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Google's 'Dutch Sandwich' Shielded 16 Billion Euros From Tax (bloomberg.com)
Google moved 15.9 billion euros ($19.2 billion) to a Bermuda shell company in 2016, saving at least $3.7 billion in taxes that year, regulatory filings in the Netherlands show. From a report: Google uses two structures, known as a "Double Irish" and a "Dutch Sandwich," to shield the majority of its international profits from taxation. The setup involves shifting revenue from one Irish subsidiary to a Dutch company with no employees, and then on to a Bermuda mailbox owned by another Ireland-registered company. The amount of money Google moved through this tax structure in 2016 was 7 percent higher than the year before, according to company filings with the Dutch Chamber of Commerce dated Dec. 22 and which were made available online Tuesday.
The continued machinations that everyone has gotten into with respect to taxing profits feels just like the epicycles used in the heliocentric models -- continued added complexity to make something work that at base doesn't make sense.
At base, the truth is that profit is an interpretive value. It's not a basic arithmetic concept like gross revenue or net revenue -- it's a derived value that requires subjective judgment to assign to the inputs. As such, you can create more and more complicated rules that never really continues. Like epicycles, the corrections and adjustments continue forever.
It would seem totally logical that the simplest and least-subject-to-perversion method of taxation would be to chose to tax a value that requires the absolute minimum subjective interpretation: either a gross revenue tax or a consumption tax. Both can be made arbitrarily progressive and both are virtually impossible to game.
Instead we go on and on trying to tax an elusive concept . . .
You're free to offshore your entire company to Somalia. Lets see how that works out ok ?
Lower corporate taxes doesn't mean zero taxes. The "sweet spot" for government is about 35-40% of GDP. Less that that, and infrastructure and essential services are not properly funded. More than that, and enterprise and opportunity are stifled.
We need bridges, roads, and ports. But those can be paid for with excise taxes on those who use them.
We need a coast guard. We don't need a blue water navy in the Indian Ocean.
Aid for the poor is most effective when directed toward increasing opportunities rather than making poverty more comfortable.
We need law and order. We don't need drug and vice laws that fill a massive prison system that accomplishes little other than increasing recidivism.
The best part about all of this is it was the US State Department's idea to set up Ireland as a tax haven. Back in the late 40's when Ireland was basically broke, the US and UK got together with them to figure out how to fix their economy. The US brought up a bunch of ideas, and setting up a tax haven was one of them. So Ireland went ahead and did it.
So it's a bit suspect when the US congress calls CEOs onto the floor and lambastes them for taking advantage of something the US told Ireland to do.
My Other Computer Is A Data General Nova III.
Who pays corporate taxes? Answer: the corporations. And who owns the corporations? Answer: the shareholders.
Why don't we just tax the shareholders and skip the corporate tax?