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How does Google pay 2.4%?

cameronkeng.com

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Re: How does Google pay 2.4%?

#21

Post by camz »

ChuckMcM wrote: post #19

Back when Commodore was a company I had the opportunity to get a look at its tax structure (I was interviewing for a VP position with the parent company). It was pretty impressive how effectively one could exploit nominal loop-holes in various jurisdiction tax codes to achieve near zero taxation. One of the more dubious strategies was having a company in the Cayman Islands that owned the cars that people drove and pa…

Lol. It sounds like I worked with your friend.

I'd like to note that the US is also a noted tax haven for foreign countries. We aggressively allow our country act as a tax shield for European and Asian companies so we should be throw rocks either when we live in a glass house

Re: How does Google pay 2.4%?

#22

Post by redsymbol »

ry0ohki wrote: post #15

Don't many companies pay nothing? IE if my company earns $100k and I pay out $100k in salaries and overhead, there is nothing left to tax as all my expenses were deductible? Google may pay 2.4% but presumably the money is getting taxed at a higher rate when it gets to individuals.

In the first paragraph, yes the tax due would be zero, in general (certain industries and/or countries could harbor exceptions). The final amount paid is independent of the tax rate on profits, though: if revenues are offset completely by expenses, it doesn't matter if the effective rate is 2.4%, 40% or 90%, it still comes to 0. But you want the former if your company is highly profitable.

For your second point, I don't know the specifics in this case. But even if it's just deferring taxes that have to be paid eventually, that can be a huge win, since it lets you collect interest or store funds for an emergency. There are probably other financial benefits too though; maybe someone who knows can comment.

Re: How does Google pay 2.4%?

#23

Post by magicalist »

Isn't that a tax rate of 2.4% on foreign income? Or does "effective tax rate" mean taxes across all income? If they've only saved "$3.1 billion since 2007" (to October 2010), it seems like they haven't saved that much (er, relatively...).

Re: How does Google pay 2.4%?

#24

Post by camz »

01Michael10 wrote: post #14

Google has an effective tax rate of 2.4%? They are being robbed as GE not only pays no taxes but also gets a refund. Personally, I am tired of millionaires (or well of people like John) complaining about taxes.

GE is a special case. Their tax department has been compared to the big four accounting firms as the unspoken big 5.

They pay their tax staff very well and truly are some of the best in the field within every tax specialty.

But it's unfair to single out John. I'm sure given the opportunity you'd attempt to maximize your profit. It's quoted from judge Learned Hand of New York, one of the most respected legal minds that it is your legal right and American duty to tax plan.

The code is set this way obviously due to politics but also because the American people value jobs over taxes. We would rather have high employment that additional Corp tax revenue.

Re: How does Google pay 2.4%?

#26

Post by draz »

"Generally, Google and companies of similar size are audited every year. Thus, the IRS actually has a permanent office within the Googleplex compound because they audit them year-round" I think this statement is incorrect. The auditors hired (PwC, Deloitte, E&Y, whoever) are at the Googleplex all year round, but not the IRS

Re: How does Google pay 2.4%?

#27

Post by camz »

draz wrote: post #26

"Generally, Google and companies of similar size are audited every year. Thus, the IRS actually has a permanent office within the Googleplex compound because they audit them year-round" I think this statement is incorrect. The auditors hired (PwC, Deloitte, E&Y, whoever) are at the Googleplex all year round, but not the IRS

I misspoke, I stated auditors but I wasn't specific about his. Pwc, deliotte and friends are financial auditors meant to provide assurance. But the IRS auditors are there for tax audits.

It is IRS policy to generally audit fortune 500 companies annually. Usually they hold an area for the IRS because it makes sense for them to be kept away from daily operations. A former coworker works in the LMSB dept that handles these cases.

When the IRS starts printing special forms for you because the lines don't fit your revenues, you know you've made it lol.

Re: How does Google pay 2.4%?

#28

Post by benmccann »

lbarrow wrote: post #16

Fixing this sort of loophole should be far higher on Congress's list of priorities than it is now. There is no reason why a massively profitable corporation like Google should pay so little in taxes when poor Americans are nickel-and-dimed with sales, payroll and income taxes.

The standard arguments against corporate taxation are that it's double taxation (the shareholders are already taxes on capital gains and dividends) and that higher corporate taxes lead corporations to choose to base their operations in other countries (e.g. Ireland).

Re: How does Google pay 2.4%?

#29

Post by yummyfajitas »

camz wrote: post #24
01Michael10 wrote: post #14

Google has an effective tax rate of 2.4%? They are being robbed as GE not only pays no taxes but also gets a refund. Personally, I am tired of millionaires (or well of people like John) complaining about taxes.

GE is a special case. Their tax department has been compared to the big four accounting firms as the unspoken big 5. They pay their tax staff very well and truly are some of the best in the field within every tax specialty. But it's unfair to single out John. I'm sure given the opportunity you'd attempt to maximize your profit. It's quoted from judge Learned Hand of New York, one of the most respected legal minds tha…

GE is also a special case because they are using a loss carryforward. GE Capital lost billions in 2008 and 2009 which means GE's profit averaged over the past few years is close to zero.

This allows them to pay yearly taxes as if they made little profit.

This is actually a good thing - it avoids disproportionately taxing companies with volatile incomes.

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