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Google Founders Cut Salaries to $1
GeneralCern writes "MSNBC Reports that Google founders Larry Page and Sergey Brin, and CEO Eric Schmidt
all slashed their salaries to $1
last year. Since you do not have to pay FICA, Medicare, or income taxes on
the capital gains associated with stock sales, they stand to substantially decrease
their tax burden. Is this a breach of the company's "do no evil" mission
statement, or just an example of people who love their jobs so much they don't
need to be paid to go to work?" Update: 04/09 13:11 GMT by H :And don't trust the above tax lines; it all depends on how sales are done; moreover when you are worth X amount with stock, I suspect the "tax burden" of what is, relatively speaking, a salary that's small compared to networth isn't a substantial impact. Sorry folks; poor story.
They will get paid by stock options and alike, paying much less taxes for the same income... anyway, I think it is more a PR stunt ("we work because we are fierce of our product") than any other thing...
Why can't
Does the US have a minumum wage?
Can you get done for underpaying yourself, or does the wronged party have to complain to start legal action?
# cat
Damn, my RAM is full of llamas.
Now i don't want to be google's next CEO any more.
var sig = function() { sig(); }
e.g.
http://www.google.co.uk/search?q=define%3Abreach
or
http://www.google.co.uk/search?q=define%3Abreech
I thought screwing Uncle Sam was "doing no evil"... especially around tax time.
Paying less taxes is funding less evil. What more can one say?
I have long given up my hopes that google will be a "nice" corporation. They have prooven over the last few months that profit is #1, like any other corporation. Like any other corporation: they should not be trusted.
It's neither a breech of "do no evil" nor an example of their love of work... it's a legitimate way of avoiding paying tax which is standard practice for business leaders everywhere.
Total non-story; yet completely on message for the nonsense that Slashdot has decended into over the past few years. News for nerds? Barely. A barrage of pointless bollocks? Definitely.
What a ridiculous post. How could you possibly draw an association between minimizing personal income tax and Google turning 'evil'.
Sergey Brin is, according to Forbes, already worth $7.2B. Wouldn't it be great to be so incredibly rich that you did'nt have to worry about personal income ever again?
Anyway, this is PR that's probably worth way more than the salary itself. Steve Jobs does the same thing, IIRC.
When the companies "company" is based on those algorithms how can you not patent them!
Dashboard Widgets
One *always* pays taxes on capitals gains from stock sales. Has nothing to do with salary.
Is it me or does the article poster spin from the left and ignore facts ?
It's never evil to stick it to the man!
Sugapablo
Well, "don't be evil" does not mean "be stupid" or "be kind to IRS".
It's actually the other way around:
This way they are saving taxes which gives them the opportunity to be even more not-evil to all the people.
Except the IRS, or course.
Apple has been evil for a few years.
Not a Twitter sockpuppet... but I wish I was.
It's just one of the many idiocies that arise from taxing "unearned" income less than "earned" income. Income from all sources should be taxed the same, to avoid giving people reason to come up with complicated schemes to move their income between categories. But given that the tax system sucks, you can't blame people for taking advantage of that fact.
Look,even if I pay 75% tax on 200,000 dollars I STILL MADE MONEY! 25% of X == > 0 if X !=0. They got payed less, how is that anything bad?? Sad that the posts on /. are trolls these days.....
Does that mean that in soviet Russia Slashdot posts you?
Oh,for the love of gos and country, kill me.
I mod everyone down who says "I'll get modded down for this." I hate to disappoint.
Google has agreed to reimburse Schmidt up to $2.1 million this year for using his jet.
2.1 million seems a little bit higher then $1 to me.
But even so, they're able to survive on google stock. If google's stock goes down, their wage goes down (I'm guessing here, to me stock seems like gambling and make-believe). So they have quite a big incentive to ensure google's stock stays up (wonder how that will impact their do-no-evil mantra). This is nothing but a tax trick, which CEOs are reknown for doing. Of course, no-one here is going to say that avoiding tax is a bad thing. Because everyone pays too much tax as it is. [gripe type="about people who complain about paying tax"]Because stuff like roads are free.[/gripe]
Seriously why would you need a salary when you have the credit rating associated
with owning Google?
Steve Jobs is in the same boat; he worked for the use of a private jet one year,
he doesn't need a salary - he founded Apple, Pixar and continues to run both.
I doubt his wallet is dusty dry after The Incredibles or the iPod.
Neko
Quit your whining, people. Oh, and look up the "Minimum Alternative Tax" while you're at it. It may have been a good idea at first, but it's getting to be a real mess these days.
#naabhaprzrag, #sverubfr-000, #agi-fcbafberq, negvpyr[pynff*=' negvpyr-ary-'] { qvfcynl: abar !vzcbegnag; }
The article poster stated that you don't pay FICA tax (another word for social security tax), medicare tax or income tax on stock appreciations. That is completely true and all of those are different than capital gains tax - which is what they would pay based on appreciation in their stock price.
I believe the article poster's premise is that they're becoming ungodly rich because of stock appreciation and that they cut their income to $1 per year to avoid contributing to society in the way that the rest of us do.
If I had to pick a reason, I'd say it's more of a PR stunt to make the Google founders appear frugal (or froogle if you like) and make it seem like the money hasn't gone to their head. Many other CEO-types have done this (including Steve Jobs).
I'm a big tall mofo.
Since they own close to 2/3 of the company, I'm sure they feel that what they do for the company affects their personal wealth a LOT more than a simple salary does.
To me, this tells me that they're vesting their livelihood in this company. And why shouldn't they? It seems that google adds new features to their search on a weekly, if not daily basis.
------
Oh yeah, did you see MSN's "billionaire hotornot" slideshow? Don't you, as a reader, feel a little patronized there trying to choose which of the capitalist elite are the best looking? Where's Mr Gates, for that matter?
/^[A-Z0-9._%+-]+@[A-Z0-9.-]+\.[A-Z]{2,4}$/i
Coincidentally I was just reading this article from Inc. magazine last night.
t ml
http://www.inc.com/magazine/20050401/priority.h
The IRS prosecuted Menard for paying a large salary and no dividend because that arrangement results in paying less tax. See the article for details.
Only silly dweebs would think this is "evil". The amount of money they got from their salaries, and the amount of taxes they paid on those saleries, were miniscule compared with their equity in Google stock. They aren't the first wealthy people to take a token salary from the company they founded.
So, get over it. Making Money Isn't Evil.
-- Slashdot: When Public Access TV Says "No"
Isn't this what Steve Jobs has been doing for years?
To Google, evil means ruining the web experience for its customers and users. Given that Google defines evil as such, it is doing a marvelous job of living up to its promise.
Evil is a subjective concept. To you, and others, perhaps, patents are wrong. But to Google, the sole criterion for evil is the user experience. Therefore, patent issues do not apply.
The tax rate for the options is probably going to roll in at 15% - certainly a lower tax rate than had it been 'earned income' (salary), but much more than zero. These rates were lowered in the 2003 tax revision - they had been 20% (there's a lower tax bracket as well, but I don't think it applies in this situation :-) ).
You only pay social security on the first $90k of earned income - so that tax relief in this case is pretty negligible (compared to the 15% of some huge number).
Of course, this assumes they sell any shares - most people in this position sit on a lot of the wealth in paper form, so there's a negligible cash flow anyway. At some point Page and Brin will diversify, but we don't know what their personal situations are like.
Furthermore, as founders, they may well have a much more complicated tax role than simply investors. This can get complex very quickly - but that doesn't intimidate the IRS.
If you've thought of the loophole, the feds have figured out how to get a piece of the pie. It's not _that_ easy!
You are right we do. Next time you think about the high cost of ... education, know that you paid your share for it and the directors of google, who make a 1000 times what I or I am guessing you make, did not. That is but one example. If googles rich wanted to make a tax statement, they could have found a way through gifts etc... to make the low paid at their company pay less taxes. What they did is to increase (theoretically) everyone elses tax burden by not paying their own. What they did is evil
I am an organism. The sole point of my existence is to reproduce. I'm not a monk.
I have urges that must be met, enormous balls and need to get laid. Its going to be in my interest to get funky.
I'm sorry, it's doing evil. How can you patent a mathematical expression? That's like patenting a statement of truth! I outright denounce any patenting of mathematical expressions, which includes, but is not limited to, encryption methods and software. You shouldn't be able to patent a philosophical expression. What if "I think therefore I am" had been patented by Descartes?
> Since you do not have to pay FICA, Medicare, or
...or just an example of people who love their
> income taxes on the capital gains associated
> with stock sales, they stand to substantially
> decrease their tax burden.
This is true. One does not pay taxes on income that one does not receive.
> Is this a breech of the company's "do no evil"
> mission statement...
Sigh. If they had kept their salaries they would have received salary income, paid taxes on it, and _also_ made money on stock sales. Now they will only make money on stock sales (and pay the relevant taxes). How is the latter more "evil" than the former?
>
> jobs so much they don't need to be paid to go
> to work?"
It is an example of how some people have chosen to manage their money. I know damn well that if you could rearrange your income so as to increase the amount left after taxes you would.
Warning: this article may contain humor, sarcasm, parody, and perhaps even irony. Read at your own risk.
The way it's spent, sending money to the US Government is evil, so Google's "no evil" policy
requires them to avoid as much tax as possible.
If all this should have a reason, we would be the last to know.
How did this modded as "insightful"? By shifting their entire salary to stock options, the Google directors are not avoiding a single "education" tax. Education is paid for out of the general fund (partially from standard income tax). They'll still be paying this tax! (See capital gains on stocks/options) The taxes they'd be avoiding (social security, medicare, etc) are all HEALTH and RETIREMENT taxes, they have nothing to do with education.
i imagine that patent would have expired by now, so that's kinda a moot point :)
ashridah
The taxes they'd be avoiding
Nice point, well stated. The generic fact that they were avoiding taxes was probably what got the mod points. I did not feel like becoming a tax lawyer over a simple question and used education as an example (and yes, out of your income tax there is fed money that goes to education) but your examples are better. My point is not even slightly altered. They are avoiding taxes.
You guys *are* a bunch of looters.
Ed R.Zahurak
You know, oblivion keeps looking better every day.
How is keeping earnings evil? Everybody, yourself included, seems to think that any attempt by Google to make money is evil. You are wrong. To be evil is to do things like run ugly ads on your webmail and charge people money to remove them, or, worse, to accept payment for changes in PageRank. If they can find a legitimate and doable way to increase their profits, it's a good thing, because they have more money to fund stuff and their shareholders are happy. Pleasing your shareholders is not evil unless it is at the expense of your customers.
Tired of free iPod sigs? Subscribe to my blacklist
If they are only getting $1 p.a. salary, then the only way they're going to be able to afford to eat is to sell stock. Assuming the US tax system is similar enough to how Australia works, I'd think that the proceeds of the stock sales would be taxed very similarly to the way salary income would is, and therefore would be paying for the same government services that anybody else would be. IOW, I'd doubt they are avoiding tax at all.
What you are worth, and what money you have available to spend are two different things. For example, Bill Gates might be worth $60B, however, the only way he could spend that (assuming he actually could), is to sell off his major ownership of Microsoft. Quite obviously (or maybe it isn't to most slashdotters?), he wouldn't have $60B cash sitting in his bank account, waiting for him to hit the ATM.
The Internet's nature is peer to peer - 20050301_cs_profs.pdf
Because, if they are only getting a salary of $1 p.a., that is the only cash they'll have available to buy food with. I suppose they could eat their Google stock certificates.
Of course, the stock certificates are probably a bit tasteless, so if they need money to buy food etc., they'll need to sell some of their Google stock. Then the government has a tax go at the gains from those profits made on the stock sales.
This is the third time I'm making this point in this thread. It surprises me that a lot of Slashdotters don't seem to understand even the fundamentals of what stock are, what a salary is, and why having a very low salary and a lot of stock doesn't magically mean that (a) you have money in your pocket to live off of and (b) that stock isn't money in the bank - you have to sell your stock (which means reduce your ownership of the company) to convert the stock into cash.
The Internet's nature is peer to peer - 20050301_cs_profs.pdf
(If they have less than 40 credits, then they should pay themselves the minimum that counts, which I think is somewhere around $360 per month. Tip for those of you looking into self-employment.)
Dunno how this could conflict with "do no evil." GeneralCern, have you stopped beating your wife?
As copyright owner of this comment, I authorize everyone to defeat any technological measure which limits access to it.
"Shaq is rich; the white guy who signs his checks is WEALTHY." --Chris Rock
I'll have to admit that I've been considering to stop paying my federal taxes recently in protest of all the crap that is going on with the federal government. Its not just the war in Iraq, but many other things as well. However, I was talking to a lawyer friend of mine last night and I asked him about people who do that and he said that it unfortunately doesn't work and that the cases are pretty funny. He's going to send me one so I might share it on my website once I've read it.
I'm not trying to get out of paying taxes, I just think that the way the U.S. is spending our taxes is becoming more and more immoral. What I was going to do, is stop paying my federal taxes (and keep paying state and local) and then take that $10,000 a year that goes towards federal and donate it towards local schools or community projects. So I would just be controlling where my tax money is spent.
It's good for everyone if money is spent rather than sat upon.
That all depends on the state of the economy. It's not good for everyone if you're in demand driven inflation. Then you want everyone to save and not spend.
But given the fact that Americans really enjoy their right to consume I doubt you could steer many towards not consuming.
09 F9 11 02 9D 74 E3 5B D8 41 56 C5 63 56 88 C0
Think about the poor google employees who had a heart attack reading "Google founders cut salaries to $1", before realizing to whose income it refers.
It wouldn't be if Disney had bought him out :)
Fnord.
How can you patent a mathematical expression?
The same way you patent anything else, and for the same reasons. If I am some company, like Google, and I pay people money to spend time thinking up algorithms, it's only fair that I get to use them exclusively for a while. I paid for them, after all. Otherwise, there's no motivation outside of the goodness of my heart for me to keep mathematicians on my payroll.
Anyway, just why, besides what appears to be sincere but baseless moral indignation, shouldn't people be able to hold patents on mathematical expressions? (Please remember, patents aren't forever.)
Also, what's the real difference between holding a patent on performing a chemical reaction in a particular way to increase yields and holding a patent on an algorithm to make web searches provide better results? Is chemistry somehow less real or less true just because it isn't purely intellectual? It seems to me that chemistry is as "owned in common" as philosophy or mathematics. Are you opposed to patents altogether?
You can and should patent a mathematical expression when your competitors can patent it as well and put you out of a job.
It's not Google's or even Amazon's or Microsoft's fault, per se. It's the ridiculous parody of a patent system we have. If they allow companies to patent knives, spoons and forks then companies pretty much have to patent them to survive.
The same way you patent anything else, and for the same reasons. If I am some company, like Google, and I pay people money to spend time thinking up algorithms, it's only fair that I get to use them exclusively for a while. I paid for them, after all. Otherwise, there's no motivation outside of the goodness of my heart for me to keep mathematicians on my payroll.
...
Also, what's the real difference between holding a patent on performing a chemical reaction in a particular way to increase yields and holding a patent on an algorithm to make web searches provide better results? Is chemistry somehow less real or less true just because it isn't purely intellectual? It seems to me that chemistry is as "owned in common" as philosophy or mathematics. Are you opposed to patents altogether?
Really though in both cases, no one outside of companies would have knowledge of the processes being used. The only exception would be if your employees broke NDAs.
Unfortunately, if they don't patent it, someone who sees what Google does will patent it, and try to get money out of Google.
While Googles prior art would be a solid defense, it would still be a fair amount of money and time to fight the frivolous claim. As long as the attacker makes sure to ask for less than the court case would cost, theres a decent chance Google would settle just to make them go away.
If Google has it patented, however, the potential attacker won't be able to get a patent to attack Google with. And on the off chance the patent office screws up and issues a duplicate patent, Google would be much more likely to get the case dismissed if they can wave an actual patent, rather than simply internal records, in the judges face. That substantially lowers the financial and time investment to fight a claim, when you can expect a dismissal in the event of a truly frivolous claim.
If I were to come up wiht a brilliantly innovative algorithm, I'd patent it. I'd also immediately turn around and license it for use with Open Source software- probably would declare it royalty free for any OSI approved license.
These days, you *need* to patent your algorithms or you can get screwed hard by the system. It's like the Cold War and MAD... if you don't have it, you'll get destroyed, so you need to ensure you can destroy your opponent too.
There are two reasons to patent something:
1) to prevent your competitors from using your tech without paying
2) to prevent them from developing the tech you developed first, patenting it, and then trying to leverage that. Take note, Carmack vs. Creative.
In case 2, they *could* cite prior art, but that assumes they've already been sued, are in court, and probably had operations suspended using the algorithm in question. Pain in the ass, and loss of revenue stream. Sure, Carmack could've taken Creative to court, but they chose their timing carefully...just a few days before the release of Doom 3. If he'd fought, it wouldn't have been on shelves, automatically making the figth much more expensive for him than for creative, regardless of who "won". Easier to just settle, even if you are in the right.
Anyway, just because most of us disagree with how the US patent system is set up doesn't mean we can hold every company that patents something as evil. Under our system, sometimes it is defensive. When Google starts suing, that'll be something.
What is it with you Americans and this dogged obsession with "companies only exist to make money"? [..]
Money is a means to an end, not the end in and of itself. Companies exist to make cars, build furniture, produce electricity, sell food, provide services, and literally 1000s of other purposes. Making money is part of that process, but it is not the actual objective.
When companies are privately owned and are run by some visionary like Henry Ford who wanted to mass produce cars, or Wozniak and Jobs who wanted to mass produce computers, yes, companies are about making products. But publicly owned companies really do have only one purpose: to maximize the return to the stockholders.
Seriously, if the shareholders of Apple decided that the best thing for Apple would be to stop making computers and become an investment bank, that's what would happen. More than a few product making companies have gone that route.
"Action without philosophy is a lethal weapon; philosophy without action is worthless."
So companies should invest gobs and gobs of money in R&D when the only thing preventing their having nothing to show for it is the trustworthiness and/or fear of reprisal of every individual employee with damaging knowledge?
This also ignores the fact that many companies derive income from licensing their technologies.
In the CEO biz, your total compensation is the way you get compared to other CEOs. It appears to be a kind of penis-measuring exercise (female CEOs aside) - after all, does a $20M CEO really work twice as hard as a $10M CEO? The usual justification for big CEO pay is "everyone else does it".
I hope the $1/year salary is their way of saying "we may be a public company, but we aren't going to play those games - we run Google because we want to solve hard problems and make money at it, not so we can wave our paychecks at Yahoo's management and laugh about how small they are."
To a Lisp hacker, XML is S-expressions in drag.
The original reason for the apportionment was to approximate a tax on net assets under the Articles of Confederation! During the early stages of the country the distribution of asset value was very much dependent on the presence of population to turn natural resource, primarily land, to productivity. Rather than trying to track everyone down and assess their property values, the States were essentially taxed on their populations.
So if the Congress wants, it can go back to the simple system of directly taxing just States.
Alternatively it can even go to a more rational system of just charging reinsurance fees to the States for the cost of underwriting defense of property rights and let the States, as regulators of premiums within their own jurisdictions, figure out how to tax assets appropriately.
Seastead this.
Tax AVOIDANCE is lawful and completely honorable.
.... The question arose whether the law which imposes such a tax upon them was constitutional. The opinion of the Attorney General thereon was requested by the Secretary of the Treasury. The Attorney General, in reply, gave an elaborate opinion advising the Secretary of the Treasury that no income tax could be lawfully assessed and collected upon the salaries of those officers who were in office at the time the statute imposing the tax was passed, holding on this subject the views expressed by Chief Justice Taney. His opinion is published in Volume XIII of the Opinioin of the Attorney General, at page 161. I am informed that it has been followed ever since without question by the department supervising or directing the collection of the public revenue..."
...A tax upon one's whole income is a tax upon the annual receipts from his whole property, and as such falls witin the same class as a tax upon that property, and is a direct tax, in the meaning of the Constitution....
...We have unanimously held in this case that, so far as this law operates on the receipts from municipal bonds , it cannot be sustained, because it is a tax on the powers of the States, and on their instrumentalities to borrow money, and consequently repugnant to the Constitution. ...it follows that, if the revenue from municipal bonds cannot be taxed because the source cannot be, the same rule applies to revenue from any other source not subject to the tax; and the lack of power to levy any but an apportioned tax on real and personal property equally exists as to the revenue therefrom.
...that personal property, contracts, obligations, and the like, have never been regarded by Congress as proper subjects of direct tax. The United States Constitution provides Congress the power to lay and collect taxes directly only as long as it is apportioned with regard to the census or enumeration."
Tax EVASION is illegal.
The payment of taxes is not a moral oblication, and "fair share" is not a legal term. It is used to intimidate and confuse people.
"The legal right of an individual to decrease or ALTOGETHER AVOID his/her taxes by means which the law permits cannot be doubted" Gregory v. Helvering, 293 U.S. 465
----------
Pollock v. Farmers Loan & Trust Co., 157 US 429 (1895)
This decision states that it is unconstitutional to impose the income tax on the interest and dividends, on the deposits of U.S citizens, in U.S. banks, because that would be a Direct Tax WITHOUT APPORTIONMENT, which is not authorized, and is, in fact, prohibited by the Constitution.
Excerpts from the decision:
"...Ordinarily, all taxes paid primarily by persons who can shift the burden upon someone else, or who are under no legal compulsion to pay them, are considered indirect taxes; but a tax upon property holders in respect of their estates, whether real or personal, or of the income yielded by such estates, and the payment of which cannot be avoided, are direct taxes..."
and;
"...Subsequently, in 1869,
and;
and;
Admitting that this act taxes the income of property irrespective of its source, still we cannot doubt that such a tax is necessarily a direct tax in the meaning of the Constitution.
In England, we do not understand that an income tax has ever been regarded as other than a diect tax. In Dowell's History of Taxation and Taxes in England, given, and an income tax is invariably classified as a direct tax..
and, even in dissent:
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Brushaber v. Union Pacific R.R. Co., 240 US 1 (1916)
The Brushaber decision determined that since the provisions of Article I of the Constitution were not repealed, they are still in full force and effect. Article I, Section 2, Clause 3, and Article I, Section 9, Clause 4, BOTH specify that Direct taxes MUST BE APPORTIONED (to the state governments for collection). The Court ruled that:
As your lawyer friend said, tax evasion is illegal. Tax avoidance, however, is not only legal it's encouraged -- hell, even the President wants you to pay as little tax as possible (if you're already rich). That's all these Google folks are doing. Fortunately, the law doesn't care if you're rich, even the poor can avoid taxes if they're careful. Back when I was in school and filed a 1040EZ I was able to cut my tax burden at least a little each year; now, with a house to kick me into itemized deductions, I milk it for all it's worth (e.g., don't throw anything away -- take it to Goodwill and let them throw it away; meanwhile, you claim the donation.
If all this should have a reason, we would be the last to know.
However the constitution did not give the right for the government to take money from the rich for the sole purpose of giving it to the poor (at least not in the US, some revisionist judges have however allowed it).
The 14th amendment gives Congress the power to tax, and gives no restriction on its use. No "revisionist judges" necessary.
Article XVI.
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
nothing wrong with company executives that avoid paying their fair share of taxes by using their position to hide their salary as stock or bonuses. Bill Gates does the same thing. You dont hear everyone saying bill gates is evil. So does larry elison. You dont hear everyone saying Larry Elison is unethical.
"So I would just be controlling where my tax money is spent."
They have a term for controlling where you money is spent. It's called a "free market".
Simple answer. You can't patent a "mathematical expression," just like you can't patent a "law of nature." However, you can patent the application of either solve a specific problem.
The same way you patent anything else, and for the same reasons.
Except that you *can't* patent mathematical expressions. That's the whole argument against software patents --- all algorithms are trivially reducible to mathematical expressions in the lambda calculus, and you can't patent those.
A deep unwavering belief is a sure sign you're missing something...