Schmidt On Why Tax Avoidance is Good, Robot Workers, and Google Fiber

Bruce66423 writes "Eric Schmidt said that a £2.5 billion tax avoidance 'is called capitalism' and seems totally unrepentant. He added, 'I am very proud of the structure that we set up. We did it based on the incentives that the governments offered us to operate.' One must admit to being impressed by his honesty." Schmidt also says that if you want a job in the future you'll have to learn to "outrace the robots," and that Google Fiber is the most interesting project they have going.

Comments

Question

[Man On Pink Corner]

How many people reading this intentionally pay more tax than they are strictly required to?

Re:Question

[erroneus]

This is spot on. No one would.

Here's the problem: Those laws/rules/loopholes/allowances etc were created by the money influences which are benefiting from them.

So if tax policy were a naturally occurring thing, I would say "yes, let's take advantage of our knowledge and understanding of nature!" But it's not and these tax avoidance structures haven't always been there.

The government did not change the rules without cause. Find the cause and you will find the culprits.

Did Google help to create the rules? Not likely... the rules were in place, most likely, before Google rose to power.

The 'news' and subsequent inquiries seem to want to focus on the tax [non-]payers. Ostensibly to determine if they did anything 'illegal.' I'm willing to bet they have not done anything illegal. The real problem and where the focus should be is on the law.

Re:Question

[Anonymous Coward]

And how many people setup offshore bank accounts and front companies etc to avoid tax?

Re:Question

[MacTO]

If I had to venture a guess: most of us. Very few individuals have the money to find those legal loopholes or lobby governments for tax incentives. Even if we did, the return on investment would be in the red.

Re:Question

[DJRumpy]

I disagree. I think they are focusing on exactly that; abuse of the tax system. The current crop of GOP senators are very business friendly, and money plays a larger role in politics than in any time in the past. I can understand why Google takes this approach, but to appear unapologetic is just rubbing salt in the wounds.

Take individuals for instance. They get a very specific set of deductions, and are expected to take them. Because of the special interests and years of corruption in congress, we have businesses making billions in profit, and paying almost nothing in taxes. It may be legal, but it doesn't make it right. The system is geared to give every benefit to a business, and none to middle America.

What they are highlighting is not the fact that is illegal (it's not), but rather that it's unfair, which it is.

Re:Question

[MightyYar]

Why pick on the GOP? They are certainly not alone. The Democrat's current position is focused on "rates", which is clearly anti-reform. As long as the tax code is complex, it will favor those with the resources to exploit the complexity.

My personal opinion is that we should eliminate the corporate tax rate, removing the shenanigans altogether. Make up for this by making dividends and capital gains taxable as income.

Re:Question

[Instine]

me. I do. I could play all kinds of games to get out of the 40% rate I pay on half my salary. But I'd rather the NHS got it, than a private healthcare system I sponsored with my avoided spend on tax. Because thats better for me? No. Because that's better for the country I live in and the the one my daughter will grow up in? Yes.

Re:Question

[kenh]

Home Schooling & Private schools are, apparently, unheard of by you.

Very few hospitals are run by municipalities, most are run by either non-profits or charities, with a some being for-profit.

The public roads argument is interesting - do employers pay for roads so employees can get to work and so that they can ship and receive goods, or do employees pay for roads so they can get to work and buy the goods others have manufactured/raised/offer? The answer is both.

The original poster's point, which apparently escaped you, is that no one goes out of their way to OVERPAY their taxes, and someone who pays all their taxes as defined by the law (as Google does) is doing nothing wrong. It may not comport to a simplistic view that "they should pay more" but in reality, they are simply availing themselves of the incentives our lawmakers provided them.

Don't be angry with Google for following laws that allow them to pay less in taxes than you think they should, be angry at the lawmakers that craft the laws that allow them to do so.

Re:Question

[Xest]

I do actually. As do most of the UK's population.

I live and work in the UK, and I take my pay through PAYE which means my income tax is automatically deducted. Most employees in the UK get paid this way.

I, and many others have the option of being paid outside the PAYE system so that we can manage our own taxes, this would allow us to take advantage of many tax evasions schemes available, or even simply do it ourselves by paying ourselves the minimum non-taxable wage and paying the rest out in a manner that doesn't attract things like national insurance.

Some people do do this, but most don't.

So can we now finally kill this stupid "How many people reading this intentionally pay more tax than they are strictly required to?" meme? Because certainly in the UK, the answer is "most people".

Re:Question

[fuzzyfuzzyfungus]

How many people reading this intentionally pay more tax than they are strictly required to?

How many people reading this have any significant ability to adjust their 'nothing we did was other than legal' tax rate to be substantially different from their 'time to fill out the tax forms' tax rate?

That's the thing: complaints about corporate and HNW tax-dodging are not based on the premise that everybody should just voluntarily chip in an extra 10% for Uncle Sam; but on the (largely accurate) perception that there is a little-people tax code and a quite distinct, and very, very generous indeed, tax code for people who can afford the requisite caymans subsidiary, 'tax opinion letters', and suitably talented accountants.

It's like answering a complaint about criminal justice for poor schmucks with overworked public defenders vs. celebrities with fancy lawyers by asking "Well, did you go and voluntarily turn yourself in and plead guilty for all that jaywalking you've done?". That's orthogonal to the point: The complaint is not "some people aren't volunteering!" but "some people are forced, and some people would only be held to anything resembling what the rest are forced to if they were to volunteer."

Re:Question

[penix1]

Don't be angry with Google for following laws that allow them to pay less in taxes than you think they should, be angry at the lawmakers that craft the laws that allow them to do so.

There is plenty of anger for them both and then some. Your argument is specious because those same corporations are buying those same politicians specifically to favor them with laws written by the corporation lobbyists. Of course the tax system favors them since they wrote the tax loopholes this dumb ass CEO is espousing as virtuous.

Re:Question

[fuzzybunny]

Is he breaking the law?

No.

“For Eric Schmidt to say that he is ‘proud’ of his company’s approach to paying tax is arrogant, out of touch and an insult to his customers here in the UK,” she said.

Maybe, but that's a subjective judgment. Tax law is not subjective. There is a very good reason for that.

Google should recognise its obligations to countries like the UK from which it derives such huge benefits, and pay proper corporation tax on the profits it makes from economic activity here. It should be ashamed, not proud, to do anything less. ”

It pays proper corporation tax. Proper corporation tax is what is legally required. If you don't like the amount of tax Google is paying, close the fucking tax loopholes that allow it to get away with less.

As a private citizen who does not have the financial means to do a double Irish, blind trust, or whatever-the-hell-else legal mechanisms I could use to legally optimize my taxes, does it gall me that Google is paying such low taxes? Of course it does. I find the whole system loathsome and unfair. Do I want to see the laws allowing them to do this changed? Absolutely.

Do I want to see them subjected to arbitrarily made up rules that are contrary to what the written law says? Fuck no. If someone does not understand why this would be a bad idea, it's not really worth arguing.

Re:Question

[Liberty.45ACP]

How on earth do you think the government subsidies home schooling? We home school our son and pay property taxes that include subsidizing government schools. In the few areas that have some sort of voucher system, then those people may be getting some of their money back that was stolen (taxed) to support government schools.

Re:Question

[mcgrew]

The current crop of GOP senators are very business friendly

That's a euphamism for "worker-hostile". "Oh, no, don't raise taxes on the billionaires, make the roofer pound nails until he's 70. Oh, and cut down the amout of doctor visits he can go to as well, medicare costs too much."

The GOP is the party of unbridled greed.

Re:Question

[circletimessquare]

Look around you. Civilization. Not possible without taxes and a strong central government. Sorry fanboys.

Re:Question

[penix1]

Because corporations including Google had a big hand in lobbying to have the laws made so they can avoid paying as much taxes as possible while still demanding the government services those taxes go to pay for. Nothing like tilting the table then blaming the table when things fall off it.

Re:Question

[Rob the Bold]

Don't be angry with Google for following laws that allow them to pay less in taxes than you think they should, be angry at the lawmakers that craft the laws that allow them to do so.

And also don't be angry at someone who uses food stamps, medicaid, unemployment insurance, social security, medicare . . .

"Why is it that if you take advantage of a corporate tax break you're a smart businessman, but if you take advantage of something so you don't go hungry, you're a moocher?" -- Jon Stewart

Re:Question

[tehcyder]

All taxation is unfair. Taxation is, essentially, legalised theft.

No it isn't. It's a means of redistributing wealth, which is why rightwing Americans in particular hate it so much. Some people pay more tax, some less, but it all goes to paying for things that are for the benefit of society as a whole.

Re:Question

[circletimessquare]

monaco is a tiny parasitical entity. funded by the rich from other countries

maybe somalia is the example you were reaching for

Re:Question

[Mr. Mikey]

Taxation isn't theft.

Taxation is the honoring of a contract, the social contract you are implicitly a signatory to as a citizen of a civilized society.

You gain the benefit of roads you can drive on, tap water that is available and safe to drink, house fires that get put out, an educated populace (you know, all those citizens who don't happen to be your son), and so on.

You pay for those benefits via your taxes.

If you don't wish to enjoy those benefits, you are free to go somewhere like Somalia, where you won't be burdened with them... and neither will you enjoy all those benefits.

Good luck with that.

Re:Question

[Sloppy]

those same corporations are buying those same politicians specifically to favor them with laws written by the corporation lobbyists.

And yet it'll fall apart if we, on voting day, withdraw our support for those politicians. We never do, though.

We The People know how Democrats and Republicans get the text of the laws they enact, and every two years we re-affirm that yes, we want those people to keep on doing that.

There's nothing wrong with being angry, but you're getting angry with a machine that we've signed off on, which acts in a predictable fashion and hasn't malfunctioned. We knew what we would get, and we got it. Be angry at our hypocrisy instead, where we say we want fair government, but then vote against it, sometimes with mumbled excuses for why we reluctantly did it yet again.

I know what you're thinking: being angry at our hypocrisy will just lead to an acknowledgement of our responsibility, and nothing good ever comes of that. What we need is for a new veil of self-deception, since the old one is so tattered. Nobody believes our old excuses, or believes that we're stupid enough to believe them. It's time for a fresh start. Therefore, for the 2014 elections, I propose we each dedicate ourselves to one of two projects:

1. One team should come up with some new and credible reasons for why we should send Republicans and Democrats back to Congress again in 2014. Please, no right/left arguments; the claim that these parties politically ideological, is very old and tired and long-past exposed. Try a new approach to justifying these people, please.
2. The other team should come up with some credible pretenses for how we can all act SHOCKED, when the Democrats and Republicans "surprise" us by doing what they always do. What we want here, is for there to be a tragic narrative about how we all believed the stuff the first team comes up with, how it was an honest mistake anyone could have made, in spite of, in hindsight, being moronic beyond the imagination of the very best comedians.

We can do this if we try. There is no reason we, our our children, should ever have to face the realization that political power always rests in the hands of the governed.

He's right

[Cornwallis]

I can't fault anyone for taking advantage of legal loopholes.

If you want to blame someone go after the Sociopaths in Washington(TM) who created the U.S. tax code.

Please. Someone go after them.

Re:He's right

[girlintraining]

Please. Someone go after them.

Many have tried. They're all awaiting trial now or in jail. The main purpose of law enforcement is to maintain the status quo. You're not going to beat the system working within it or exposing yourself to it. That's been proven since the 60s in this country when, depite massive public opinion against it, the war in Vietnam continued. It's going to take more than words, banners, and a few picket lines to fix this problem -- our law makers do not listen even when they are surrounded by thousands of angry voters, because they know that voting and protest are both ineffectual. If you manage to get rid of one bad politician, another will take his/her place. The amount of effort required to overcome the bureaucratic inertia reinforcing and protecting these laws and legal mechanisms to extract money from the poor and give them to the rich is beyond the capability of even hundreds of thousands of organized citizens.

I cannot see this changing short of a major civil uprising.

Re:He's right

[ultranova]

I can't fault anyone for taking advantage of legal loopholes.

Why not? "I' won't be punished for it" is hardly good moral reasoning - indeed, it's literally infantile morality. And it actively harms society, not only by pushing tax burden on its weaker members but also by acting as an incentive to control all aspects of behaviour through laws.

Why on Earth should we not fault executives for refusing to grow up?

Mobile Capital

[SkunkPussy]

Its not Capitalism, its "Mobile Capital"-ism. And governments need to adjust their tax structure very quickly! Otherwise national-level and smaller businesses will not be able to compete.

Especially the robot CEO's

[Anonymous Coward]

I'm sure you could write a computer program to do a better job than 99% of CEOs... and think of all the money that will be saved on the obscene costs in have a human CEO.

Run Eric, Run. The robots are coming.

Do No Evil

[Anonymous Coward]

The more Schmidt speaks the less you can take the do no evil line seriously.

robot workers

[Iamthecheese]

Why would it be a good thing for us to work really hard so we can keep jobs by outpacing robot workers?

The goal should be 0% involuntary employment.

Corporate Taxes == Political Favoritism

[CajunArson]

The corporate tax rate should be on the order of 10% *but* with zero loopholes: Any profits from sales made in the U.S. get taxed regardless of where the company is based.

That would actually increase taxes on some major companies (but not to the stupid levels for the nominal tax rates that are in place now).

What we have now is a system where politicians can strut around talking about "taxing those evil corporations" while the corporations that pander to the politicians pay zero tax. Offender Number 1: General Electric that was paying zero taxes while Jeffrey Immelt was jetting around the world with Obama at taxpayer expense while the convenient liberals at MSNBC railed that Mitt Romney never paid taxes while conveniently never talking about their own corporate masters.

Socialism may win after all

[Gr8Apes]

First on tax avoidance: no one wants to pay taxes, but if everyone is taxed fairly, then this sort of nonsense resulting from favoritism in the tax code would not happen.

On the robot overlords commeth comment: Just about any halfway intelligent person can see that we're entering the phase of robot factories that produce products and that can repair themselves. Even factories producing robots.... These factories will take orders of magnitude fewer labor hours, and this movement will spread to other typically high labor industries, such as agriculture. Once those are converted, what then? A service economy can only employ so many, and food and basic foodstuff will wind up being almost free, other than energy costs (which could also be virtually free in this scenario) So what's left? Academia will only hold so many, and you only need so many managers/troubleshooters.

Yeah. But what's "reasonably" angry?"

[Chas]

Again. These companies are under no legal, moral or ethical constraint to assume the maximum tax burden possible.

They're under fiduciary constraints to maximize their shareholders' investments.

If you think that the current tax avoidance schemes are a Bad Thing, stop pissing and moaning at the companies who are simply doing what they're supposed to be doing and change the fucking laws.

Re:Yeah. But what's "reasonably" angry?"

[circletimessquare]

Restraint is not merely legal. Restraint is about your own internal compass. If you prove not to have one, I will hold that against you.

Re:Yeah. But what's "reasonably" angry?"

[serviscope_minor]

This is not about corporations making full use of tax credits.

This is about corporations licensing "IP" e.g. the name "Google" from some company in the Bahamas for almost as much money as they make (before the licensing) in a country such as the UK. As a result they appear to make no UK profit (since they have to pay so much for the name "Google") and hence have to pay no tax.

Basically it's about moving all actual profit offshore before it's taxed.

It might be legal, but it is unethical and it looks like lawmakers are looking to fix that loophole.

And FYI, that is something it is possible to do as an individual. Most people don't and those that do are generally looked on as scum.

Re:Yeah. But what's "reasonably" angry?"

[gfxguy]

That's a really good explanation of what's going on, so thanks, but I disagree with your conclusion.

Most people don't do this as an individual because most people don't make enough money for it to be worthwhile. But let me explain why I don't have any ill-will at all towards these companies: it's a global economy, and countries have to compete for businesses. If they U.S. can't offer a competitive tax structure (I personally favor a corporate tax rate of zero*), then the companies move. It's the free market at it's best, and it happens even between states in the U.S., and I completely support it.

* - Where do companies get their money to pay taxes? Hint: it's not growing on the trees that are growing outside their offices. Studies indicate that an average of 21% of the cost of all the goods and services you buy in the U.S. are simply embedded taxes that get passed up the line to the government. Most businesses get their money from one source: their customers.