Google is "flying a banner of doing no evil, and then they're perpetrating evil under our noses," says Abraham J. Briloff, a professor emeritus of accounting at Baruch College who has examined Google's tax disclosures.
Maybe it is the lawyer in me, but why wouldn't any international business do whatever it could legally do to minimize its taxes? I understand that governments might want to consider these as loopholes and seek to end the right of U.S. taxpayers to avail themselves of these tax-minimization strategies. But, as long as it is legal, why should a company voluntarily seek to expose itself to higher tax rates when it has the choice not to?
I guess when you as a company claim the high ground ("do no evil"), you will have people making their own judgments about what ethical standard ought to govern your conduct and this would explain this professor's remark. By that measure, though, one could argue that companies such as Google should seek to attribute all their revenues to California because that is where their main intellectual property development efforts have occurred and hence pay corporate tax rates at one of the highest rates around simply because they "owe" it to California.
I get this question all the time from web-based startups: why run our revenues through a high-tax state when we have the option of running them through all sorts of lower-tax venues and saving on taxes? The universal answer for smaller companies is "set your company up in a way that let's you pay the least tax you can legally."
Why should Google be held to a different standard on penalty of having its perfectly legal actions castigated as "evil"? Is it the view of some or many in the HN community, for example, that a private enterprise has a form of "social responsibility" to voluntarily subject itself to the tax rates of whatever domicile it happens to have its major operations in (in this case, California) when it legally has the option not to do so? That seems unwise by free enterprise standards and I am genuinely curious to know why refusing to do this would be called "evil."
> That seems absurd by free enterprise standards and I am genuinely curious to know why refusing to do this would be called "evil."
When taxes come up, it tends not to be a well-thought, cohesive, pros-and-cons thing. It tends to be an emotional/identity thing. Some people think and almost always argue it'd be a good thing if companies gave more money over to governments.
Me, I think it's very good for the world on every level for Google to pay less taxes. They're hiring the best people, acquiring companies and giving liquidity to founders, run amazing free services (search, Gmail, Google Earth, Google Maps, Google Finance, Google News, Google Voice, Google Reader, Feedburner, many many others). Also, they're internally investing in energy and robotics like the auto-driven cars thing, and their high level personnel seem to invest really well too (like in genetics research). Anyone who thinks that England would do a better job with the money than Google hasn't been to England, or hasn't thought this through very much.
Ethics aside, Google shouldn't seek to deprive nations of tax revenue because they benefit in no small part from that money. They hire employees educated with government money, buy research projects funded with government money, build data centers that depend upon public infrastructure, etc.
Frankly, without government money, Google would not exist.
By gaming the tax systems, they're not only flipping the bird to the ladder they stood upon to create Google, but they're strangling the future pipeline for the very government products they depend upon.
And people only call Google out for crap like this because they insist on running around claiming they "Do No Evil". They set the bar higher for themselves. If they didn't want it there, they should shut up about it already.
I can't speak for others, but my alarm wasn't with Google. Instead it was with a tax system that allows these kinds of loopholes. When people talk of expiring the Bush tax cuts for those making over $250k, my jaded response is that it will probably only affect those that are well to do but not really rich. I think the really rich can afford tax lawyers that let them avoid substantial taxes via other loopholes.
Right on grellas. Every other company does this and there is a corporate tax industry around these loop holes.
Apple operates Braeburn Capital http://en.wikipedia.org/wiki/Braeburn_Capital
Microsoft is known for borrowing its own money from foreign countries to avoid repatriating tax. Because borrowing is cheaper than paying repatriation tax.
Broadcom is known for using R&D tax credits(for spending money in US for R&D) and Singapore and other lower tax states when it comes to selling goods and realizing income.
Even Oil/financial companies are known to set up shops in overseas just to avoid paying higher taxes.
When someone's career is to find ways to reduce taxes, companies will find whatever way to achieve it.
The characterization of "evil" is too strong. The focus should not be on Google, but on the world's corporate tax system because it doesn't accomplish what it was set out to do. In terms of the level of fairness and for the purposes of generating domestic revenue, it is broken. A specific tax revenue distribution was intended, and that is why the particular tax levels were set, but instead the levels change dramatically for the most sophisticated participants.
Maybe the answer is to make these tax management/arbitrage services more accessible to everyone and every business to allow the democratic/political/capital system put pressure on the issue. I imagine the overhead is great, but there should be a way consolidate or ease it, I am sure some innovative minds out there will find a way.
It's not just Google who is evil. They're just getting called out on it, because they've pledged not to be evil. It's rather expected of other corporations because we expect them to operate with out morals in search of maximum profit.
But any corporation that takes advantages of tax loop holes, legal or not, is doing evil. By doing that they are taking money out of the pockets of every day citizens in every country who's taxes they avoid paying. Because those citizens have to either make up the difference, or cut vital services such as education, infrastructure, health care and the social safety net. And those citizens can very ill afford to make up the difference.
There are exposes like this done once every few years decrying how low the real tax rate is for some large corporation or other or group there in. Really Google ought not have been singled out by this round. All corporations that do this are being evil. But Google's promised not to be evil -- and for the most part has upheld that -- so they are being targeted.
Really, the most moral course of action here would be to pay the taxes and lobby for the closing of the loopholes. And if they feel the tax rate is too high -- the lowering of the tax rate.
The answer in HN's context should be obvious: It is 'evil' because these techniques have nothing to do with making a superior product, and it is 'evil' because it puts newcomers to a market into an inferior position: they don't have the resources to use the same techniques.
I guess when you as a company claim the high ground ("do no evil")
The slogan wasn't "do no evil", which is impossible, but "don't be evil," which is much closer to being within reach; and its intended audience was Google employees, not people outside the company. Google probably should have aggressively refused to comment on rumors that this slogan was widespread, rather than publicly confirming it.
A cynic might argue that the constant press attacks on Google resulting from this slogan are from people who have resigned themselves to being evil and are angry that someone else has the courage to attempt otherwise.
> Maybe it is the lawyer in me, but why wouldn't any international business do whatever it could legally do to minimize its taxes?
It all comes down to ruining competition which is crucial for capitalism to improve the quality and decrease the cost of services for society. Do many startups have the money to hire a bunch of lawyers to find out the latest tax loophole and the money to setup multiple shell corporations?
Tax loopholes should be closed in law, Google and other corporations have a responsibility to their shareholders - why shouldn't they act within the law to save money?
I remember seeing a fun flow-chart of the IKEA tax avoidance scheme. Didn't have as amusing names as those used in this article though :)
Maybe it is the lawyer in me, but why wouldn't any
international business do whatever it could legally do to
minimize its taxes?
It's the lawyer in you and he's misleading you. It's not a question of doing what they can do. The economist in you should conclude that it is a question of doing what they must do in order to remain competitive. You can't choose to 'do no evil', when all your competitors are doing evil. That road leads only to bankruptcy, as they can undercut your prices, because they pay much lower taxes.
This is one of the examples explaining why capitalism is fundamentally incapable of providing any moral guidelines. It doesn't care about what is right, only about what turns a profit.
OK, so what does all this have to do with Google? Well the problem is that such companies are welcomed when they set up overseas, and great expectations accompany them. And in the short term, there seems to be a distinct increase in prosperity - but people tend to extrapolate the growth trend endlessly into the future, and spend the money almost as fast as they make it. When the inevitable inflation ensues, they tend to feel they got a bad deal and go protectionist or sometimes enact draconian new tax policies. Oh, and the Irish government is also in bad odor with other European countries, who have felt for a while that the country took advantage of its small size to get away with significantly undercutting its neighbors on corporate taxes during the good times, leaving a correspondingly deep fiscal hole now.
Back in California, people look at the overseas investment made by the multinational and conclude that if the expansion actually cost the firm a lot less than imagined, then the favorable domestic tax treatment of the overseas operations (an indirect export subsidy, in effect) essentially amounted to the US taxpayer bankrolling their overseas expansion without any of the benefits coming back to the US Treasury later. But isn't that good for overall US competitiveness? Maybe, but who was Google (or Yahoo, or...) competing with internationally when it set up shop in Europe - Baidu? I can't even name a UK or Euro search competitor of any significance off the top of my head.
So it's not obvious what US taxpayers gained by letting Google out of paying US taxes on Euro/Eastern Hemisphere operations. Sure, Google expanded its operations and brand, and indirectly the economic reach of the USA, but as they were also getting a sweet legal/taxation regime at the other end - much lower than the headline 12.5% corporate tax rate in Ireland - then it seems as if the vast bulk of the benefits went to Google. OK, they have to pay tax somewhere, but Bermuda, like most tax havens, is such a small country that even a tiny slice in 'fees' is a huge feast. Again, like most tax havens, Bermuda's actual contribution to the global economy is almost nil; about the only argument you can make in their favor is that they contribute to increased liquidity.
There's a worthy philosophical debate here about the ultimate economic value of exporting low tax rates. But in the short term, the pragmatic result is that governments of more developed countries feel scammed, because they obeyed the popular wish of investing in things like infrastructure and education in hope of a long-term payoff, and now that they find themselves distinctly short of cash it's hard to explain why the payoff has failed to materialize (or why they didn't manage it very well, when it did). Of course, there's a little bit of hypocrisy going on here - well, actually a lot. Governments are often getting sweetheart deals on the back end; this arguably represents a transfer of wealth from the US to the populations of other countries, even if only in terms of lost wages for jobs that are not location-specific.
As neither the US nor the Irish or Dutch treasuries saw a great direct benefit, routing all the money through Bermuda has the political (not legal) appearance of a money-laundering operation. Particularly in Ireland, where people paying 20-40% in personal income taxes and almost 20% in VAT (sales taxes) are wondering what is the point of having one of the world's lowest rates of corporate tax (12.5%) if the government doesn't even collect most of it from large foreign firms. This is exactly the sort of thing that tends to give people the idea that it might be better to just have their treasury own shares in the company instead, a strategy employed with varying degrees of success in places like Venezuela and France.
I want to make it clear that I personally don't subscribe to the idea of state-owned industry or the idea that you can tax your way to economic success. There are reasons Europe doesn't produce the kind of industrial giants the US does, and why the European software industry is much less competitive than that in the US - they're not all to do with heavy-handed industrial/tax policy or regulation, mind, but those things do play a big part.
But when there is a good deal on offer (such as Ireland's low corporate tax rates, much cited in the US during recent years), the short-term tax savings of trying to further minimize tax liability have to be weighed against the long-term skepticism that manifests at the bottom of a business/economic cycle. Google is a smart company and may decide it has an interest in writing a $500m check or so to the Irish government now, rather than risk being frozen out of the European market in the future by penal regulation or hit with fines from the EU's muscular competition commission. Possibly the US government too, rather than being subjected to excruciating Congressional hearings. At the very least, they are probably going to have to give up using the 'double Irish' method of moving their money around. Bermuda will have to sit through some chilly diplomatic meetings and make some concessions about the transparency of its financial reporting or the accounting standards it uses, as have other tax havens of yore such as Jersey, Monaco and so on.
To sum up, I agree with George that from a legal (and short-term economic) point of view, running profits through Dublin and then putting them through some quirky Dutch-Bermudan slimming diet before running them back through Dublin is an entirely rational course of action. And it may well be a superior moral course of action, if you consider that Google contributes significantly towards the common good by making a wide variety of high-quality services available to the public for nothing - services on which large chunks of the US economy have come to depend, and I include myself in that. I honestly can't think of another company that makes such a generous value proposition, and don't find the price of personally-targeted advertising very onerous.
But from a political point of view, the practice is unsustainable and deeply unwise. Entrepreneurs and fiscal/transactional engineers are a small minority of the population. Some chunk of the population leans left and thinks corporations should be taxed much, much more severely, because the infrastructural foundation of their business model was heavily subsidized by the public. Another chunk leans right and while not being in favor of taxes much, sees no reason why the US taxpayer should be indirectly subsidizing people in other countries like Bermuda or Ireland. Then you have centrist voters who may not understand or care much about the details but are worried about US jobs going abroad, a rising deficit, and can grasp the basic idea that Google is using a legal fiction to reduce tax liability. Go there's a good chance that Google is going to find itself being the national punching bag for the next week or three.
why wouldn't any international business do whatever it could legally do to minimize its taxes?
The argument for not doing so (or at least, not going to such lengths to minimize the tax burden) is political rather than legal. I don't think it's 'evil,' incidentally, so please take the following as descriptive rather than proscriptive!
What happens when a company expands overseas? Well, it's a coup for the receiving country. There's a ribbon-cutting ceremony, speeches are made about the number of jobs it will create, people feel good about the past taxes they paid that went towards educating the workforce, and and there's a general expectation that the country will pick up 'a bit of the action' in three ways: by collecting some taxes from a successful business (pure rent-seeking, but after all that's part of why investing in education and infrastructure seemed like a good idea to begin with); by attracting other businesses in the same sector and getting a 'hub effect,' which will build up a secondary market serving these firms' ancillary needs (eg payroll, new real estate etc.); and a long-term benefit as employees of the Big Foreign Corporation develop world-class skills and later some of them start companies of their own or guide university researchers etc., making the country's economy more competitive and modern.
What happens is a little different. Usually the incoming firm has negotiated a favorable tax regime with the local government, and the long-term benefits of the secondary market and skill development are estimated to be greater than the foregone tax revenue. When I grew up (in Ireland) the usual approach was for the government to give a 10 year tax holiday in return for building a factory and training the employees, on the theory that the business would be OK with paying tax at the normal rate after a decade. But quite a few companies just shut down their factories when the 10 years ran out, because paying taxes was more expensive than setting up anew in some other developing economy and shipping the product. Of course, then the secondary market that had grown up servicing the industrial and consumer demand for local services would collapse.
So gradually there was a shift towards less rent-seeking (by allowing this sort of accounting manipulation) in return for the hope of increased long-term stability in secondary markets and skill growth. Unfortunately IMO, what has happened with a lot of tech and financial companies that moved to Ireland in particular is that that little technology transfer takes place. For example, Microsoft used to be a fairly big employer in both the UK and Ireland (not sure about now), but the bulk of the work was technical support and localization, rather than software engineering. Similarly most of the financial business in Dublin was backoffice processing because it was cheaper to do it there than in London or Paris (plus it gave UK companies an easy in to the European market). Jobs like that are less sticky if the tax regime changes, and while they probably do make the country's economy more competitive the gains are smaller and over a longer term than people anticipate - hence the endless supply of stories about some new location attracting a few tech companies and declaring itself to be 'Silicon _______.'
The secondary markets which provide ancillary services to the firm and its local employees thus do best out of such an arrangement, and a lenient tax regime keeps them going for longer - in practice, as long as wage differentials are sustainable for the parent company, and there isn't an equally capable workforce available to do the task for substantially less. Service jobs (at the foreign firm) are somewhat sticky because you can't move your call center from Dublin to Shanghai - but you might be able to find that in Bangalore. Meanwhile, if enough foreign firms set up shop in a country and a thriving secondary market grows up to service their ancillaries - plant, payroll and infrastructure for the firm itself, housing and consumer services for the happy employees. Of course, this tends to overheat the local economy: if you think the US property boom was out of control, you should have seen the Irish one. The price/earnings ratio for housing in Dublin shot up to 100:1.
Predictably, the party stopped right around the time when the cost of living had inflated wages high enough to make Ireland a less attractive destination for multinationals. Irish people were feeling so prosperous and skilled at making money that nobody wanted to do boring things like farm work or child care, and so the country saw an influx of Polish farmhands and nannies who everyone agreed made great workers. Several multinational firms came to the same conclusion; Dell used to have a manufacturing plant near my hometown in Ireland which was the largest local employer, but decided to close it and open a new one in Poland instead, resulting in the loss of ~2000 jobs. Of course the former employees still have their skills, but assembling PCs on an assembly line turns out not to be all that special, and my understanding is that Dell had a policy of not recruiting for management from the local workforce, or even hiring skilled people who were likely to apply for internally-advertised management positions rather than stay on the assembly line.
(Please bear in mind that I'm drastically oversimplifying here, so as not to make this comment even longer.)
I think it'd be illegal for Google NOT to use tax shelters. They have to maximize shareholder value. They can't just give money away to whoever they feel like for no reason, including to the US Govt.
In Ireland, these kinds of tax breaks are one of the foundations of our economy. They aren't viewed as a way to give a hand out to the big companies, but as a way to create jobs. This article mentions that 2,000 people are employed in Google Dublin. Given Microsoft, Amazon, Intel, IBM and Sun also operate, there's easily 10,000+ people employed thanks to our low tax rate. There are only 1,000,000 people employed in Ireland (small country), so the loss of these 10,000+ jobs (~1%+ of all employees) would be massive.
Ireland has very little industry, very little traditional ways to grow the economy. We all know if it wasn't for the tax breaks these companies wouldn't be here, and that there'd be loads of people out of work.
Leave aside the moral outrage and any sentence that has "should" in it. You're not being rigorous in your analysis.
Next, think of the tax code as a giant bucket of Lego pieces. Google - and many other multinationals (including very small startup tech companies of the type that spring from the loins of YC) - simply assemble the Lego pieces as they choose.
Looked at as a strictly engineering exercise? No big deal. Hire better engineers (people like me) and get better results (cooler tax-Lego structures).
OK, put on your moral outrage hats again. We are finished with the tax engineering. Let's move on to the social engineering. Because that is what we are talking about when we say "X _should_ pay more to support government functions.". Except for a few people we will have general consensus that a government is good and services need to be paid for. It's just a giant "Not out of my wallet!" game now. Sometimes logic, sometimes "Think of the children," sometimes whatever argument you can muster. All of these devices are used to deflect the tax collector's attention to someone else's wallet.
That is how I look at this topic. And from this perspective I derive two conclusions:
- if you don't like the way multinationals create their Lego structures, change what is in the bucket of Lego pieces. That is the job of Congress, not Google.
- if you plan to change the laws, expect the argument to devolve quickly to uninformed "think of the children" arguments because politics is purely that. No A/B testing is done. Statistical analysis is bent to prove a point, not looked at dispassionately to optimize decisions.
Two last points.
- Every dollar Google makes will eventually go out to employees, vendors, and the government. (At the moment they don't pay a dividend, so the shareholders do not get anything directly). A corporation is not some giant Jabba the Hutt that grows bigger to infinity. It is ultimately just a money collector and distributor.
- the particular game they are playing in fact acts as a net revenue transfer mechanism from the US Treasury to the Irish government. I will have to find the article that describes this so clearly. I'm on my phone right now in downtown LA about to give a speech in a few minutes. I'll be back. (Heh. What a disappointment he turned out to be for California).
"Google's practices are very similar to those at countless other global companies operating across a wide range of industries,"
So, why's the article about Google? Shouldn't the article be about "countless global companies" bilking us for billions? I'm astonished at the lack of outrage on this issue every time it comes up.
Because Google have a public image of behaving ethically. Everyone expects banks and evil multinationals to do this kind of thing.
Is it ethical to avoid paying tax as an individual? Many would say no. But when a company does it, they lay their blame on the shareholders and the market. So the more outrage about this subject, the better. Our governments can either raise taxes or lower taxes. But they shouldn't let individuals and business get away with pretending to pay taxes when they're not.
Because "Google has managed to lower its overseas tax rate more than its peers in the technology sector". They're all doing it, but Google is doing it best.
Because countless global companies don't claim to be "not evil".
Anyone Google hires in the UK (up 'til now anyway) has been educated at the expense of the taxpayer, for example. If someone breaks into their offce, the police will show up to investigate. Why shouldn't they pay their fair share?
It's my understanding that the way we've defined fiduciary duty (roughly speaking) requires public corporations to do this if it's legal. Can anyone comment on that?
This is a commonly accepted best practice in corporate accounting. In 2006 the IRS approved Google's transfer pricing arrangements. Also, it's so common that there is a name for it - "The Double Irish". Bloomberg recently had an article on the same topic:
http://www.bloomberg.com/news/2010-05-13/american-companies-...
"The setup lowers Google's overseas tax bill, but it also affects U.S. tax revenues as the government struggles to close a projected $1.4 trillion budget gap."
It's a ridiculous notion that any single corporation's tax contribution will put even the slightest dent in the budget deficit. Government spending is like gas in a vacuum, it will expand to fill whatever space you give it.
I was going to leave a comment about corporate citizens not doing their fair share in America, but that got me thinking: should corporations pay tax? I'm not asking this rhetorically to make a point. Really, should they?
I would imagine that whatever profits are passed along to shareholders are taxed as capital gains. So, while it is a great headline to say Google pays 2.4% corporate tax, might it also be fair to say "Google shareholders pay 2.4% additional tax on top of the regular tax they pay on their income from capital ownership."?
Now, I'm not at all aware of how capital gains taxes and wage-style income taxes compare, and my inner liberal slant / desire for social justice inclines me to believe that those with the means should pay MORE than their "fair" share.
But I can't help but think that, at least at a theoretical level, there is someone, somewhere, who makes their living investing in corporations - lubricating the gears of capital society - but isn't phenomenally wealthy, and actually pays a total higher % of their "income" than a wage slave making a comparable amount of money. VCs? Angels? Wouldn't we as a society want to reward this behavior?
I can just as easily see the other side; maybe in theory this is right, but the reality is that capital gains are the domain of the ultra-wealthy, and corporations are frequently used as tax havens, pushing money around from holding company to holding company. If the corporation buys something and the owner uses it, that's an effective way to minimize your total "income" without losing the benefits of your wealthy lifestyle.
I would love to hear thoughts on this, particularly from anyone more familiar with tax law.
Ireland usually gets a bad rep from this but companies like Intel, Google and MS are the biggest employers in the country. If they were there for purely tax reasons you'd expect them to be shell companies, rather than having multiple fabs in the case of Intel or a few thousand employees in the case of Google.
Startup idea: Company that cheaply sets up individuals/small companies to evade taxes in the same way big corporations do. You pay a subscription fee or something and they fill out the returns and set up a PO Box in Bermuda or whatever.
Seriously! Reading the article made me think, "wow, trying to piece together where companies go and who owns what sounds like fun!" (No, I'm not a lawyer.) Certainly sounds like an optimization problem where a computer could do an especially good job (assuming that you can represent everything efficiently).
I had a distinct Randroid phase where I thought it was almost a moral obligation to avoid taxation. Now things are fuzzier for me.
I make a truly decent wage. Not an earth-shattering one but a wage that beat the hell out of anything my mom made while I was growing up. I am a very fortunate man.
Heinlein wrote a thing about freedom:
"In terms of morals there is no such thing as a ‘state.’ Just men. Individuals. Each responsible for his own acts. I am free, no matter what rules surround me. If I find them tolerable, I tolerate them; if I find them too obnoxious, I break them. I am free, because I know that I alone am morally responsible for everything that I do."
In my case, I find taxation to be tolerable. It finances things like education for people with fewer advantages than I have right now. Ideally, a much bigger proportion of my taxes would go there. It also finances stupid things, like the TSA and DHS, and that's unfortunate. It financed military adventure in Iraq, which I find repugnant.
But I want to live in a society where you're not screwed based on the number you draw in the ovarian lottery. Where you can be taught useful skills to make the most of the opportunities you find. Where you don't have to pay for this privilege – until later, when you pay taxes. I'm not aware of any scalable solution to this that doesn't involve taxation of my earnings.
So I tolerate the imperfect because it's what I've got. Until there's a better way to ensure that the next generation isn't screwed by bad luck, I can't avoid that taxes are how I can do my part for the moment.
Meanwhile, Google is free to break or bend the rules, too. If they share my values on this subject, I'd hope they'd do their part in some other way. But that's up to them.
Why don't you spend some of your own money directly on the causes that you like? About 1/3 of American taxes go to the military, and another 1/3 goes to non-means tested social support programs (not necessarily benefiting the poor). The amount going to better education opportunities for poor people is absolutely negligible, especially since the sitting government is hostile to school choice.
What this should signal, is that the US should lower its corporate tax rate. Even just making it competitive with other developed nations would probably generate more revenue for the government. And though it would still be higher than the effective rate many companies pay with all these transfer schemes, it would make the hassle less worthwhile.
However, what it will actually cause lawmakers to do is increase regulations to make income transfers like this illegal, and leave the corporate tax rate as is.
We hear corporate leaders (Gates, Brin, et al) lecture on social responsibility, yet they undercut the very structure of society by skirting tax laws.
How will we build universities, roads, public infrastructure without tax revenue?
Now the hacker in me says, knowing how corporations behave, how do we fix this? Do we have tax laws that encourage corps to pass along more earnings to share holders? Implement 0% corporate tax rate and then capture tax revenue out of individual capital gains and taxes on dividends?
It's one thing to rage about this, it's another to come up with a solution.
I would trust google to spend its money more efficiently than any government. People tend to talk about government as the only socially responsible charity in town and the money not forcibly taken is somehow wasted in some black hole.
Am I one of the few who doesn't see a problem with this? If our tax structure is so f'd up that it allows for this, we need to change it. In the meantime, why wouldn't Google minimize its tax liability?
If you're an entrepreneur and are against this, I hope you voluntarily don't take the tax breaks afforded to you, or else you're a hypocrite. Lunch with business partners? Better not write that off. Your internet or cell-phone? Don't write that off either. Part of your apartment where you code for 5 hours a day? Don't write that off either.
Has anyone thought of or seen a startup designed to bring these kinds of tax advantages to average citizens?
There would be a real value in streamlining this legal process of creating shell companies or whatever is needed in some sort of mass market approach.
It seems like the only people this is available to are big companies or high net worth individuals who can afford expensive one-on-one consultation with accountants/lawyers.
Tax law changes all the time. It is a cat and mouse game. Loopholes are closed, lawyers see the statue which closed them and come up with other loopholes which are closed...
A start up could possibly hire such lawyers to do what they do for national for the general public, but possibly each individual has his own requirement and tax lawyers are quite expensive.
Does Google not pay plenty in income tax on its employees, who in fact do generate that precious intellectual property? Looking only at taxed profits is misleading.
They follow the letter of the law. If the law is bad, change the law, don't bash Google for managing it's tax liability cost effectively and accuse them of being evil.
Are we missing something here, maybe? Google, as a legal entity, is really nothing more than a piece of paper in someone's filing cabinet. As a corporation, it is just a legal vehicle for shuffling around money and managing liability and ownership.
On the other hand, the people who work for Google are ... people. And I'm sure the great majority of them pay plenty of taxes (income, payroll, etc.) in whatever jurisdictions they live in.
One of the primary functions of Google-the-entity, is to get that money to the people. In doing so, Google-the-entity pays very little tax, but the people pay lots. So the money is taxed, government programs are supported, and all is well.
To put it a different way, Google's tax strategy can be considered as a way to minimize the effect of governments taxing their people twice.
I think it is a double standard that US companies get to avoid taxation worldwide while US individuals have to be taxed on worldwide earnings (regardless if it was earned in the US).
To me, it's insane that the US government feels that this is reasonable.
[+] [-] grellas|15 years ago|reply
Maybe it is the lawyer in me, but why wouldn't any international business do whatever it could legally do to minimize its taxes? I understand that governments might want to consider these as loopholes and seek to end the right of U.S. taxpayers to avail themselves of these tax-minimization strategies. But, as long as it is legal, why should a company voluntarily seek to expose itself to higher tax rates when it has the choice not to?
I guess when you as a company claim the high ground ("do no evil"), you will have people making their own judgments about what ethical standard ought to govern your conduct and this would explain this professor's remark. By that measure, though, one could argue that companies such as Google should seek to attribute all their revenues to California because that is where their main intellectual property development efforts have occurred and hence pay corporate tax rates at one of the highest rates around simply because they "owe" it to California.
I get this question all the time from web-based startups: why run our revenues through a high-tax state when we have the option of running them through all sorts of lower-tax venues and saving on taxes? The universal answer for smaller companies is "set your company up in a way that let's you pay the least tax you can legally."
Why should Google be held to a different standard on penalty of having its perfectly legal actions castigated as "evil"? Is it the view of some or many in the HN community, for example, that a private enterprise has a form of "social responsibility" to voluntarily subject itself to the tax rates of whatever domicile it happens to have its major operations in (in this case, California) when it legally has the option not to do so? That seems unwise by free enterprise standards and I am genuinely curious to know why refusing to do this would be called "evil."
[+] [-] lionhearted|15 years ago|reply
When taxes come up, it tends not to be a well-thought, cohesive, pros-and-cons thing. It tends to be an emotional/identity thing. Some people think and almost always argue it'd be a good thing if companies gave more money over to governments.
Me, I think it's very good for the world on every level for Google to pay less taxes. They're hiring the best people, acquiring companies and giving liquidity to founders, run amazing free services (search, Gmail, Google Earth, Google Maps, Google Finance, Google News, Google Voice, Google Reader, Feedburner, many many others). Also, they're internally investing in energy and robotics like the auto-driven cars thing, and their high level personnel seem to invest really well too (like in genetics research). Anyone who thinks that England would do a better job with the money than Google hasn't been to England, or hasn't thought this through very much.
[+] [-] roc|15 years ago|reply
By gaming the tax systems, they're not only flipping the bird to the ladder they stood upon to create Google, but they're strangling the future pipeline for the very government products they depend upon.
And people only call Google out for crap like this because they insist on running around claiming they "Do No Evil". They set the bar higher for themselves. If they didn't want it there, they should shut up about it already.
[+] [-] nhebb|15 years ago|reply
[+] [-] SriniK|15 years ago|reply
Apple operates Braeburn Capital http://en.wikipedia.org/wiki/Braeburn_Capital Microsoft is known for borrowing its own money from foreign countries to avoid repatriating tax. Because borrowing is cheaper than paying repatriation tax. Broadcom is known for using R&D tax credits(for spending money in US for R&D) and Singapore and other lower tax states when it comes to selling goods and realizing income. Even Oil/financial companies are known to set up shops in overseas just to avoid paying higher taxes.
When someone's career is to find ways to reduce taxes, companies will find whatever way to achieve it.
[+] [-] charlief|15 years ago|reply
Maybe the answer is to make these tax management/arbitrage services more accessible to everyone and every business to allow the democratic/political/capital system put pressure on the issue. I imagine the overhead is great, but there should be a way consolidate or ease it, I am sure some innovative minds out there will find a way.
[+] [-] dbingham|15 years ago|reply
But any corporation that takes advantages of tax loop holes, legal or not, is doing evil. By doing that they are taking money out of the pockets of every day citizens in every country who's taxes they avoid paying. Because those citizens have to either make up the difference, or cut vital services such as education, infrastructure, health care and the social safety net. And those citizens can very ill afford to make up the difference.
There are exposes like this done once every few years decrying how low the real tax rate is for some large corporation or other or group there in. Really Google ought not have been singled out by this round. All corporations that do this are being evil. But Google's promised not to be evil -- and for the most part has upheld that -- so they are being targeted.
Really, the most moral course of action here would be to pay the taxes and lobby for the closing of the loopholes. And if they feel the tax rate is too high -- the lowering of the tax rate.
[+] [-] vegai|15 years ago|reply
[+] [-] kragen|15 years ago|reply
The slogan wasn't "do no evil", which is impossible, but "don't be evil," which is much closer to being within reach; and its intended audience was Google employees, not people outside the company. Google probably should have aggressively refused to comment on rumors that this slogan was widespread, rather than publicly confirming it.
A cynic might argue that the constant press attacks on Google resulting from this slogan are from people who have resigned themselves to being evil and are angry that someone else has the courage to attempt otherwise.
[+] [-] codexon|15 years ago|reply
It all comes down to ruining competition which is crucial for capitalism to improve the quality and decrease the cost of services for society. Do many startups have the money to hire a bunch of lawyers to find out the latest tax loophole and the money to setup multiple shell corporations?
I think not.
[+] [-] metabrew|15 years ago|reply
Tax loopholes should be closed in law, Google and other corporations have a responsibility to their shareholders - why shouldn't they act within the law to save money?
I remember seeing a fun flow-chart of the IKEA tax avoidance scheme. Didn't have as amusing names as those used in this article though :)
[+] [-] ced|15 years ago|reply
As a lawyer, what's your perspective on lobbying?
If the laws are ultimately chosen by the companies and the wealthiest, then I don't agree that "anything legal is fair".
[+] [-] Confusion|15 years ago|reply
This is one of the examples explaining why capitalism is fundamentally incapable of providing any moral guidelines. It doesn't care about what is right, only about what turns a profit.
[+] [-] rue|15 years ago|reply
Evil is a moral judgment, not a legal one.
[+] [-] robk|15 years ago|reply
Many people confuse the latter for the original statement, when it was in fact the former.
[+] [-] anigbrowl|15 years ago|reply
OK, so what does all this have to do with Google? Well the problem is that such companies are welcomed when they set up overseas, and great expectations accompany them. And in the short term, there seems to be a distinct increase in prosperity - but people tend to extrapolate the growth trend endlessly into the future, and spend the money almost as fast as they make it. When the inevitable inflation ensues, they tend to feel they got a bad deal and go protectionist or sometimes enact draconian new tax policies. Oh, and the Irish government is also in bad odor with other European countries, who have felt for a while that the country took advantage of its small size to get away with significantly undercutting its neighbors on corporate taxes during the good times, leaving a correspondingly deep fiscal hole now.
Back in California, people look at the overseas investment made by the multinational and conclude that if the expansion actually cost the firm a lot less than imagined, then the favorable domestic tax treatment of the overseas operations (an indirect export subsidy, in effect) essentially amounted to the US taxpayer bankrolling their overseas expansion without any of the benefits coming back to the US Treasury later. But isn't that good for overall US competitiveness? Maybe, but who was Google (or Yahoo, or...) competing with internationally when it set up shop in Europe - Baidu? I can't even name a UK or Euro search competitor of any significance off the top of my head.
So it's not obvious what US taxpayers gained by letting Google out of paying US taxes on Euro/Eastern Hemisphere operations. Sure, Google expanded its operations and brand, and indirectly the economic reach of the USA, but as they were also getting a sweet legal/taxation regime at the other end - much lower than the headline 12.5% corporate tax rate in Ireland - then it seems as if the vast bulk of the benefits went to Google. OK, they have to pay tax somewhere, but Bermuda, like most tax havens, is such a small country that even a tiny slice in 'fees' is a huge feast. Again, like most tax havens, Bermuda's actual contribution to the global economy is almost nil; about the only argument you can make in their favor is that they contribute to increased liquidity.
There's a worthy philosophical debate here about the ultimate economic value of exporting low tax rates. But in the short term, the pragmatic result is that governments of more developed countries feel scammed, because they obeyed the popular wish of investing in things like infrastructure and education in hope of a long-term payoff, and now that they find themselves distinctly short of cash it's hard to explain why the payoff has failed to materialize (or why they didn't manage it very well, when it did). Of course, there's a little bit of hypocrisy going on here - well, actually a lot. Governments are often getting sweetheart deals on the back end; this arguably represents a transfer of wealth from the US to the populations of other countries, even if only in terms of lost wages for jobs that are not location-specific.
As neither the US nor the Irish or Dutch treasuries saw a great direct benefit, routing all the money through Bermuda has the political (not legal) appearance of a money-laundering operation. Particularly in Ireland, where people paying 20-40% in personal income taxes and almost 20% in VAT (sales taxes) are wondering what is the point of having one of the world's lowest rates of corporate tax (12.5%) if the government doesn't even collect most of it from large foreign firms. This is exactly the sort of thing that tends to give people the idea that it might be better to just have their treasury own shares in the company instead, a strategy employed with varying degrees of success in places like Venezuela and France.
I want to make it clear that I personally don't subscribe to the idea of state-owned industry or the idea that you can tax your way to economic success. There are reasons Europe doesn't produce the kind of industrial giants the US does, and why the European software industry is much less competitive than that in the US - they're not all to do with heavy-handed industrial/tax policy or regulation, mind, but those things do play a big part.
But when there is a good deal on offer (such as Ireland's low corporate tax rates, much cited in the US during recent years), the short-term tax savings of trying to further minimize tax liability have to be weighed against the long-term skepticism that manifests at the bottom of a business/economic cycle. Google is a smart company and may decide it has an interest in writing a $500m check or so to the Irish government now, rather than risk being frozen out of the European market in the future by penal regulation or hit with fines from the EU's muscular competition commission. Possibly the US government too, rather than being subjected to excruciating Congressional hearings. At the very least, they are probably going to have to give up using the 'double Irish' method of moving their money around. Bermuda will have to sit through some chilly diplomatic meetings and make some concessions about the transparency of its financial reporting or the accounting standards it uses, as have other tax havens of yore such as Jersey, Monaco and so on.
To sum up, I agree with George that from a legal (and short-term economic) point of view, running profits through Dublin and then putting them through some quirky Dutch-Bermudan slimming diet before running them back through Dublin is an entirely rational course of action. And it may well be a superior moral course of action, if you consider that Google contributes significantly towards the common good by making a wide variety of high-quality services available to the public for nothing - services on which large chunks of the US economy have come to depend, and I include myself in that. I honestly can't think of another company that makes such a generous value proposition, and don't find the price of personally-targeted advertising very onerous.
But from a political point of view, the practice is unsustainable and deeply unwise. Entrepreneurs and fiscal/transactional engineers are a small minority of the population. Some chunk of the population leans left and thinks corporations should be taxed much, much more severely, because the infrastructural foundation of their business model was heavily subsidized by the public. Another chunk leans right and while not being in favor of taxes much, sees no reason why the US taxpayer should be indirectly subsidizing people in other countries like Bermuda or Ireland. Then you have centrist voters who may not understand or care much about the details but are worried about US jobs going abroad, a rising deficit, and can grasp the basic idea that Google is using a legal fiction to reduce tax liability. Go there's a good chance that Google is going to find itself being the national punching bag for the next week or three.
[+] [-] anigbrowl|15 years ago|reply
The argument for not doing so (or at least, not going to such lengths to minimize the tax burden) is political rather than legal. I don't think it's 'evil,' incidentally, so please take the following as descriptive rather than proscriptive!
What happens when a company expands overseas? Well, it's a coup for the receiving country. There's a ribbon-cutting ceremony, speeches are made about the number of jobs it will create, people feel good about the past taxes they paid that went towards educating the workforce, and and there's a general expectation that the country will pick up 'a bit of the action' in three ways: by collecting some taxes from a successful business (pure rent-seeking, but after all that's part of why investing in education and infrastructure seemed like a good idea to begin with); by attracting other businesses in the same sector and getting a 'hub effect,' which will build up a secondary market serving these firms' ancillary needs (eg payroll, new real estate etc.); and a long-term benefit as employees of the Big Foreign Corporation develop world-class skills and later some of them start companies of their own or guide university researchers etc., making the country's economy more competitive and modern.
What happens is a little different. Usually the incoming firm has negotiated a favorable tax regime with the local government, and the long-term benefits of the secondary market and skill development are estimated to be greater than the foregone tax revenue. When I grew up (in Ireland) the usual approach was for the government to give a 10 year tax holiday in return for building a factory and training the employees, on the theory that the business would be OK with paying tax at the normal rate after a decade. But quite a few companies just shut down their factories when the 10 years ran out, because paying taxes was more expensive than setting up anew in some other developing economy and shipping the product. Of course, then the secondary market that had grown up servicing the industrial and consumer demand for local services would collapse.
So gradually there was a shift towards less rent-seeking (by allowing this sort of accounting manipulation) in return for the hope of increased long-term stability in secondary markets and skill growth. Unfortunately IMO, what has happened with a lot of tech and financial companies that moved to Ireland in particular is that that little technology transfer takes place. For example, Microsoft used to be a fairly big employer in both the UK and Ireland (not sure about now), but the bulk of the work was technical support and localization, rather than software engineering. Similarly most of the financial business in Dublin was backoffice processing because it was cheaper to do it there than in London or Paris (plus it gave UK companies an easy in to the European market). Jobs like that are less sticky if the tax regime changes, and while they probably do make the country's economy more competitive the gains are smaller and over a longer term than people anticipate - hence the endless supply of stories about some new location attracting a few tech companies and declaring itself to be 'Silicon _______.'
The secondary markets which provide ancillary services to the firm and its local employees thus do best out of such an arrangement, and a lenient tax regime keeps them going for longer - in practice, as long as wage differentials are sustainable for the parent company, and there isn't an equally capable workforce available to do the task for substantially less. Service jobs (at the foreign firm) are somewhat sticky because you can't move your call center from Dublin to Shanghai - but you might be able to find that in Bangalore. Meanwhile, if enough foreign firms set up shop in a country and a thriving secondary market grows up to service their ancillaries - plant, payroll and infrastructure for the firm itself, housing and consumer services for the happy employees. Of course, this tends to overheat the local economy: if you think the US property boom was out of control, you should have seen the Irish one. The price/earnings ratio for housing in Dublin shot up to 100:1.
Predictably, the party stopped right around the time when the cost of living had inflated wages high enough to make Ireland a less attractive destination for multinationals. Irish people were feeling so prosperous and skilled at making money that nobody wanted to do boring things like farm work or child care, and so the country saw an influx of Polish farmhands and nannies who everyone agreed made great workers. Several multinational firms came to the same conclusion; Dell used to have a manufacturing plant near my hometown in Ireland which was the largest local employer, but decided to close it and open a new one in Poland instead, resulting in the loss of ~2000 jobs. Of course the former employees still have their skills, but assembling PCs on an assembly line turns out not to be all that special, and my understanding is that Dell had a policy of not recruiting for management from the local workforce, or even hiring skilled people who were likely to apply for internally-advertised management positions rather than stay on the assembly line.
(Please bear in mind that I'm drastically oversimplifying here, so as not to make this comment even longer.)
[+] [-] xenophanes|15 years ago|reply
[+] [-] rmc|15 years ago|reply
Ireland has very little industry, very little traditional ways to grow the economy. We all know if it wasn't for the tax breaks these companies wouldn't be here, and that there'd be loads of people out of work.
[+] [-] philiphodgen|15 years ago|reply
Leave aside the moral outrage and any sentence that has "should" in it. You're not being rigorous in your analysis.
Next, think of the tax code as a giant bucket of Lego pieces. Google - and many other multinationals (including very small startup tech companies of the type that spring from the loins of YC) - simply assemble the Lego pieces as they choose.
Looked at as a strictly engineering exercise? No big deal. Hire better engineers (people like me) and get better results (cooler tax-Lego structures).
OK, put on your moral outrage hats again. We are finished with the tax engineering. Let's move on to the social engineering. Because that is what we are talking about when we say "X _should_ pay more to support government functions.". Except for a few people we will have general consensus that a government is good and services need to be paid for. It's just a giant "Not out of my wallet!" game now. Sometimes logic, sometimes "Think of the children," sometimes whatever argument you can muster. All of these devices are used to deflect the tax collector's attention to someone else's wallet.
That is how I look at this topic. And from this perspective I derive two conclusions:
- if you don't like the way multinationals create their Lego structures, change what is in the bucket of Lego pieces. That is the job of Congress, not Google.
- if you plan to change the laws, expect the argument to devolve quickly to uninformed "think of the children" arguments because politics is purely that. No A/B testing is done. Statistical analysis is bent to prove a point, not looked at dispassionately to optimize decisions.
Two last points.
- Every dollar Google makes will eventually go out to employees, vendors, and the government. (At the moment they don't pay a dividend, so the shareholders do not get anything directly). A corporation is not some giant Jabba the Hutt that grows bigger to infinity. It is ultimately just a money collector and distributor.
- the particular game they are playing in fact acts as a net revenue transfer mechanism from the US Treasury to the Irish government. I will have to find the article that describes this so clearly. I'm on my phone right now in downtown LA about to give a speech in a few minutes. I'll be back. (Heh. What a disappointment he turned out to be for California).
[+] [-] wallflower|15 years ago|reply
http://en.wikipedia.org/wiki/IKEA
[+] [-] jbooth|15 years ago|reply
"Google's practices are very similar to those at countless other global companies operating across a wide range of industries,"
So, why's the article about Google? Shouldn't the article be about "countless global companies" bilking us for billions? I'm astonished at the lack of outrage on this issue every time it comes up.
[+] [-] dtf|15 years ago|reply
Is it ethical to avoid paying tax as an individual? Many would say no. But when a company does it, they lay their blame on the shareholders and the market. So the more outrage about this subject, the better. Our governments can either raise taxes or lower taxes. But they shouldn't let individuals and business get away with pretending to pay taxes when they're not.
[+] [-] jeroen|15 years ago|reply
[+] [-] gaius|15 years ago|reply
Anyone Google hires in the UK (up 'til now anyway) has been educated at the expense of the taxpayer, for example. If someone breaks into their offce, the police will show up to investigate. Why shouldn't they pay their fair share?
[+] [-] karl11|15 years ago|reply
[+] [-] llimllib|15 years ago|reply
It's my understanding that the way we've defined fiduciary duty (roughly speaking) requires public corporations to do this if it's legal. Can anyone comment on that?
[+] [-] benmccann|15 years ago|reply
[+] [-] nysauhem|15 years ago|reply
It's a ridiculous notion that any single corporation's tax contribution will put even the slightest dent in the budget deficit. Government spending is like gas in a vacuum, it will expand to fill whatever space you give it.
[+] [-] joshklein|15 years ago|reply
I would imagine that whatever profits are passed along to shareholders are taxed as capital gains. So, while it is a great headline to say Google pays 2.4% corporate tax, might it also be fair to say "Google shareholders pay 2.4% additional tax on top of the regular tax they pay on their income from capital ownership."?
Now, I'm not at all aware of how capital gains taxes and wage-style income taxes compare, and my inner liberal slant / desire for social justice inclines me to believe that those with the means should pay MORE than their "fair" share.
But I can't help but think that, at least at a theoretical level, there is someone, somewhere, who makes their living investing in corporations - lubricating the gears of capital society - but isn't phenomenally wealthy, and actually pays a total higher % of their "income" than a wage slave making a comparable amount of money. VCs? Angels? Wouldn't we as a society want to reward this behavior?
I can just as easily see the other side; maybe in theory this is right, but the reality is that capital gains are the domain of the ultra-wealthy, and corporations are frequently used as tax havens, pushing money around from holding company to holding company. If the corporation buys something and the owner uses it, that's an effective way to minimize your total "income" without losing the benefits of your wealthy lifestyle.
I would love to hear thoughts on this, particularly from anyone more familiar with tax law.
[+] [-] duke_sam|15 years ago|reply
[+] [-] dangrover|15 years ago|reply
[+] [-] froydnj|15 years ago|reply
[+] [-] barmstrong|15 years ago|reply
I will say that this seems like a company that should be started by lawyers and not programmers though.
[+] [-] danilocampos|15 years ago|reply
I make a truly decent wage. Not an earth-shattering one but a wage that beat the hell out of anything my mom made while I was growing up. I am a very fortunate man.
Heinlein wrote a thing about freedom:
"In terms of morals there is no such thing as a ‘state.’ Just men. Individuals. Each responsible for his own acts. I am free, no matter what rules surround me. If I find them tolerable, I tolerate them; if I find them too obnoxious, I break them. I am free, because I know that I alone am morally responsible for everything that I do."
In my case, I find taxation to be tolerable. It finances things like education for people with fewer advantages than I have right now. Ideally, a much bigger proportion of my taxes would go there. It also finances stupid things, like the TSA and DHS, and that's unfortunate. It financed military adventure in Iraq, which I find repugnant.
But I want to live in a society where you're not screwed based on the number you draw in the ovarian lottery. Where you can be taught useful skills to make the most of the opportunities you find. Where you don't have to pay for this privilege – until later, when you pay taxes. I'm not aware of any scalable solution to this that doesn't involve taxation of my earnings.
So I tolerate the imperfect because it's what I've got. Until there's a better way to ensure that the next generation isn't screwed by bad luck, I can't avoid that taxes are how I can do my part for the moment.
Meanwhile, Google is free to break or bend the rules, too. If they share my values on this subject, I'd hope they'd do their part in some other way. But that's up to them.
[+] [-] jacoblyles|15 years ago|reply
Think with your head, not your heart.
[+] [-] karl11|15 years ago|reply
However, what it will actually cause lawmakers to do is increase regulations to make income transfers like this illegal, and leave the corporate tax rate as is.
[+] [-] pragmatic|15 years ago|reply
http://www.google.com/intl/zh-CN/corporate/responsibility_en...
"Look at how great we are" type giving: http://www.prnewswire.com/news-releases/the-brin-wojcicki-fo...
We hear corporate leaders (Gates, Brin, et al) lecture on social responsibility, yet they undercut the very structure of society by skirting tax laws.
How will we build universities, roads, public infrastructure without tax revenue?
Now the hacker in me says, knowing how corporations behave, how do we fix this? Do we have tax laws that encourage corps to pass along more earnings to share holders? Implement 0% corporate tax rate and then capture tax revenue out of individual capital gains and taxes on dividends?
It's one thing to rage about this, it's another to come up with a solution.
[+] [-] elai|15 years ago|reply
[+] [-] dennisgorelik|15 years ago|reply
[+] [-] jonpaul|15 years ago|reply
If you're an entrepreneur and are against this, I hope you voluntarily don't take the tax breaks afforded to you, or else you're a hypocrite. Lunch with business partners? Better not write that off. Your internet or cell-phone? Don't write that off either. Part of your apartment where you code for 5 hours a day? Don't write that off either.
[+] [-] barmstrong|15 years ago|reply
There would be a real value in streamlining this legal process of creating shell companies or whatever is needed in some sort of mass market approach.
It seems like the only people this is available to are big companies or high net worth individuals who can afford expensive one-on-one consultation with accountants/lawyers.
[+] [-] Andrew_Quentin|15 years ago|reply
A start up could possibly hire such lawyers to do what they do for national for the general public, but possibly each individual has his own requirement and tax lawyers are quite expensive.
[+] [-] aristidb|15 years ago|reply
[+] [-] ceejayoz|15 years ago|reply
If I steal a couch from a furniture store, I don't get to defend myself in court by saying I bought a table from them.
[+] [-] charlief|15 years ago|reply
http://www.freshfields.com/publications/pdfs/2007/boyle.pdf
http://faculty.chicagobooth.edu/austan.goolsbee/research/mun...
http://ideas.repec.org/a/eee/pubeco/v93y2009i1-2p142-159.htm...
[+] [-] hop|15 years ago|reply
[+] [-] ggchappell|15 years ago|reply
On the other hand, the people who work for Google are ... people. And I'm sure the great majority of them pay plenty of taxes (income, payroll, etc.) in whatever jurisdictions they live in.
One of the primary functions of Google-the-entity, is to get that money to the people. In doing so, Google-the-entity pays very little tax, but the people pay lots. So the money is taxed, government programs are supported, and all is well.
To put it a different way, Google's tax strategy can be considered as a way to minimize the effect of governments taxing their people twice.
[+] [-] klochner|15 years ago|reply
The same goes for Goldman, et al., unless congress passes another "repatriation holiday" in the name of stimulus.
[+] [-] newman314|15 years ago|reply
To me, it's insane that the US government feels that this is reasonable.