Google Invests $1 Billion To Build New London HQ

redletterdave writes "Google just purchased a 2.4-acre plot in the King's Cross Central development in London, where the company plans to build a brand-new, 1 million square foot office. Google reportedly invested about £650 million ($1.04 billion) on the property, which, when finished, will be valued at more than £1 billion ($1.6 billion). While Google traditionally leases its overseas offices, the company's decision to buy rather than rent in this case was likely tax motivated, since Google can't repatriate its cash to the U.S. without paying a hefty tax."

Comments

One trick is through sales

[SmallFurryCreature]

Ireland and say Spain have radically different tax rates over profits over a sale. So... what can you do if you are devoid of all morals?

Say the product in Spain sells for 100 dollars but really costs 10 to produce in China. Then Ireland buys it from China for 10 and sells it to Spain for 99.99. The sale in Spain then to the consumer is for 100, giving the Spain division a 1 cent profit.

Of course, since you are making so little money in Spain, you do claim all the subsidies and tax breaks you can to support your struggling business.

The fact is that our society is run on the principle that everyone is nice, that everyone is going to try their best to live together and play well with each other. The order keepers can NEVER check everyone doesn't speed, doesn't run red lights, gives the right of way. AND we NEED that, just imagine HOW hard it would be to travel anywhere if you couldn't at least somewhat count of right of way, people stopping for signs and keeping a similar speed. Remember that those who hate the speed limit ONLY talk about the MAX speed limit, the speeders NEVER complain about SLOW vehicles being banned from certain roads. No speed limits means you can drive ANYTHING ANYWHERE.

It is the same with taxes, it would be un-workable to check everybody, so the system relies on most people paying their tax neatly.

Evil people/Republicans often claim the rich pay the majority of the tax burden... apart that from the fact it ain't as a big a burden if you are rich, that is only logical, those who have the majority of the money, pay the majority of the taxes. The hidden lie (you know it is a lie because a Republican said it) is that the rich SHOULD be paying FAR more. But countless loopholes make the likes of Romney have a taxrate of 11%. No wonder he wants to see a birth certificate but does not want to show his tax records. If the rich payed their due share (who benefits more from police patrols, the rich guy with police guard or the poor guy living in a police no-go area) there would be far more tax-revenue AND then EVERYONES taxes could come down. If one rich guy avoids paying 1 million, that is a LOT of minimum wage workers who have to make up the difference because no Republican tax avoider would think of spending less on the army.

Tax avoidance is a gigantic business, the economy of Ireland practically runs on it. And that is the huge problem, there is ALWAYS someone who benefits when society is harmed.

The funny thing is that any call for chance will get you millions of piss-poor Republicans living on benefits saying you shouldn't tax the rich! Willing slaves. Because one day YOU may own a slave, you defend your own slavery. The American Dream, the ultimate brainwash.

Re:One trick is through sales

[batkiwi]

I don't find claiming 90+% of the profit from ireland as legit if 0% of the work involved was done there.

Re:One trick is through sales

[towermac]

There is another explanation for your apparent dichotomy, but I believe your vitriol for "Evil people/Republicans" is blinding you to it.

You defined the problem: The cost of doing business in Ireland and China is far cheaper than Spain (and the US and other places). There are two solutions to that, although you only see the one of going after Ireland and the people who do business across borders. You could try to make it cheaper to do business in Spain. You can't magically lower the cost of commodities and land, but you can cut taxes. Especially if that was one of the major costs of doing business.

11% would be a decent tax, especially on a guy making millions. Romney's, like mine, was actually closer to 14%; which means about $7,000 for me, millions and millions for him. What's your moral justification for making either one of us pay a higher percentage than the other? Don't envy his stuff, man. Don't vote based on envy, which is simply self-justified greed.

The corporate rate over here is 35%. That's not a tax, that's a freakin' partner. It's obviously too high. "Tax" is supposed to be an incidental cost, not a major portion of a transaction. I'm not talking opinion here, the proof is in the facts. All these companies holding money offshore; they don't get to have that money either. It's still their money, but while it sits in the Caymans, not really earning enough interest to cover inflation; they don't get to have it, use it, spend it; just like we don't get to tax it. Google needs a billion dollar building in London about as much as you or I do. Hell, I guess that's better than it sitting in a damn bank somewhere though.

The fact that they would rather do without their own money, rather than have it, and pay the tax on it, proves the tax is too high. And if they are truly as greedy, and covet their money as much as you say, then you can trust their judgement on this one.

Re:One trick is through sales

[divisionbyzero]

11% would be a decent tax, especially on a guy making millions. Romney's, like mine, was actually closer to 14%; which means about $7,000 for me, millions and millions for him. What's your moral justification for making either one of us pay a higher percentage than the other? Don't envy his stuff, man. Don't vote based on envy, which is simply self-justified greed.

You are focused too much on the absolute value of the dollars. The moral justification is that beyond a certain number those millions of dollars have less value than your $50,000. In other words basic necessities take up a far larger percentage of your income than Romney's. The additional tax revenue from people like Romney helps pay for the social costs of company's like his that force other companies to pay their workers substandard wages and benefits and thus turn to the government for help in order to increase profit margins to give people like Romney even more money. Do you see how this cycle works? If companies paid their employees a more reasonable wage, a so-called living wage, I could see the case for lowering taxes.

As for the rest of your post, competing on taxes is a downward spiral that leaves governments unable to take care of their people in order to export wealth out of the country. A certain amount of tax competition help keep things lean but it's better to compete on things like education and infrastructure that hard to replicate. The reason tax competition is so popular is that it just takes some paper shuffling rather than real investments in a country's future.

Re:Can someone explain how multinationals work?

[iserlohn]

So what are the moral implication of funnelling money through a tax haven that has no real purpose other than to reduce tax load? It may be legal, but is it moral?

This is the reason that I have avoided doing the same. Obviously, if your main base of business is in your own country, the corporation tax should also go back to you country to fund public expenses in your country, as opposed to a country which has nothing to do you your business apart from having low tax rates.

There are some people that go even further than that. They roam around Europe with no fixed abode, claim non-domiciled status and can avoid the majority of dividend tax. There is more to being honest than staying within the boundaries of the law.

Re:Can someone explain how multinationals work?

[LordLucless]

So what are the moral implication of funnelling money through a tax haven that has no real purpose other than to reduce tax load? It may be legal, but is it moral?

Um, none? Tax isn't a moral issue, it's a legal and economic one. It's like asking if there's a moral issue with not paying $110 against a $100 charge. The government calculates your tax bill. If you pay what it says you owe, you've discharged your obligation. If there are "loopholes" in the tax law, then the government has put them there, and presumably is ok with you using them.

There are some people that go even further than that. They roam around Europe with no fixed abode, claim non-domiciled status and can avoid the majority of dividend tax. There is more to being honest than staying within the boundaries of the law.

If they have no fixed address and keep moving around between countries, it's quite likely they're not receiving any benefits their taxes would ostensibly go to pay for.

Re:Can someone explain how multinationals work?

[dkf]

There is then the wrinkle that to not do 'B' may be against your shareholders best interests.

I wouldn't really say there's much of a maybe about it... and as far as I know isn't it a legal requirement that you can't do anything against their best interests?

But there's usually a way to spin virtually anything that management want to do as being in the shareholders' best interest. The issue is that shareholders have a very large range of interests, many of which will be directly divergent from one another, and there's a need to have many different strategies over many spans of time.

In practice, the fiduciary responsibility regulations only really have real bite in limited circumstances where the actions of management may verge on the fraudulent (e.g., selling substantial parts of the company for much less than their fair value to another company owned by the CEO; whether or not that's technically fraud, it's still seen as clearly wrong). Most of the time, so long as management are trying to do the best for the company as they see it, they're not on the hook for fiduciary responsibility violation.

If you want to identify real problems, point your finger at investment firms that just want a fast return on their money and care nothing for the success of the businesses that they invest in. All they do is try to force everyone else to act like as big a corporate psychopath as they are. (This is why businesses run by their founding entrepreneurs often do better: they don't just focus on boosting their share price or returning dividends over the next 3 months, but instead actually build the business.)