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Google used a tax loophole to shelter $19.2B

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Re: Google used a tax loophole to shelter $19.2B

#31

Post by debt »

thrill wrote: post #6

There are no such things as tax loopholes. There is compliance with the law as Congress has written with all of their agendas, and there is noncompliance.

Incorrect.

Loopholes are the side effect crappily written laws. And in many cases, loopholes are unearthed by an army of high-paid law firms. Unintentionally created, but very intentionally exploited.

As these loopholes are closed(again, because they're unintentional), these mega corporations are moving around their money from tax haven to tax haven; they're actively exploiting these loopholes in various countries.

It is depriving these countries of very real income. Ya know to pay for the roads, emergency systems, mental health clinics, etc. of ordinary people.

So, sure, it's legal in the same way the many multitudes of immoral things of history were legal.

Re: Google used a tax loophole to shelter $19.2B

#32

Post by monktastic1 »

cryptoz wrote: post #29
cantrip wrote: post #24

Earlier quoted context omitted.

Exactly. Do you think shareholders would stand for a company paying $19.2B more in taxes than they should? That would be absurdly negligent on the part of everyone leading the company. Would an individual pay $500 more in taxes than they are required to out of the goodness of their heart and belief in the American government? Don't indict corporations for following the tax code, change the laws.

Obviously the law should be changed. But your comments are otherwise incorrect. > Do you think shareholders would stand for a company paying $19.2B more in taxes than they should? What do you mean, 'should'? They 'should' pay the amount that is expected of them - the amount proportional to their profits. Each corporation should pay what is expected of them in full. This would produce is vastly more stable economy whi…

> What do you mean, 'should'?

I read it as something like 'are required to by law.'

> Sure they would. Why not? I've done this. Canadian government and US government. It doesn't make sense not to do this sometimes.

I'm curious, what was your reasoning for paying $500 more than expected? And in what way did it "not make sense" to not do that?

Re: Google used a tax loophole to shelter $19.2B

#33

Post by saas_co_de »

thrill wrote: post #6

There are no such things as tax loopholes. There is compliance with the law as Congress has written with all of their agendas, and there is noncompliance.

It is not at all that cut and dried.

Engaging in sham business activity for the specific purpose of tax avoidance is not legal. Many of these tax schemes could be declared invalid at the discretion of the IRS (or other governments - the EU already has in some cases).

These companies are not complying with tax law. They are cheating and paying bribes or doing favors to get away with it, and everyone knows it.

Re: Google used a tax loophole to shelter $19.2B

#34

Post by refurb »

gowld wrote: post #16
thrill wrote: post #6

There are no such things as tax loopholes. There is compliance with the law as Congress has written with all of their agendas, and there is noncompliance.

Loopholes exist, because language is imprecise and imperfect. Laws have loopholes like code has bugs. In this particular case, it's probably not a loophole, since the behavior in question has been known for many years, and the US government has made no effort to change how the law fails to tax overseas income of corporations. In many cases, tax law says or (implies) "you pay $X to us, but you get credit for tax paid…

Yes language is imprecise and imperfect and that is why we have tax courts to clarify it.

If a company misinterprets tax code, they will eventually have to pay the price for it.

And I feel like "loophole" doesn't do justice to the authority the US gov't has.

If Congress can't get their act together enough to write clear tax law, then they should go back and fix it. Don't blame the company for imperfect and imprecise language - they didn't write it.

Re: Google used a tax loophole to shelter $19.2B

#35

Post by flor1s »

debt wrote: post #31
thrill wrote: post #6

There are no such things as tax loopholes. There is compliance with the law as Congress has written with all of their agendas, and there is noncompliance.

Incorrect. Loopholes are the side effect crappily written laws. And in many cases, loopholes are unearthed by an army of high-paid law firms. Unintentionally created, but very intentionally exploited. As these loopholes are closed(again, because they're unintentional), these mega corporations are moving around their money from tax haven to tax haven; they're actively exploiting these loopholes in various countries. I…

Companies pay low tax in one country for money they earned in another country. Almost every multinational does that, there are buildings in The Netherlands in which a dozen of international firms have a postbox just so they can redirect their revenue and pay the lowest tax on it.

Being Dutch, I am ashamed that our government does not do anything to change the laws which allow for this to happen.

Re: Google used a tax loophole to shelter $19.2B

#36

Post by cryptoz »

monktastic1 wrote: post #32
cryptoz wrote: post #29

Earlier quoted context omitted.

Obviously the law should be changed. But your comments are otherwise incorrect. > Do you think shareholders would stand for a company paying $19.2B more in taxes than they should? What do you mean, 'should'? They 'should' pay the amount that is expected of them - the amount proportional to their profits. Each corporation should pay what is expected of them in full. This would produce is vastly more stable economy whi…

> What do you mean, 'should'? I read it as something like 'are required to by law.' > Sure they would. Why not? I've done this. Canadian government and US government. It doesn't make sense not to do this sometimes. I'm curious, what was your reasoning for paying $500 more than expected? And in what way did it "not make sense" to not do that?

> I read it as something like 'are required to by law.'

I would have said 'have to' to be required by law. 'Should' implies a moral code, a desire to do right and good. In this case, Google absolutely 'should' pay those taxes.

> I'm curious, what was your reasoning for paying $500 more than expected? And in what way did it "not make sense" to not do that?

If you have more money than necessary, and you know that others don't, and you know that a good portion of your taxes goes to helping others, the rational thing to do could be to help out and not attempt to claim every tax break and benefit you could. I'm not saying that's always right, I'm saying it can be rational for people to do it.

Paying as little taxes as possible to avoid jail is absolutely not the rational move for people or corporations. This is a classic tragedy of the commons: if people and companies paid taxes as due, we would all be better off for it. The rational move is to fully pay all expected taxes, not use offshore secret hideouts to avoid improving your own country.

Re: Google used a tax loophole to shelter $19.2B

#37

Post by refurb »

saas_co_de wrote: post #33
thrill wrote: post #6

There are no such things as tax loopholes. There is compliance with the law as Congress has written with all of their agendas, and there is noncompliance.

It is not at all that cut and dried. Engaging in sham business activity for the specific purpose of tax avoidance is not legal. Many of these tax schemes could be declared invalid at the discretion of the IRS (or other governments - the EU already has in some cases). These companies are not complying with tax law. They are cheating and paying bribes or doing favors to get away with it, and everyone knows it.

Right, that would be non-compliance as the OP already pointed out.

Re: Google used a tax loophole to shelter $19.2B

#38

Post by basch »

gowld wrote: post #16
thrill wrote: post #6

There are no such things as tax loopholes. There is compliance with the law as Congress has written with all of their agendas, and there is noncompliance.

Loopholes exist, because language is imprecise and imperfect. Laws have loopholes like code has bugs. In this particular case, it's probably not a loophole, since the behavior in question has been known for many years, and the US government has made no effort to change how the law fails to tax overseas income of corporations. In many cases, tax law says or (implies) "you pay $X to us, but you get credit for tax paid…

>it's probably not a loophole, since the behavior in question has been known for many years, and the US government has made no effort to change how the law fails

They did change the law, and this workaround will stop working around 2020

Re: Google used a tax loophole to shelter $19.2B

#39

Post by ocdtrekkie »

basseq wrote: post #28
burke wrote: post #20

Earlier quoted context omitted.

Corporations literally have a legal obligation to attempt to pay as little tax as is legally possible (really, to maximize shareholder value, which might even mean paying less tax than is legally possible, as long as the expected value of the gambit is positive). The issue is not corporations taking advantage of it, the issue is that we have a system where an actor is obligated to optimize for certain variables withi…

Exactly this. The term is "fiduciary responsibility". Their directors could be sued for paying unnecessary tax, against which "doing the right thing" is not a legitimate defense. ("Right" in that statement having different moral and legal meanings.) Or, put another way, it would have been illegal for them to have paid that tax.

I don't think I agree with that. There's no reason to suggest Google's current actions[1] (hiding billions of dollars in offshore accounts) maximizes shareholder value. They could, instead, either invest that money in ways that bring shareholders returns or even pay out dividends to shareholders directly. Both methods which would generate shareholder value and improve the US economy, which is also good for shareholders.

Instead they're hoarding the money offshore in what looks like a figurative dragon in a cave hoarding shiny things. To my knowledge, hiding cash under your mattress has never been a wise investment strategy.

[1] Note: Plenty of other companies do this too. Apple, Microsoft, etc. all have played tax games, even just in the tech industry. Though I find the level of disparity between Google's public statements about how it thinks things should be, and the statements of employees who seem to think they improve humanity by working there, and the actual realities of Google's business operations bordering on the comical.

Re: Google used a tax loophole to shelter $19.2B

#40

Post by ocdtrekkie »

wdn wrote: post #30

This is actually good thing. I don't know about you, I would rather Google keep more money and invest with it than handed the money to any government. What would the government do with your money? They most likely wasted it with 0 accountability. At least when Google failed, they go bully up. When government failed, they get rewarded with more money and resources.

Google isn't using or investing this money. They're hiding it in a bank account in Bermuda. Whereas, if it was brought into the US, it would both get taxed (with which the government could help pay for things like your healthcare), but Google could also invest it or spend it here in the US, improving our economy.
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