For a paper that discusses the Google example in some detail see Ed Kleinbard's "Stateless income's challenge to tax policy".
http://www.sbs.ox.ac.uk/centres/tax/symposia/Documents/Klein...
The Tax Haven That's Saving Google Billions
21–30 of 62 posts
Re: The Tax Haven That's Saving Google Billions
#22Trying to tax multi-national corporations is futile and encourages huge amounts of rent-seeking. We should just go to a low flat corporate tax rate (say 10%). To offset that we should stop taxing capital gains at a lower rate and crack down on tax avoidance by high-income individual taxpayers in the US. A corporation can run their activities from Bermuda or wherever they want, but corporate executives and shareholder…
It's "futile"? Really? Is that just shorthand for saying that you oppose trying hard enough to do it successfully? I don't think it's futile at all. I think we lack the national will to do it, largely and obviously because of the folks who are in control of the relevant decisions. I'd be more sympathetic to your argument (and just fyi, I am not entirely unsympathetic as it is) if I had some confidence that adopting a…
Your failure with the facts reveals that you are just an angry partisan.
President Clinton cut capital gains rates further in 1997 than G.W. Bush did. Also, President Carter cut capital gains, while Bush senior made no change in capital gains rates but famously raised other taxes in 1990.
Current longterm/shortterm rates range from 15/25 or 15/35, which is hardly "non-existent", especially when you consider that these rates are a double-taxation on resources that were already taxed as income.
Re: The Tax Haven That's Saving Google Billions
#23My knowledge of international corporate tax law is practically nil, but if I understand this correctly, the money sitting in Bermuda is still subject to taxation when it gets brought back into the US; so Google isn't avoiding taxes, but is rather postponing taxes by doing this.
I don't believe that Google is actually just postponing taxes. Instead, they are also being selective about what money they pay it on. Basically, the money has been obtained in Ireland, sent to the Netherlands, and then Bermuda. So it hasn't touched the US, and they don't owe US taxes. They can then do two things with that money. One, they can bring it into the US, pay taxes on it, and use it to do whatever it is the…
The Irish are probably not going to be too upset that companies are taking advantage of the system that they setup in order to attract large companies and the associated financial/legal industry. It's not a case of big companies exploiting the poor Irish.
Re: The Tax Haven That's Saving Google Billions
#24Trying to tax multi-national corporations is futile and encourages huge amounts of rent-seeking. We should just go to a low flat corporate tax rate (say 10%). To offset that we should stop taxing capital gains at a lower rate and crack down on tax avoidance by high-income individual taxpayers in the US. A corporation can run their activities from Bermuda or wherever they want, but corporate executives and shareholder…
I would go even further: zero out corporate income tax, and raise taxes on the individual owners and lenders to make the change revenue neutral. This would do much to increase long-term economic growth by allowing managers to focus on creating value rather than playing tax arbitrage games. We would also be able to shift a lot of tax accountants to more productive work, and downsize the IRS.
Re: The Tax Haven That's Saving Google Billions
#25I wrote an article on this transaction that I had posted to the HN community that breaks down a number of the points and explains how it works. http://cameronkeng.com/hn-how-do-i-pull-a-google/ A few things you should consider about international taxation is that it's complicated and only works because they have the infrastructure to sustain it. Disclaimer, I'm not saying what they're doing is right or wrong, but sim…
Does this get any easier if you do the original incorporation offshore?
Yes possibly, if you're able to source the income offshore and keep it away from the united states. Then you'd be able remove it easier. But, as a shareholder that owns more than 10% of the company. It effectively cancels any of the tax benefits.
There are some creative ways to remove yourself from the equation but it's pretty complicated.
Is this Brian? lol
Re: The Tax Haven That's Saving Google Billions
#26Trying to tax multi-national corporations is futile and encourages huge amounts of rent-seeking. We should just go to a low flat corporate tax rate (say 10%). To offset that we should stop taxing capital gains at a lower rate and crack down on tax avoidance by high-income individual taxpayers in the US. A corporation can run their activities from Bermuda or wherever they want, but corporate executives and shareholder…
It's "futile"? Really? Is that just shorthand for saying that you oppose trying hard enough to do it successfully? I don't think it's futile at all. I think we lack the national will to do it, largely and obviously because of the folks who are in control of the relevant decisions. I'd be more sympathetic to your argument (and just fyi, I am not entirely unsympathetic as it is) if I had some confidence that adopting a…
With corporations, taxation is very complicated. The law is complicated because its tries to be sensitive to the question of who should be taxed where for what, and the facts are complicated because it's hard to find out exactly what revenues are being made and what they represent. You can always throw more enforcement at the problem, but that costs money, and your yield is uncertain because companies will just spend more money on tax lawyers to shift things around.
Taxing individuals is a lot simpler. You live in the US, you pay US taxes on all your income.
Also, I said we should stop taxing capital gains at a lower rate. There is no reason for it, and it just distorts the market, shifting activity from spending to saving.
Re: The Tax Haven That's Saving Google Billions
#27This is exactly why high taxes hurt startups. How can a startup/small business compete profit wise against Google or another large company when they are paying a much lower effective rate. Since their tax burden is so much lower they can charge a much lower price, effectively pricing any startup/competition out of the market.
We just need a super low corporate tax with zero loopholes that make it less expensive to just comply vs hiring hundreds of lawyers and accountants to move around money.
Re: The Tax Haven That's Saving Google Billions
#28Earlier quoted context omitted.
It's "futile"? Really? Is that just shorthand for saying that you oppose trying hard enough to do it successfully? I don't think it's futile at all. I think we lack the national will to do it, largely and obviously because of the folks who are in control of the relevant decisions. I'd be more sympathetic to your argument (and just fyi, I am not entirely unsympathetic as it is) if I had some confidence that adopting a…
Your failure with the facts reveals that you are just an angry partisan. President Clinton cut capital gains rates further in 1997 than G.W. Bush did. Also, President Carter cut capital gains, while Bush senior made no change in capital gains rates but famously raised other taxes in 1990. Current longterm/shortterm rates range from 15/25 or 15/35, which is hardly "non-existent", especially when you consider that thes…
Capital gains taxes are not "double taxation." If you buy an asset for $1,000, you've paid for it with $1,000 after-tax dollars and acquire $1,000 in basis on the asset. If you then sell it for $2,000, you're taxed on the $1,000 accretion in value as a capital gain, but you are not taxed again on the $1,000 which forms your basis in the asset.
Re: The Tax Haven That's Saving Google Billions
#29[deleted]
Re: The Tax Haven That's Saving Google Billions
#30Earlier quoted context omitted.
Your failure with the facts reveals that you are just an angry partisan. President Clinton cut capital gains rates further in 1997 than G.W. Bush did. Also, President Carter cut capital gains, while Bush senior made no change in capital gains rates but famously raised other taxes in 1990. Current longterm/shortterm rates range from 15/25 or 15/35, which is hardly "non-existent", especially when you consider that thes…
Capital gains taxes are not "double taxation." If you buy an asset for $1,000, you've paid for it with $1,000 after-tax dollars and acquire $1,000 in basis on the asset. If you then sell it for $2,000, you're taxed on the $1,000 accretion in value as a capital gain, but you are not taxed again on the $1,000 which forms your basis in the asset.
In the case of a business, that business had to grow to justify the increase in value, and that growth typically occurred via some taxable event, such as income. Then, that growth makes the business more valuable. If you sell your interest in the business, you pay taxes again on the increased value.
So, yes, double taxation. Very similar to the double taxation experienced when taking in taxed business income and using it to pay taxed salaries. It's a repeated net drain on the economy, which occurs almost every time money changes hands.