Slashdot Mirror
How Google Avoided Paying $60 Billion In Taxes
bonch writes "Google only pays a 2.4% tax rate using money-funneling techniques known as the 'Double Irish' and the 'Dutch Sandwich,' even though the US corporate income tax is 35%. By using Irish loopholes, money is transferred legally between subsidiaries and ends up in island sanctuaries that have no income tax, giving Google the lowest tax rate amongst its technology peers. Facebook is planning to use the same strategy."
How Google Avoided Paying $60 Billion In Taxes
Yeah, unless you read the article that says:
Such income shifting costs the U.S. government as much as $60 billion in annual revenue, according to Kimberly A. Clausing, an economics professor at Reed College in Portland, Oregon.
That's $60 billion total per year. Not just from Google but from every American business using these tax loopholes (Microsoft and Facebook included). The article clarifies:
Google Inc. cut its taxes by $3.1 billion in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda.
Emphasis mine. So you can see that it's on average a billion a year that Google saves doing this. Not $60 billion. Do I still feel like they're shafting me? Yes. But not 15% of their stock market worth. That's just unimaginable. Here's a bigger survey of companies using these loopholes with more details.
My work here is dung.
What if it was Microsoft?
Technically Google has committed no crime, and their tax avoidance is entirely legal. While it is normal to feel a moral outrage, I think your anger should be focused on those who created the loopholes in the first place. Washington.
If our elected representatives no longer represent us, do we still live in a Democracy?
That's a lot of textbooks, teacher's salaries, roads to be paved, police/fire stations to NOT be closed etc etc etc..
Someone actually read TFA
Apparently this is legal, so why should I care? It's not as if the government is going to do better things with that money than Google is.
That's a straight up ignorant statement.
The ridiculously complex tax code is to blame. It's time to flush it and start again. That's one of the concepts behind H.R.25, also known as the FairTax.
It's a misconception that corporations pay taxes. They don't. They get all their money from their customers (and some from investment). If you raise corporate taxes, the corporation raises prices to cover the tax. Why hide it like this? Just tax the customer, so we can all SEE how much tax we're paying. It's the only way to keep people involved in the battle to lower government spending, which is out of control.
I need trepanation like I need a hole in the head.
Apparently this is legal, so why should I care? It's not as if the government is going to do better things with that money than Google is.
One of the things they could do is fund their operations, rather than borrowing from overseas with substantial interest penalties for me and my children to pay. Trot this argument out again when the government stops doing that --- then we can talk about whether the government needs that money.
Even though the title is misleading, I still have only one thing to say....
"DON'T BE EVIL"
Like every other monolithic company in the world.
Who's "they"?
"They" are Microsoft, Google, Facebook, etc. Any company that uses this method.
And, assuming you're referring to google, how are they shafting you? It's not your money.
No, it's not my money. It's the communal money that is under so much debate by politicians. And the fact that Google and everyone else has a hundred goddamned lawyers and accountants sitting around saving them billions of dollars does upset me. Because I don't have that. I don't have the option to employ the "double Irish" tactic when trying to save thousands of dollars in taxes each year so I can afford a simple house. Nope, they get that privilege and I don't because I'm poorer than them. So who's being screwed over? Every tax payer that doesn't have or employ those options. If you live in America, that's you. Why is your public education so lacking? Why do your taxes go up? Well, part of it is that companies employ tax evasion methods like the ones listed in the article. I'm not singling out Google, I'm expressing equal anger toward all who employ these methods.
You can call me a socialist, you can call me a communist. That's fine because I know I'm neither of those. I'm just someone that wants a fair playing field when it comes to aggregating X amount of resources so that our government and public services continue to function properly.
The men and women who founded this country cited 'taxation without representation' as one of the reasons. Like them, I'm not okay with lobbyists and tax loopholes that are apparently legal and okay to anyone who has tons and tons and tons of money. The rich get richer and the poor get poorer just because.
My work here is dung.
""Anyone may arrange his affairs so that his taxes shall be as low as
possible; he is not bound to choose that pattern which best pays the
treasury. There is not even a patriotic duty to increase one's taxes.
Over and over again the Courts have said that there is nothing sinister
in so arranging affairs as to keep taxes as low as possible. Everyone
does it, rich and poor alike and all do right, for nobody owes any
public duty to pay more than the law demands."" - Judge Learned Hand
Of course, if we'd reign in corporate taxes, we'd bring a lot of capital back home. The US has one of the highest rates of corporate taxes in the world, trailing only Japan and Cameroon. Even France... bastion of Euro-Socialism Lite... has a lower top corporate tax.
Life is hard, and the world is cruel
Because they are not paying their share, and that means you and I have to make up for it. Further: this nation generally supports a progressive tax where the more wealthy pay a greater share, not less.
Not that Google is the slightest bit wrong for doing this! If I owned their stock I'd expect them to do whatever is legal to reduce non-productive expenses, which taxes are. I'd prefer them to invest it new products and technologies, or pay me a dividend.
TFS says "Google only pays a 2.4% tax rate"
TFA says "Google’s income shifting [...] helped reduce its overseas tax rate to 2.4 percent"
But corporations are people!
I'm no Economist, but the arguments for trickle-down theory seem pretty good to me.
I thought by this point history had pretty well demonstrated that it's never worked out in practice.
It's a nice-sounding idea that falls apart completely in reality -- just like communism.
If corporations were not recognized as individuals in a number of other annoying contexts (political contributions, "personal" rights, etc) then I *might* be inclined to agree. But as it stands, they've got the best of both worlds; no meaningful taxation like individuals are burdened with, but all the same protections and "rights" as well.
Perhaps if Google paid up more taxe you would pay less ?
Your taxes have to be higher because these guys have to pay less. You should ask your government to close these loopholes, and have big companies pay a reasonable share of the tax.
Do I still feel like they're shafting me? Yes.
You know if they gave it to the Feds they'd just use it to do evil. They're following their mandate.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
For the record, I tried to submit a different headline, but the buggy, AJAX-ridden story editor wouldn't display the changes I made in the text boxes when I hit Preview. It kept displaying the old text unchanged. I even refreshed the page and tried a different browser. Eventually, I said, "Fuck it" and submitted, hoping it would post the changes.
Or...it just sits in a war chest somewhere so the CEO can jump in for a refreshing dip in the morning.
People replying to my sig annoy me. That's why I change it all the time.
If you want to make that argument then you would need a corollary to go along with it that any law that treats a corporation like an individual would have to be abolished as well.
Knowledge is just opinion that you trust enough to act upon. -Orson Scott Card
The act of have a sex sandwich with a mother and daughter who's combined weight is over 400 lbs http://www.urbandictionary.com/define.php?term=Dutch%20sandwich
Maybe you should take some higher-level courses. What stops them from raising prices is competition. When you tax an industry, you allow all participants in the sector to raise their prices to cover the tax increase. If one company finds a tax loophole, they'll be able to undercut the other players, and force everyone else to find a way to cut their costs, so they can cut prices. Yes, they may be able to sit on higher profits for a while, but anyone who has gotten out of econ 101 knows, growth is the only measuring stick that matters. Cash sitting idle in corporate coffers is not how you win the game.
I need trepanation like I need a hole in the head.
Unless you believe that all money ultimately belongs to the government, I fail to see how this is evil.
I look for every deduction I can grab as well. So does almost everyone else. This isn't wrong.
I disagree. Legal and moral aren't synonymous. As one of the country's largest technology companies, Google has a moral obligation to pay their fair share of taxes whether they're legally obligated to or not. They also have a moral obligation to lobby against these unfair tax codes. You cannot take a neutral stance on moral issues and avoid being evil. Doing good is the only way to avoid being evil because by taking a neutral stance is usually just as bad as being intentionally evil.
It goes back to the old murder issue: If someone is drowning and you have the ability to save them but don't, have you just murdered the person? My answer is: it doesn't matter because regardless, inaction was evil. Our government is drowning in debt and Google is intentionally contributing to the problem. Their attitude is, "I don't want to get wet, someone else can dive in."
They bought consumer trust with their "don't be evil" slogan, it's about time they started living up to it again.
"From the depths of my skeptical and rationalist soul, I ask the Lord to protect me from California touchie-feeliedom."
So you're saying we should protest in favor of "No Representation without Taxation!"
Planning to be moderated ± 1: Bad Pun.
This is the biggest trolling post I have seen in a long time. You should be ashamed of yourself CmdrAssTaco. Shit like this is killng /.
I've heard that somewhere before...
I'm getting so tired of people saying that "fair" means "you pay, I benefit". Almost half of Americans pay NO federal income tax at all (http://www.businessinsider.com/only-half-americans-actually-pay-income-tax-2010-4), and these are the ones screaming loudest that the ones who DO pay taxes should pay even more... with that money to be paid to (you guessed it) the people who already pay nothing, directly or indirectly.
"I want your money, I don't want to have to work for it, so I voted that you have to give me your money. That's my definition of 'fair' and 'democratic'."
Maybe it's time I looked into creating an overseas-based tax structure for myself.
Everybody gets what the majority deserves.
All taxes are paid by individual taxpayers, no matter the form in which it goes to the government. If Google had not used any loopholes and paid, say $3B more in taxes, then $3B would be passed on to its customers in the form of increased costs, so it ends up being a tax on the customer. Be thankful that they don't pay them - keeps your costs lower and keeps the politicians from finding more useless crap on which to spend it.
I don't want to achieve immortality through my work. I want to achieve it by not dying. - Woody Allen
It's solidly rigged in favor of the rich and the corporations.
Nothing new here; vote with and for the republicans to keep things this way.
I've fallen off your lawn, and I can't get up.
Google on average pays 20% in taxes, as stated in their earnings. Which is still pretty low, but nowhere near the 2.4% in the article.
Essentially, Google licenses the IP to the Bermuda holding company for $1000, which Google, US pays taxes on.
Now, the Bermuda company licenses it to the Irish company, which then sells products and advertising to make a ton of money. That ton of money goes, by way of the Netherlands, back to the Bermuda company...
... where it sits indefinitely.
"But no," you say, "it returns to the US in license fees!"
Nope. As noted, Google sets its license fee intentionally low so that it has very little income and thus pays very little US income tax. If that money was returning to the US in license fees, then they would have all that income and pay taxes again. The money, generated overseas, stays overseas (well, Bermuda, anyways), and is not coming back into the US. Google, the multinational has avoided paying US taxes on its international profits by keeping its international profits separate from its US profits. Google, the US company, hasn't avoided any US taxes.
The article also notes this:
Deferred Indefinitely
Technically, multinationals that shift profits overseas are deferring U.S. income taxes, not avoiding them permanently. The deferral lasts until companies decide to bring the earnings back to the U.S. In practice, they rarely repatriate significant portions, thus avoiding the taxes indefinitely, said Michelle Hanlon, an accounting professor at the Massachusetts Institute of Technology.
Conceptually, this makes some sense, too... Why should Google US have to pay taxes on money that was earned overseas and is never brought into this country?Like, say they make a lot of money on advertising in the UK, and decide to open a London office and hire a bunch of people there... Why should the US government get a piece of money earned outside the US and spent outside the US?
First, last I checked, governments were awash in revenue. They just have spent even more. You are essentially arguing that the gambling addict has too much debt so we should give him more money. No thanks.
And what exactly is their "fair share"? There is none that can be objectively ascertained.
Btw, did you overpay your taxes? You're allowed to and not take your deduction.
Except for ending slavery, the Nazis, communism, & securing American independence, war has never solved anything.
Maybe I'm being cynical, but I see more articles about Google doing things to improve the world than I do our own governments.
So are income taxes.
There is no tax-free situation for the poor with income tax in place.
Assume 30% average tax rate. Poor person pays zero. Then buys a service, such as plumbing. Plumber pays 30%. Poor person pays $100; Plumber gets $70, government takes $30; poor person gets (maybe) $70 worth of plumbing. Effective tax rate for poor person: 30%.
Of course, it's higher if you're middle class: You earn $142; taxed at 30%, you keep $100; you pay plumber $100; government takes $30; you get $70 worth of plumbing. Effective tax rate for middle class: 50%.
Whereas if you're Google, you pay 2.4%, so you earn $102.45, keep $100, pay the plumber $100, govt gets $30, Google gets $70 worth of plumbing. Effective tax rate for Google: 31.6%
By taxing incomes, the government ensures that everyone, most definitely including the poor, pays taxes by catching you (often again) when you spend your money on anything that is taxed. The only way to avoid paying is to only buy things that themselves are not taxed in any way. And good luck with that.
I've fallen off your lawn, and I can't get up.
"... but I do begrudge people from demanding that the rich pay even more taxes.'
Warren Buffett himself says that the rich do NOT pay enough taxes, and that the taxes on the rich should be higher.
"Speaking at a $4,600-a-seat fundraiser in New York for Senator Hillary Clinton, Mr Buffett, who is worth an estimated $52 billion (£26 billion), said: “The 400 of us [here] pay a lower part of our income in taxes than our receptionists do, or our cleaning ladies, for that matter. If you’re in the luckiest 1 per cent of humanity, you owe it to the rest of humanity to think about the other 99 per cent.”
"Mr Buffett said that he was taxed at 17.7 per cent on the $46 million he made last year, without trying to avoid paying higher taxes, while his secretary, who earned $60,000, was taxed at 30 per cent."
http://www.timesonline.co.uk/tol/money/tax/article1996735.ece
Any sect, cult, or religion will legislate its creed into law if it acquires the political power to do so.
I find it so disheartening that people will bitch vehemently about taxes without a fucking clue about the truth. I was hoping someone would point out that your return is a portion of the money already taken out of your taxes. I know people well into the "bottom half" of earners who didn't have their taxes set up right and they ended up owing money to the government come tax season.
:(){
But corporations are people!
And the top people in these corporations hide the majority of their income under the corporations. They use all sorts of legal tomfoolery to avoid paying taxes at all.
In addition, the article is about the 2009 tax year. During the 2009 tax year, Obama's Making Work Pay tax credit disproportionately benefited the poor. That tax credit is now expired, and (unlike with the Bush tax cuts) there is absolutely zero discussion in Washington about extending it.
Anyone who supports extending the Bush tax cuts but fails to support extending the Making Work Pay tax cut is doing exactly what we are accusing you of doing, namely, wanting to keep poor people as the only ones who pay taxes. Presumably this is your stance as well, since I see you favor extending the Bush tax cuts, but not the Making Work Pay tax cut. If this assessment of your position is wrong, please feel free to correct it.
You've been plundered.
"...the few practice lawful plunder upon the many, a common practice where the right to participate in the making of law is limited to a few persons.” – Frédéric Bastiat, The Law
I once took an excursion to Reddit, and later HN. Unlimited up/down voting sucks when dealing with a hive-mind.
Supposedly this was the case before world war 2 as well.
Bring back the old version of slashdot.
That assumes the taxes collected would be spent on such matters, vs. on wars, bridges to nowhere, monuments to government leaders, etc.
Given that you have a democracy, your vote, ultimately, decides that. Of course, if no taxes are collected, then there's nothing to decide.
Do No Evil. Yay for hypocrisy!
how they avoid paying taxes to the state of Washington. http://crosscut.com/2008/02/02/microsoft/11167/Microsoft-s-$528-million-Washington-tax-break/ They probably have tactics for avoiding federal taxes as well. I think all large companies do.