Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

The Tax Haven That's Saving Google Billions

businessweek.com

Post reply on HN
Print view View original

141–150 of 292 posts

Re: The Tax Haven That's Saving Google Billions

#141

Post by RickHull »

rdouble wrote: post #139
RickHull wrote: post #127

Earlier quoted context omitted.

Are you saying that a corporation does not have a fiduciary duty to its shareholders? That paper just expresses a limitation of conclusions that can be drawn from a single case, Dodge v Ford .

This is a counter to the commonly espoused internet-forum notion that there's some law corporations would be breaking if they don't engage in the most sociopathic behavior possible in order to "maximize shareholder value". There is in fact no such law. Bringing up Dodge vs. Ford is relevant, because that is indeed where the concept of "maximizing shareholder value" was brought up, and it's the only case ever cited. T…

What is the extent of a corporation's fiduciary duty to its shareholders then?

See http://en.wikipedia.org/wiki/Fiduciary#Relationships

Under Corporation-Stockholders, Dodge v Ford is not cited.

Re: The Tax Haven That's Saving Google Billions

#142

Post by rdouble »

RickHull wrote: post #141
rdouble wrote: post #139

Earlier quoted context omitted.

This is a counter to the commonly espoused internet-forum notion that there's some law corporations would be breaking if they don't engage in the most sociopathic behavior possible in order to "maximize shareholder value". There is in fact no such law. Bringing up Dodge vs. Ford is relevant, because that is indeed where the concept of "maximizing shareholder value" was brought up, and it's the only case ever cited. T…

What is the extent of a corporation's fiduciary duty to its shareholders then? See http://en.wikipedia.org/wiki/Fiduciary#Relationships Under Corporation-Stockholders, Dodge v Ford is not cited.

A corporation has no LEGAL fiduciary duty to "maximize shareholder value," that is just a business "best practice."

There are actual corporate laws regarding shares and shareholders and corporate boards and whatnot, but they are mostly about trying to keep the game clean and not defrauding people, not "maximizing shareholder value."

Edit: So long as we're referencing wikipedia...

http://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Company

"Dodge is often misread or mistaught as setting a legal rule of shareholder wealth maximization. This was not and is not the law. Shareholder wealth maximization is a standard of conduct for officers and directors, not a legal mandate. "

It's actually a very interesting case, because the DODGE in Dodge vs. Ford is actually the guys behind the Dodge motors brand. They were using their investment in Ford motors to make money in order to start their own competing car company.

Re: The Tax Haven That's Saving Google Billions

#144

Post by borism »

RickHull wrote: post #130
borism wrote: post #36

Earlier quoted context omitted.

We can argue what is legal or illegal, and whether something that is legal should be illegal etc for ages. The fact is that they pay 2% tax while most US based persons pay at least 10x that rate.

> The fact is that they pay 2% tax while most US based persons pay at least 10x that rate. And this is Google's fault? If you don't like the outcomes that result from players playing by the rules, perhaps you should direct your ire toward the rulemakers rather than the players.

I don't think I suggested anywhere that it's Google's fault?

Re: The Tax Haven That's Saving Google Billions

#145

Post by neilc »

Irving H. Plotkin, a senior managing director at PricewaterhouseCoopers' national tax practice in Boston, says that "a company's obligation to its shareholders is to try to minimize its taxes and all costs, but to do so legally."

This is a pet peeve of mine: company directors are not obligated to minimize costs or maximize profits.

http://crookedtimber.org/2008/07/25/what-obligation-maximise... http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1013744

Re: The Tax Haven That's Saving Google Billions

#146

Post by yummyfajitas »

roc wrote: post #115
yummyfajitas wrote: post #50

Earlier quoted context omitted.

Most of their tax money would not be spent on the specific items you describe. For every $100 google spends in taxes, roughly $16 will be spent on education (mostly education for underachievers who would never work at google), $4.90 will be spent on transportation infrastructure, $0.30 will be spent on basic research and $0.1 will be spent on communications infrastructure. On the other hand, for every $100 google pay…

> "It's a fallacy to focus solely on the desirable components of government spending." Without going into what proportion of spending might directly benefit Google, I do agree with you. Return on tax revenue is nowhere close to 1:1 nor is it being spent optimally. But Google does not decide how that money is allotted. They can't say "I'm only paying 25% because I only approve of 25% of expenditures." When they limit…

Your original post implied google is being a freeloader: "...they benefit in no small part from that money. [...] Frankly, without government money, Google would not exist."

I'm just pointing out that if google limits their exposure to 25% of what it might be, they are still paying for all the services they use and far more. They pay not be paying for all the services you want them to pay for, but that isn't the same thing.

I'm also pointing out that it's not quite honest to list only the useful government services, when they are dwarfed by wealth transfers. That's a tactic worthy of congress, similar to naming a law "To amend the Internal Revenue Code of 1986 to provide earnings assistance and tax relief to members of the uniformed services, volunteer firefighters, and Peace Corps volunteers, and for other purposes" (where "other purposes" == bank bailouts).

Re: The Tax Haven That's Saving Google Billions

#147

Post by shasta »

Travis wrote: post #113
roc wrote: post #32

Earlier quoted context omitted.

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…

+1. This is similar to the major reason I despise the band U2 (besides their awful music): they bitch and moan about helping poor children in Africa. They even recently complained that the British gov't doesn't send enough money to impoverished countries. But they have a major tax haven set up that deprives the gov't of tax revenue. You just need to be consistent. Google has gotten a lot of benefits out of their "Do…

So they preach that the government doesn't spend money on the right things, but then in practice don't want to give money to that government? The hypocrites!

Re: The Tax Haven That's Saving Google Billions

#148

Post by tyn »

patio11 wrote: post #106
tyn wrote: post #75

Earlier quoted context omitted.

Using tax havens is certainly not one of these cases.

You probably mean "tax haven", which is a rhetorical slight-of-hand to suggest that jurisdictions competing for attention via tax rates are somehow enticing people to sin. Competing via tax rates is just another way of enticing people to behave differently. Some people are under the impression that this happens only internationally. This is incorrect. One of the healthiest features of the American experiment is a fed…

My point was that when a company uses a foreign tax regime (which is what google does, btw) it completely escapes any incentives created by it's own government that are related to tax avoidance. Apparently the parent of my previous comment (pg) doesn't think that US government's purpose is to give incentives to US companies to move to Bermuda. Btw, I never implied that moving to tax havens is some kind of a sin.

Re: The Tax Haven That's Saving Google Billions

#149

Post by borism »

Matt_Cutts wrote: post #64
borism wrote: post #36

Earlier quoted context omitted.

We can argue what is legal or illegal, and whether something that is legal should be illegal etc for ages. The fact is that they pay 2% tax while most US based persons pay at least 10x that rate.

Actually, if you go read the longer version of the article at http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-sho... you'll find that Google's overall effective tax rate was 22.2 percent last year. The BusinessWeek version of the article is radically shorter and suffered for those edits, in my opinion.

OK, let's make it clear once and for all:

22.2% - overall effective tax rate in US in 2009 (compared to 27.8% in 2008)

2.4% - average overseas tax rate 2007-2009 (that's what they pay to the Rest of the World, where they earn 88% of profit)

Re: The Tax Haven That's Saving Google Billions

#150

Post by adbge »

Anechoic wrote: post #129
adbge wrote: post #83

Earlier quoted context omitted.

> None of those products/services would be possible but for the government spending taxpayer money to develop the infrastructure behind those services (the internet, roads, GPS, etc). I'd argue that the infrastructure would have been built regardless.

I'd argue that the infrastructure would have been built regardless. It would likely be very different than the relatively free/open roads, GPS and internet we have today. The "internet" would likely be similar to the mesh of networks we had back in the '90's (eWorld/AOL, Compuserve, Prodigy, the proposed Microsoft Blackbird/MSN strategy) and who knows if they would have played well with each other. Roads would be tol…

> It would likely be very different than the relatively free/open roads, GPS and internet we have today.

Oh, I'm in violent agreement with you on this one.

"The infrastructure" in my comment is meant to refer to something roughly comparable to our current infrastructure. For example, if the government didn't build roads, something would fill the void of a service that facilitates transportation -- not necessarily roads.

> And does anyone believe that a privately developed GPS system would be anything but horribly expensive or unreliably? Just look at satellite telephone.

Remember, public infrastructure isn't free. No infrastructure, no taxes for infrastructure, more money, which one could choose to spend on an expensive satellite phone. It's certainly not that simple, but that's my general point.

Post reply on HN