Tax Accounting Evil at Google?

theodp writes "In its annual report, Google said it's done no tax-accounting evil, but the search giant acknowledged that both the IRS and SEC are taking a look at the way in which it accounts for income tax. Google is one of a number of U.S. companies that have come under fire for allegedly practicing 'profit laundering', i.e., moving book profits offshore to evade millions and even billions in taxes to the country where it really operates. In past SEC filings, Google has credited its Irish subsidiary for reducing its effective tax rate."

Comments

Google no differnt than the rest

[Reverse Gear]

If Google had not done this then they would be pretty much the single exception from all other multinational companies.

Here in Denmark we have this huge shipping company Mærsk or A.P. Møller as it also known.
They have lots of other activities also, the company has always been somehow very attached to Denmark and many Danes are proud that Mærsk is a Danish company.
The thing is that the government here in Denmark have been proposing to change how the taxing system works for companies. The general idea is to lower the tax rate but to remove many of the things that companies can withdraw from their incomes when taxes are to be calculated, in part to prevent what Google is being accused of doing here, namely putting all their income in countries where they have lot's of losses and expenses also.
Mærsk have been threatening the Danish government that if these tax changes are done as proposed then they may be forced to move many of their activities to other countries. I see no evil in this, companies have to look at the bottom line and for most businesses generating income for their shareholders or who ever gets the money in the end.

I would not consider Google to be evil if they did something similar to this, they would just be acting like pretty much any other multinational company does these days.
I feel pretty sure the Irish doesn't see Googles way of doing their accounting as evil ;)

If something has to be done about this, it can't be done at the national level, I guess that is also what some of these movements like Attack (spelled?) and other have been talking about. I doubt there is ever going to be any real changes in this any time soon, there are far to big interests at stake for countries and big companies.

definitions

[TheSHAD0W]

Why exactly do you define avoiding taxes as "evil"?

Unlawful, certainly. But evil?

Re:definitions

[Planesdragon]

Why exactly do you define avoiding taxes as "evil"?

Because the taxes that cash-rich google doesn't pay are paid for by the rest of us.

Re:definitions

[chill]

If you think, for one minute, that if Google paid every last dime it could in taxes without trying to structure business to avoid them, that YOUR taxes would go down, you're on crack.

Re:definitions

[iPaul]

Maybe in the short run you're correct, but in the long run I'm afraind you're wrong. Sure, over the next couple of years it won't affect your tax rate. However, there are essentially three parts to government spending. The first is interest on the debt - which we have to pay or else we'll never be able to borrow a dime again without paying ridiculous interest rates. A lot of people think this is something we could default on since they believe the fiction that "it's money we owe ourselves." However, we borrow a significant chunk from overseas - so not paying it is actually off the table. The second are obligations that are a matter of law - like social security. If we wanted to reduce our social security obligations we have to pass a law stating that you and I won't get our promised benefits. That's hard to do politically. Finally, there are discretionary items, like the military. We do have some wiggle room there, but not a tonn.

Okay, all of this is paid for by incoming taxes. If the taxes aren't sufficient to cover the expenses, then we borrow, adding to the debt. So, the amount we pay in interest on the debt goes up, further reducing the ability we have to make decisions about how much money to spend on which program. Eventually, if there's no fiscal discipline and companies are allowed to avoid paying taxes, the rest of us will have to pitch in more money. So, in the short run, you're right in that your taxes are not a function of Google's taxes. However, in the long run, the more companies game the system to avoid paying taxes, the more likely we will have to raise taxes on individuals in order to meet payment on the debt and obligatory expenditures. In addition, these companies benefit from operating in the US. They are protected by our military, when their CEO has a heart attack the ambulance comes an picks him up, and the police stop the "G-8 protesters" from throwing trashcans through their plate glass windows. They use the same public services we all use, shouldn't they pay their fair share?

This is perfectly normal

[jorghis]

The government isnt evil for collecting taxes as above posters are claiming.

Google isnt evil for using a perfectly legal accounting system that works within the bounds of the law to pay as little taxes as they can.

Everyone takes as many deductions as they are legally allowed on their tax returns. Would we think that people claiming an exemption for having a kid are 'evil'? Really not much difference.

Yeah, that's a horrible idea.

[encoderer]

Forgoing the income tax for a sales tax is a pretty bad idea.

First, the income tax is progressive. This would be impossible to achieve with sales tax. The only people that would benefit from a "flat" tax (sales or income) are those at the highest tax brackets. In order to replace the income lost from dropping taxes on the top 5%, taxes would have to be raised on the bottom 50%.

Second, a sales tax puts a disproportionate burden on the lowest income families. Those with low incomes--even up to $50k/yr for a single man--spend a very large proportion of their income. The lower your income, the higher percentage of it is spent. People making minimum wage are spending 100% of their pay checks.

Those making $1MM a year, on the other hand, may spend only a small fraction of their income.

And you can say that you would simply not charge sales tax on the things that poor people are spending their money on -- food, shelter and utilities -- but doing so would drastically reduce tax receipts. It would be impossible to exempt those things and the suggestion that it is possible is just used by proponents to try to sell their plan.

Furthermore, this is about Google. Corporations pay a pitifully small percentage of taxes in America. The percentage of taxes paid by corporations has dropped dramatically since the 1950's. Your notion that double taxation is a serious problem is just plain wrong. The tax code currently incentivizes businesses to invest in capital expenditures, R&D, etc.

In summary, the only people that want a sales tax are those that don't understand it's implications and those that could pay less taxes by shifting the tax burden more on the lower & middle classes.

The notion that there is tax injustice because the top minority of Americans pays the majority of taxes is absurd. The people at the top of the food chain reap the highest rewards of our society. Without our national infrastructure, they wouldn't be able to make and horde millions or billions of dollars. They SHOULD pay a tax burden that more closely resembles their share of the US pie, not necessarily their share of the US Population.