradises (which would cause a revolution btw), but to eliminate the tax code altogether.
If your ideology insists on coercion than at least make it a flat rate.
Edit: I get accused of supporting corporatism below. I don't. I just support anyone to avoid taxes as much as possible and oppose all forms of collectivism.
Makes your furniture cheaper... and your taxes higher.
Helps big companies and the politically-connected... hurts upstarts and people who focus on business not politicking.
Makes people angry at tax distortions, not taxes themselves.
So this sort of gaming doesn't advance your hopes at all.
You'll have better luck with fair, broadly-based taxes, and structural protections against constant tinkering with both the progressivity and exceptions. Then we could have a rational discussion about the overall level of taxation, or possible replacements for taxation, without the distracting class-warfare and favor-trading sideshows that dominate tax policy in conventional shallow politics.
I'm honestly not sure it makes furniture cheaper, either.
Here in the UK at least I found IKEA to be about 10-15% more expensive to local furniture stores. And about on par (about 2-5% more expensive) with national chains.
- Homebase: (2 or 3 units together to make that design) £140
- Local Furniture Store: £130 - £150
- Second Hand: £100 ish
- Self Build: about £85 plus my labour (plus; leaps and bounds better quality)
Off topic note; it's currently half built :D because it's a no brainer really to have built it myself once I sorted out the costings. Highly recommend building custom furniture if you have a bit of practical skill - next up is a decent desk (cost of £200 down to under £100 with self build)
I generally enjoy reading hn but such right wing ideologies make me feel sick in the stomach.
Please take into account when making such statements the US (or whereever you live) is not the world. And just because you got brainwashed after decades of conservative government doesn't mean the rest of the world is. But the rest of the world also participates in this community.
You could argue that it makes your furniture cheaper, but isn't it more likely that the additional profit that IKEA accrues due to this complicated scheme is 1. siphoned directly to a small number of individuals 2. divided amongst the shareholders or 3. simply wasted on the tons of accountants and lawyers that it probably takes to keep this system running.
Even if its not the case (at least not entirely) then you can still argue that the fact that IKEA is doing this is anti-competitive, which is surely against your ideology of anti-collectivism because it distorts natural market forces.
Even someone adamantly in the Chicago school of economics would be against a scheme like this because it implies that IKEA is effectively able to compete under markedly different market conditions than its competitors.
What's with posting articles from 2006? There are more recent sources with updates, including from FT.com (behind a paywall) and the investigative documentary about this which aired last week in Sweden:
http://translate.google.com/translate?hl=en&sl=sv&u=...
I personally prefer the economist article. I read it back in 06 and I've read a few more on the Ikea tax setup since then. It seems to still accurately represent the situation, some numbers might be out of date but the gist is the same. That ft.com article is a bit sparse, seemingly written as an update for people already aware of the issue, and as you say paywalled.
Thanks for the additional and up to date info though.
I always think of that when I see a PBS show like NOVA, sponsored by the Howard Hughes Medical Institute. At one time, they owned Hughes Aircraft, mainly as a tax dodge for Howard Hughes. The tax dodge has long outlived the company.
What's terrible about IKEA's whole tax avoidance scheme is that it gives an unfair advantage to IKEA over Target, Walmart, etc. who are all presumably paying expected amounts of corporate tax and additionally, by virtue of being public companies, provide a great amount of transparency versus IKEA.
Another example of a business built in part on a tax loophole--Amazon.com and its online brethren whose customers generally don't pay sales tax. That's a huge, unfair retail advantage compared to Barnes & Noble and other brick-and-mortar stores, especially since retail margins are generally so thin.
>gives an unfair advantage to IKEA over Target, Walmart
Ugh. You correctly note that tax avoidance is an unfair advantage but list among your victims some of the biggest companies in the world. Do you think Walmart is at a disadvantage? They almost certainly avoid more taxes than IKEA (if nothing else, because they make a lot more money).
When Adam Smith wrote about "the invisible" hand, he noted that it would only work if companies weren't allowed to grow too large. Once a company gets big enough it no longer has to participate in the market. Massive tax avoidance is just one of the many ways that companies like Walmart can use their size and power to keep small players out.
First, let's not forget that Walmart is the largest retailer in the world, for several reasons. But skimping on state and local tax regulation is something that Walmart has done over the years. Most states (not all cities tho) want a company like Walmart, it provides lots of jobs (we won't take about labor wages), and creates perpetual economic growth in a neighborhood / city / region through a whole ecosystem of consumers, employees, vendors, shippers, contractors, etc. To entice Walmart, states give tax subsidies, devalue property assessments, etc.
I'm not saying IKEA doesn't have the same retail financial prowess with state regulators, but let's be fair, many corporations do what they can to get tax loopholes. Accenture, a global consulting powerhouse was incorporated in Bermuda strictly to avoid paying taxes on billions of dollars.
If you keep a tight control on the number of shareholders you have there is no reason why you have to go public - of course the reporting standards are going to be lower for private companies, if you don't want that overhead don't go public!
Re: Amazon - all products from amazon have to be shipped. There is no sales tax, but there is shipping charges. Not quite the same, but consumer do not care usually.
The story would be much different if Ikea's owners were American.
American citizens don't have the same affordances as foreign nationals when it comes to tax minimization. If these foundations for Ikea were majority owned by Americans, they would be subject to taxation by the IRS, regardless of in which country they were created.
This is an amazing write-up i read to counteract the piece about google's tax avoidance... I had to find it on another site though, how do you get the link to go around the paywall?
Google cut its taxes by $3.1 billion in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda (Double Irish).
[+] [-] forgottenpaswrd|15 years ago|reply
Am I the only one that enjoy assembling flat-pack furniture and believe it is extremely easy?.
[+] [-] dagw|15 years ago|reply
[+] [-] pmjordan|15 years ago|reply
[+] [-] zizee|15 years ago|reply
[+] [-] pchristensen|15 years ago|reply
[+] [-] smackfu|15 years ago|reply
Also, have you ever tried to hang a pair of doors straight? Their hinges have like 9 degrees of freedom, which doesn't really help. Plus I don't think it is actually possible on this TV cabinet I have, since it isn't actually square once you put a TV on it.
[+] [-] bertil|15 years ago|reply
[+] [-] hjalle|15 years ago|reply
[+] [-] thret|15 years ago|reply
[+] [-] c2|15 years ago|reply
[+] [-] cafard|15 years ago|reply
[+] [-] Evgeny|15 years ago|reply
[+] [-] sanj|15 years ago|reply
http://www.youtube.com/watch?v=GjDp0TAZUQI
[+] [-] ajtaylor|15 years ago|reply
[+] [-] wallflower|15 years ago|reply
> In an email from Ikea sent to the TT news agency, Kamprad admits that the Interogo Foundation in Liechtenstein exists and that it owns Inter Ikea Holding SA, which in turn owns Inter Ikea.
"Interogo Foundation is a company foundation whose only goal is to invest in the expansion of the company business and secure its long-term survival. In other words, the assets of the Interogo Foundation are held as financial security and are only used if Inter Ikea has financial difficulties," wrote Kamprad.
"The assets can also be used to support individual Ikea dealers who have financial difficulties or for philanthropic purposes. Interogo Foundation is controlled by my family and is administered by a board of directors consisting only of outside representatives." he added.
http://www.thelocal.se/31650/20110126/
[+] [-] vitobcn|15 years ago|reply
[1] Source: http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-sho...
[+] [-] bryanlarsen|15 years ago|reply
[+] [-] ebaysucks|15 years ago|reply
The only thing unethical about it is that these tax avoidance schemes have inherit economies of scale - startups can't afford the advice.
The solution is not to eliminate the tax paradises (which would cause a revolution btw), but to eliminate the tax code altogether.
If your ideology insists on coercion than at least make it a flat rate.
Edit: I get accused of supporting corporatism below. I don't. I just support anyone to avoid taxes as much as possible and oppose all forms of collectivism.
[+] [-] gojomo|15 years ago|reply
Helps big companies and the politically-connected... hurts upstarts and people who focus on business not politicking.
Makes people angry at tax distortions, not taxes themselves.
So this sort of gaming doesn't advance your hopes at all.
You'll have better luck with fair, broadly-based taxes, and structural protections against constant tinkering with both the progressivity and exceptions. Then we could have a rational discussion about the overall level of taxation, or possible replacements for taxation, without the distracting class-warfare and favor-trading sideshows that dominate tax policy in conventional shallow politics.
[+] [-] ErrantX|15 years ago|reply
Here in the UK at least I found IKEA to be about 10-15% more expensive to local furniture stores. And about on par (about 2-5% more expensive) with national chains.
I'm in the process of kitting out my new house and, to take an example of a book case; this is the sort of think I am after: http://www.ikea.com/gb/en/catalog/products/S99823013
- IKEA: £160
- Homebase: (2 or 3 units together to make that design) £140
- Local Furniture Store: £130 - £150
- Second Hand: £100 ish
- Self Build: about £85 plus my labour (plus; leaps and bounds better quality)
Off topic note; it's currently half built :D because it's a no brainer really to have built it myself once I sorted out the costings. Highly recommend building custom furniture if you have a bit of practical skill - next up is a decent desk (cost of £200 down to under £100 with self build)
[+] [-] guelo|15 years ago|reply
[+] [-] xtho|15 years ago|reply
Please take into account when making such statements the US (or whereever you live) is not the world. And just because you got brainwashed after decades of conservative government doesn't mean the rest of the world is. But the rest of the world also participates in this community.
[+] [-] meric|15 years ago|reply
[+] [-] lukesandberg|15 years ago|reply
Even if its not the case (at least not entirely) then you can still argue that the fact that IKEA is doing this is anti-competitive, which is surely against your ideology of anti-collectivism because it distorts natural market forces.
Even someone adamantly in the Chicago school of economics would be against a scheme like this because it implies that IKEA is effectively able to compete under markedly different market conditions than its competitors.
[+] [-] mmmmax|15 years ago|reply
[+] [-] vampirical|15 years ago|reply
I personally prefer the economist article. I read it back in 06 and I've read a few more on the Ikea tax setup since then. It seems to still accurately represent the situation, some numbers might be out of date but the gist is the same. That ft.com article is a bit sparse, seemingly written as an update for people already aware of the issue, and as you say paywalled.
Thanks for the additional and up to date info though.
[+] [-] toadi|15 years ago|reply
As an example:
Suez Tractebel, Energy Europe Invest en GDF Suez CC had a profit before tax : 4,8 bilion euro.
Together they payed 2,3 milion euro tax. This is a tax rate of 0,049%.
Oh these are the Gas & electricity companies in Belgium.
[+] [-] cschmidt|15 years ago|reply
http://en.wikipedia.org/wiki/Howard_Hughes_Medical_Institute
[+] [-] jimmybot|15 years ago|reply
Another example of a business built in part on a tax loophole--Amazon.com and its online brethren whose customers generally don't pay sales tax. That's a huge, unfair retail advantage compared to Barnes & Noble and other brick-and-mortar stores, especially since retail margins are generally so thin.
[+] [-] loewenskind|15 years ago|reply
Ugh. You correctly note that tax avoidance is an unfair advantage but list among your victims some of the biggest companies in the world. Do you think Walmart is at a disadvantage? They almost certainly avoid more taxes than IKEA (if nothing else, because they make a lot more money).
When Adam Smith wrote about "the invisible" hand, he noted that it would only work if companies weren't allowed to grow too large. Once a company gets big enough it no longer has to participate in the market. Massive tax avoidance is just one of the many ways that companies like Walmart can use their size and power to keep small players out.
[+] [-] kalpeshjoshi|15 years ago|reply
I'm not saying IKEA doesn't have the same retail financial prowess with state regulators, but let's be fair, many corporations do what they can to get tax loopholes. Accenture, a global consulting powerhouse was incorporated in Bermuda strictly to avoid paying taxes on billions of dollars.
[+] [-] arethuza|15 years ago|reply
[+] [-] Tichy|15 years ago|reply
[+] [-] pacifika|15 years ago|reply
[+] [-] hippich|15 years ago|reply
[+] [-] sudonim|15 years ago|reply
American citizens don't have the same affordances as foreign nationals when it comes to tax minimization. If these foundations for Ikea were majority owned by Americans, they would be subject to taxation by the IRS, regardless of in which country they were created.
[+] [-] hippich|15 years ago|reply
[+] [-] bound008|15 years ago|reply
[+] [-] ashbrahma|15 years ago|reply