The Tax Haven That's Saving Google Billions • Hacker News Board

Re: The Tax Haven That's Saving Google Billions

#191

Post by vegai » Thu, Oct 21, 2010, 6:13 PM UTC

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…

The answer in HN's context should be obvious: It is 'evil' because these techniques have nothing to do with making a superior product, and it is 'evil' because it puts newcomers to a market into an inferior position: they don't have the resources to use the same techniques.

Re: The Tax Haven That's Saving Google Billions

#192

Post by lsc » Thu, Oct 21, 2010, 6:18 PM UTC

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…

my problem with it is not so much that google is paying fewer taxes, but that this complex tax structure encourages "innovation" in tax avoidance rather than innovation in things that actually create value.

How much money goes into building and checking the legality of those tax avoidance schemes? a lot, I bet. I'm fairly certain, for example, that my company would not be able to afford something like that.

A simpler tax law not only makes things more fair (maybe it's just sour grapes, but I don't think it's fair that there is one tax rate for corps like mine, who have one part-time accountant, and another, much lower tax rate for giant corporations that can afford massive teams of tax lawyers.) but it makes the economy more efficient. The goal of closing those loopholes should be to make it in Google's best interest to spend their effort on, say, improving search rather than avoiding taxes.

Re: The Tax Haven That's Saving Google Billions

#193

Post by jamii » Thu, Oct 21, 2010, 6:19 PM UTC

tkahn6 wrote: post #153

notahacker wrote: post #101

Earlier quoted context omitted.

The NHS employs a lot more people than Google and carries out research and development into saving people's lives. Sure, what Google does is great, but I'm really not convinced that thinking up ever more creative outlets to display targeted advertising is necessarily a better outcome for society than spending the money on the UK public sector, which has many worthwhile projects of its own. I'm going to go out on a li…

but it's equally a stretch to suggest that we're better off because Google pays less tax In absolutely no way is it a stretch to say that and I'm terribly surprised you have any upvotes. Are you aware of how many services Google provides for free that make my life (and probably yours) better? Google Search Google Maps Android Google Navigation (on Android) Google Patent Search Google Book Search (Working with librari…

> Are you aware of how many services Google provides for free that make my life (and probably yours) better?

Are you aware of how many services the NHS provides for free which make my life better, despite being cripplingly underfunded?

I'm not saying that google are evil for avoiding taxes, bit neither am I convinced that I wouldn't be better off if the money made its way into my governments hands.

Re: The Tax Haven That's Saving Google Billions

#194

Post by jbooth » Thu, Oct 21, 2010, 6:20 PM UTC

llimllib wrote: post #56

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.

> bilking us for billions It's my understanding that the way we've defined fiduciary duty (roughly speaking) requires public corporations to do this if it's legal. Can anyone comment on that?

Sure. Yes, you're right.

So we should redefine tax law so that it's not legal, and have everyone pay their fair share. Only ourselves to blame, I'm certainly not blaming corps for chasing dollars.

Re: The Tax Haven That's Saving Google Billions

#195

Post by jimmyk » Thu, Oct 21, 2010, 6:35 PM UTC

rdtsc wrote: post #187

philwelch wrote: post #156

Earlier quoted context omitted.

That is a very common idea among right-wing Americans -- they'd rather have companies take care of us than the government. No, right-wing Americans want to take care of themselves. They would just rather freely pay for certain services (health care, for instance) from competing private firms than be provided it by the government. Framing the question as "who will clothe and feed and wash us" is implicitly a leftist f…

> most people clothe and feed and wash themselves How so? Most don't own the means to produce all those things. Most people buy those goods and choose between a range of available products. The fundamental flaw with that (at least as far as I see) is what happens if the products are unsafe. Imagine that FDA wasn't there (or its European equivalent) and companies could sell you anything whatsoever as food. How often h…

>Imagine that FDA wasn't there (or its European equivalent) and companies could sell you anything whatsoever as food. How often have you gone shopping with a pestiside testing kid, a bacterial testing kit and a geiger counter? How do you know that all 15 type of shampoo you can buy don't all have mercury in them?

Why does it have to be a government agency that's doing the testing? What's to stop a private company with a trusted brand from doing the testing and giving its stamp of approval? Their motivation to keep bad products from slipping through is very strong because their brand is their worth.

It is useful to note that it was the meat packers who lobbied the government for the creation of what became the FDA because they knew that the public would require some testing and the FDA would do it for little money. A private brand would of course have to charge more.

>Maybe I don't like Gmail and Gmail is the only mail in town, I can't force Google to change it. But can at least attempt to call my congressman if I don't like a particular upcoming bill.

If you don't like GMail, you can write your own email service. If enough people don't like it, odds are someone will have already written a competing service. Google cannot stop you from doing that. A government, however, can.

Re: The Tax Haven That's Saving Google Billions

#196

Post by SriniK » Thu, Oct 21, 2010, 6:38 PM UTC

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…

Right on grellas. Every other company does this and there is a corporate tax industry around these loop holes.

Apple operates Braeburn Capital http://en.wikipedia.org/wiki/Braeburn_Capital Microsoft is known for borrowing its own money from foreign countries to avoid repatriating tax. Because borrowing is cheaper than paying repatriation tax. Broadcom is known for using R&D tax credits(for spending money in US for R&D) and Singapore and other lower tax states when it comes to selling goods and realizing income. Even Oil/financial companies are known to set up shops in overseas just to avoid paying higher taxes.

When someone's career is to find ways to reduce taxes, companies will find whatever way to achieve it.

Re: The Tax Haven That's Saving Google Billions

#197

Post by sedachv » Thu, Oct 21, 2010, 6:40 PM UTC

dangrover wrote: post #38

Startup idea: Company that cheaply sets up individuals/small companies to evade taxes in the same way big corporations do. You pay a subscription fee or something and they fill out the returns and set up a PO Box in Bermuda or whatever.

I was going to ask: how can startups (and in particular YC companies) apply similar strategies once they start making revenue? And how can they scale out? What would be really interesting is to see the evolution of the corporate/tax structure of Google as the company grew.

Re: The Tax Haven That's Saving Google Billions

#198

Post by Travis » Thu, Oct 21, 2010, 6:43 PM UTC

adbge wrote: post #176

Travis wrote: post #110

Earlier quoted context omitted.

Perhaps the infrastructure would have been built, but I think you'd be surprised at the amount of basic fundamental research the government does that enables the infrastructure. Most corporations don't do what the US Feds call "R06" research, meaning there is no current application for the results. Pure research, others might call it. My current field, public health, is an example. The US Gov't spends billions into r…

> There are lots of non-infrastructure advantages that exist only because the government has tax money. I'd posit that, for many of these advantages, government is not a necessary cause. That is to say, these non-infrastructure advantages can exist independent of government. > But without it, we wouldn't know that cigarettes are bad... This is demonstrably false. "In 1938 a study by a John Hopkins University scientis…

I understand your counterpoints. And I'd like to thank you for taking the time to research and cite all of this -- I truly had no idea of the private money behind some of this research.

However, after further consideration I don't think the tobacco-cancer example was a particularly good one for me to bring up. It was highly controversial in the epi/stats community for many years, mainly because RA Fischer (the father of applied statistics) never believed in the validity of the tests. While I'm sure we could each pick studies that backed the public/private side of things, the truth is that there just wasn't a consensus (about cigarettes) until Congress started investigating. So it's probably not the best topic for me to have brought up.

Re: The Tax Haven That's Saving Google Billions

#199

Post by Travis » Thu, Oct 21, 2010, 6:46 PM UTC

WalterBright wrote: post #175

Travis wrote: post #110

Earlier quoted context omitted.

Perhaps the infrastructure would have been built, but I think you'd be surprised at the amount of basic fundamental research the government does that enables the infrastructure. Most corporations don't do what the US Feds call "R06" research, meaning there is no current application for the results. Pure research, others might call it. My current field, public health, is an example. The US Gov't spends billions into r…

Anybody who dissected a smoker knew it was bad for you (ever seen a smoker's lung? I have. Horrific). Even in the 20's cigarettes were called "coffin nails", and doctors routinely advised their patients to quit smoking. Epidemiological studies have been carried out since the early 1800's.

Counterpoint: well into the 1950s, doctors would routinely endorse cigarettes with menthol because they "cleared up your lungs." Even R.A. Fischer, the man who started modern applied statistics, died in 1962 believing that the conclusions drawn from cig studies were at best inconclusive and bad science.

And I'm curious if you could give me examples of a few epi studies that were done before Fisher's time. I was under the impression that he started everything to do with statistics (and that the field didn't really blossom until we could compute the coefficients digitally. Read "The lady tasting tea" for more background on the origins of this stuff).

Re: The Tax Haven That's Saving Google Billions

#200

Post by ramanujan » Thu, Oct 21, 2010, 6:49 PM UTC

Travis wrote: post #110

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.

Perhaps the infrastructure would have been built, but I think you'd be surprised at the amount of basic fundamental research the government does that enables the infrastructure. Most corporations don't do what the US Feds call "R06" research, meaning there is no current application for the results. Pure research, others might call it. My current field, public health, is an example. The US Gov't spends billions into r…

To state what is perhaps obvious, scientific research and invention flourished before the modern, post WW2 world of state sponsored research.

Given things like the Broad Institue, the Allen Brain Atlas, Microsoft Research, the Google guys' funding of the Singularity Institute, DE Shaw's funding of protein folding, etc. it's pretty clear that billions in private money is spent on R06 research.

It's also not clear that the current system of indentured servitude for grad students and postdocs is optimal. Frankly, in biomedicine, it's the top 10-20 places (and really the top 5) that primarily invent and discover new stuff, as quantified by citation rates[1].

By contrast, a PhD from Directional State is unlikely to do so, and the government funding him or her at the same rate as an MIT scientist is a distortion which is less likely to occur when funding is controlled by individuals rather than politicians with an interest in pork. In the absence of government funding, said marginal PhD candidate would find productive employ as an engineer or scientist in the real economy. (I say all this as a lifelong academic!)

[1] Perhaps the ultimate proof of bibliometry's utility is that it was the inspiration for PageRank.