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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."
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.
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.
Learning HOW to think is more important than learning WHAT to think.
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.
While I doubt that this is a case of Civil Disobedience, you are correct it's not evil. But it's so much fun to label any non-wonderful Google practice as "evil" because of their "do no evil" ideal.
We are all just people.
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?
Leave the gun, take the cannoli -- Clemenza, The Godfather
Maybe if Google didn't have to pay 40% of its profits in taxes, they wouldn't have to spend millions on accountants to move money. We have all seen the fantastic things that Google has done with the money they have, just think of what they could have done (4D Google earth, Google desktop that doesn't take up 1GB, chocolate pudding that tastes as good as Bill Cosby thought it should taste... who knows?) if the government didn't rape them for being successful.
If anything, we should be proud that Google doesn't put money into the vast wasteland of government spending.
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- Seconds per year ~ Pi * 10^7
As told to me by my ex-IRS tax accountant:
TAX AVOIDANCE is a patriotic thing to do. It does no good to give the government money in excess of what it needs to do its job, and what it has been lawfully authorized to collect.
TAX EVASION is illegal. That's what they got Al Capone on when then couldn't nail him for any other crimes.
I know a few tax lawyers. The tax laws of the U.S. have grown so complex over the decades that it has become literally impossible for one person to know them all. Tax law firms have lawyers dedicated to specific portions of the tax code.
When you have a set of rules as ridiculously long as the U.S. tax codes, it basically makes it impossible to comply 100%, because no matter what you do, there will be a segment SOMEWHERE in that massive wall of text that you unintentionally violate.
The novelty about the deeply complicated tax laws is that loopholes abound - it may be the specific reason the government maintains its complexity.
Google trying to minimize its tax burden is just good business. That they seem to have done it in a way that is suspect doesn't mean they intentionally broke a law, it probably means they did it so well that the IRS isn't sure it's legal or not.
But again, with tax codes as complex as ours, it will probably fall into the realm of ambiguity so that it can either be legal OR illegal, which is yet another governmental advantage of highly complicated tax laws.
"Study your math, kids. Key to the universe." -The Archangel Gabriel
Does anyone think that perhaps corporations shouldn't pay taxes at all? In thinking about basic economic realities, I've been leaning in this direction. It sounds like a bit of a radical idea on the surface, but it's always seemed to me that taxing a corporation is really just an indirect tax on anyone who uses that corporations's services or products. In other words, they'll just raise prices to the point that they're making a profit, and thus simply pass along any increased tax burden to the consumer.
It's the same sort of hidden tax as the idea of having employers pay for half of your social security benefits. Where do you think the extra revenue comes to do this? Higher prices on products and lower wages. The government loves to obscure the true source of taxes, especially when they can make it appear that someone else is really paying for them. These are two good examples.
Am I missing something in my logic here? I haven't really heard anyone else talking about this (although I haven't looked all that hard). My suspicion is that this would never fly, if only for the huge political target you'd make yourself for even bringing this up.
Irony: Agile development has too much intertia to be abandoned now.