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The Tax Haven That's Saving Google Billions

businessweek.com

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Re: The Tax Haven That's Saving Google Billions

#21

Post by cperciva »

dtf wrote: post #14
jbooth wrote: post #3

From the article: "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 ind…

Is it ethical to avoid paying tax as an individual? Many would say no.

They might say that, but their actions -- buying from duty-free stores, contributing to tax-deferred retirement accounts, filing jointly with a spouse, and claiming every possible deduction -- suggest quite the opposite.

There's a world of difference between illegal tax evasion and legal tax avoidance, and all indications point to what Google is doing as being tax avoidance. How many individuals went to the IRS and said "here's how I'm planning on reducing my income taxes; can you see any problem with this"?

Re: The Tax Haven That's Saving Google Billions

#22

Post by rmc »

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.

Re: The Tax Haven That's Saving Google Billions

#23

Post by joshklein »

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.

Re: The Tax Haven That's Saving Google Billions

#24

Post by nysauhem »

"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.

Re: The Tax Haven That's Saving Google Billions

#25

Post by rbranson »

lionhearted wrote: post #16
grellas wrote: post #13

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…

> 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 e…

Obviously we should always look at large companies with skepticism, but Google is clearly building a long-term brand and trying to generate goodwill by investing in massive R&D efforts. This is rare among large companies. Most seem focused on the quarterly report. If they were IBM or Oracle, who undoubtedly have similar practices, perhaps I might feel a little more betrayed. I still believe Google, for the most part, is not evil.

Thankfully though, we are a nation of laws. As much as I despise the practices of some businesses, I am perfectly happy that it's not any one person's single opinion that keeps these companies in business.

Re: The Tax Haven That's Saving Google Billions

#26

Post by chollida1 »

karl11 wrote: post #6
jbooth wrote: post #3

From the article: "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.

Agreed, I think Goldman Sachs has their effective rate down to less than 2%.

A claim like this should always be backed up by some proof.

Re: The Tax Haven That's Saving Google Billions

#27

Post by charlief »

spoiledtechie wrote: post #12
karl11 wrote: post #5

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 regula…

The US Corporate Tax is one of the lowest in all the world. http://www.qbalance.com/Corporate_Tax_Rates_United_States.ht... But Bermuda still beats out us at ZERO corporate tax rate.

Including others for comparison from Wikipedia (http://en.wikipedia.org/wiki/Corporate_tax), interesting to note that Vancouver, Canada, small business is taxed 13.5%, and to no surprise, there are many startups in Vancouver:

Examples of corporate tax rates for a few English-speaking countries include:

Australia: 30%, however some specialized entities are taxed at lower rates.

Canada: Federal 11% or 18% plus provincial 1% to 16%. Note: the rates are additive.

Hong Kong: 16.5%

Ireland: 12.5% on trading (business) income, and 25% on nontrading income.

New Zealand: 30%

Singapore: 17% from 2010, however a partial exemption scheme may apply to new companies.

United Kingdom: 21% to 28% for 2008–2010.

United States: Federal 15% to 35%.[18] States: 0% to 10%, deductible in computing Federal taxable income. Some cities: up to 9%, deductible in computing Federal taxable income. The Federal Alternative Minimum Tax of 20% is imposed on regular taxable income with adjustments.

Re: The Tax Haven That's Saving Google Billions

#28

Post by lionhearted »

dtf wrote: post #14
jbooth wrote: post #3

From the article: "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 ind…

> Is it ethical to avoid paying tax as an individual? Many would say no.

"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands" — Judge Learned Hand

Re: The Tax Haven That's Saving Google Billions

#30

Post by dbingham »

lionhearted wrote: post #16
grellas wrote: post #13

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…

> 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 e…

Well, it's up to England's citizens to change the efficiency of England's government. Google is doing great things. By but dodging its taxes, it is forcing ordinary citizens to pay more. Or make do with less.

It doesn't matter whether it would do better with the money. I think I could do better with my tax money than the US government. But then, that's not my choice to make. My job is to work to make sure that the US government does better with my tax money. Not to deny the government the money. If I don't pay, someone else will have to. And that's not okay.

It's like saying I need your sandwich more than you do. I'm hungrier, I could make better use of it, therefor I should get your sandwich. Even if I could legally take your sandwich. It's still not okay. It's your sandwich! If I take it, you go hungry.

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