6 ms·

From the article: "Google's practices are very similar to those at countless other global companies operating across a wide range of industries," So, why's th

by jbooth 16y ago

From the article: "Google's practices are very similar to those at countless other global companies operating across a wide range of industries," So, why's the article about Google? Shouldn't the article be about "countless global companies" bilking us for billions? I'm astonished at the lack of outrage on this issue every time it comes up.

karl11 16y ago
Agreed, I think Goldman Sachs has their effective rate down to less than 2%.
- solutionyogi 16y ago
  I had a hard time digesting this claim, I looked up on Google and found this: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a6bQVsZS2_18 http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a... In 2008, GS's effective tax rate was 1%!
  - borism 16y ago
    Why it's so hard to digest this? GS is so successful and so hated for certain reasons, and that's one of them.
    - solutionyogi 16y ago
      I do expect a Public Corporation to minimize their tax liability. I would have not been surprised if they minimized their effective tax from 35% to 25%, or even 15%. But going from 35% to 1% is rather surprising. I guess their Corporate Tax team got some real nice bonus for 2008.
  - jacoblyles 16y ago
    Since someone needs to call bullshit on this discussion, I would like to point out that GS's 2008 income was roughly 94% lower than its 2007 income. In 2007 its tax liability was roughly 35% of pretax income. Good tax accountants can lower your liability, but there is no magic "get out of taxes" card besides losing money. I'm not going to spend more time looking through the 2008 quarterlies, but I would guess they lost money in some of those quarters, creating a tax benefit. If you find that shocking, well I can also give you amazing advice to lower your tax rate to 0% but you may not enjoy it. In 2009, Goldman's pretax earnings returned to its historical range and the company again paid ~30% income taxes. These financials are all public, you can look at them on the internet.
- chollida1 16y ago
  A claim like this should always be backed up by some proof.
gaius 16y ago
Because countless global companies don't claim to be "not evil". Anyone Google hires in the UK (up 'til now anyway) has been educated at the expense of the taxpayer, for example. If someone breaks into their offce, the police will show up to investigate. Why shouldn't they pay their fair share?
- iwr 16y ago
  My neighbour should not get screwed harder so we are made equal. There's no such thing as a "fair share" of rape. Besides, if you look at the things the government is doing with the money recently vs. what Google is, there is no contest!
- camiller 16y ago
  Yes, and those taxpayer educated employees go on to pay income tax...rather than drawing welfare (or whatever you call it in the UK). In general the better the education, the higher the pay and the greater the income tax revenue from those employed individuals.
  - gaius 16y ago
    Google is in the UK at all because we are a stable, developed economy with a well-educated workforce, good infrastructure and high consumer spending. It could pay no tax at all if it relocated all its operations to Somalia where there is no government. But it stays, why? Because it is in its advantage to do so. To take but not give, that counts as a parasite in my book. Fortunately we have a government now that ain't gonna stand for no jibba jabba.
    - camiller 16y ago
      But it is giving, it's giving jobs.
- calloc 16y ago
  So? Then the UK needs to close the loopholes that allow Google to operate this way. Google is not obligated in any way shape or form to pay more for taxes if there are rules and regulations that state they can operate their business in a certain way that allows them to not be taxed for that amount of money. As a socialist I don't agree with that (I am from Europe), and I wish they did pay more taxes as it would certainly help the various governments there provide social services, at the same time I can definitely see that Google who is accountable to its shareholders and has to make as much money as possible is going to use the loopholes to keep as much money and not have it taxed.
jeroen 16y ago
Because "Google has managed to lower its overseas tax rate more than its peers in the technology sector". They're all doing it, but Google is doing it best.
dtf 16y ago
Because Google have a public image of behaving ethically. Everyone expects banks and evil multinationals to do this kind of thing. Is it ethical to avoid paying tax as an individual? Many would say no. But when a company does it, they lay their blame on the shareholders and the market. So the more outrage about this subject, the better. Our governments can either raise taxes or lower taxes. But they shouldn't let individuals and business get away with pretending to pay taxes when they're not.
- pg 16y ago
  Is it ethical to avoid paying tax as an individual? Many would say no. Do you mean avoid (by legal means) or evade (by illegal means)? Any government that uses tax incentives to affect citizens' behavior is saying it's ok to avoid taxes. If they promise your taxes will be lower if you do x rather than y, they're counting on your desire to avoid taxes to motivate you to do x.
  - patio11 16y ago
    Including -- very relevantly for many people here -- huge incentives given to creating wealth via capital gains relative to creating wealth via salaried employment. I mean, memo from Congress to you: if you either a) make a business then sell it or b) invest in a retirement account, we will literally let you keep a few million more of your own money than we would have otherwise.
  - tyn 16y ago
    Using tax havens is certainly not one of these cases.
    - patio11 16y ago
      You probably mean "tax haven", which is a rhetorical slight-of-hand to suggest that jurisdictions competing for attention via tax rates are somehow enticing people to sin. Competing via tax rates is just another way of enticing people to behave differently. Some people are under the impression that this happens only internationally. This is incorrect. One of the healthiest features of the American experiment is a federal system where you have a broad spectrum of options in terms of tax rates versus social services. People (and companies) can, and do, pick legal regimes which optimize for the outcomes they find important. You may have heard people sort of like living in California, especially if they work for political subdivisions of it: that comes at a price -- you'll pay a gobsmacking amount of money in taxes relative to a similarly situated individual in Texas. (I managed to pay California several hundred dollars in taxes last year and I don't even live there. Yay, hotel tax.) Competition among governments internationally is also healthy, for much the same reason. The market in tax and legal protection encourages governments to not just expropriate all the surplus from their wealth-creating constituents.
llimllib 16y ago
> bilking us for billions It's my understanding that the way we've defined fiduciary duty (roughly speaking) requires public corporations to do this if it's legal. Can anyone comment on that?
- jbooth 16y ago
  Sure. Yes, you're right. So we should redefine tax law so that it's not legal, and have everyone pay their fair share. Only ourselves to blame, I'm certainly not blaming corps for chasing dollars.
benmccann 16y ago
This is a commonly accepted best practice in corporate accounting. In 2006 the IRS approved Google's transfer pricing arrangements. Also, it's so common that there is a name for it - "The Double Irish". Bloomberg recently had an article on the same topic: http://www.bloomberg.com/news/2010-05-13/american-companies-dodge-60-billion-in-taxes-even-tea-party-would-condemn.html http://www.bloomberg.com/news/2010-05-13/american-companies-...

by jbooth 16y ago

karl11 16y ago

Agreed, I think Goldman Sachs has their effective rate down to less than 2%.

solutionyogi 16y ago
I had a hard time digesting this claim, I looked up on Google and found this: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a6bQVsZS2_18 http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a... In 2008, GS's effective tax rate was 1%!
- borism 16y ago
  Why it's so hard to digest this? GS is so successful and so hated for certain reasons, and that's one of them.
  - solutionyogi 16y ago
    I do expect a Public Corporation to minimize their tax liability. I would have not been surprised if they minimized their effective tax from 35% to 25%, or even 15%. But going from 35% to 1% is rather surprising. I guess their Corporate Tax team got some real nice bonus for 2008.
- jacoblyles 16y ago
  Since someone needs to call bullshit on this discussion, I would like to point out that GS's 2008 income was roughly 94% lower than its 2007 income. In 2007 its tax liability was roughly 35% of pretax income. Good tax accountants can lower your liability, but there is no magic "get out of taxes" card besides losing money. I'm not going to spend more time looking through the 2008 quarterlies, but I would guess they lost money in some of those quarters, creating a tax benefit. If you find that shocking, well I can also give you amazing advice to lower your tax rate to 0% but you may not enjoy it. In 2009, Goldman's pretax earnings returned to its historical range and the company again paid ~30% income taxes. These financials are all public, you can look at them on the internet.
chollida1 16y ago
A claim like this should always be backed up by some proof.

gaius 16y ago

Because countless global companies don't claim to be "not evil". Anyone Google hires in the UK (up 'til now anyway) has been educated at the expense of the taxpayer, for example. If someone breaks into their offce, the police will show up to investigate. Why shouldn't they pay their fair share?

iwr 16y ago
My neighbour should not get screwed harder so we are made equal. There's no such thing as a "fair share" of rape. Besides, if you look at the things the government is doing with the money recently vs. what Google is, there is no contest!
camiller 16y ago
Yes, and those taxpayer educated employees go on to pay income tax...rather than drawing welfare (or whatever you call it in the UK). In general the better the education, the higher the pay and the greater the income tax revenue from those employed individuals.
- gaius 16y ago
  Google is in the UK at all because we are a stable, developed economy with a well-educated workforce, good infrastructure and high consumer spending. It could pay no tax at all if it relocated all its operations to Somalia where there is no government. But it stays, why? Because it is in its advantage to do so. To take but not give, that counts as a parasite in my book. Fortunately we have a government now that ain't gonna stand for no jibba jabba.
  - camiller 16y ago
    But it is giving, it's giving jobs.
calloc 16y ago
So? Then the UK needs to close the loopholes that allow Google to operate this way. Google is not obligated in any way shape or form to pay more for taxes if there are rules and regulations that state they can operate their business in a certain way that allows them to not be taxed for that amount of money. As a socialist I don't agree with that (I am from Europe), and I wish they did pay more taxes as it would certainly help the various governments there provide social services, at the same time I can definitely see that Google who is accountable to its shareholders and has to make as much money as possible is going to use the loopholes to keep as much money and not have it taxed.

jeroen 16y ago

Because "Google has managed to lower its overseas tax rate more than its peers in the technology sector". They're all doing it, but Google is doing it best.

dtf 16y ago

Because Google have a public image of behaving ethically. Everyone expects banks and evil multinationals to do this kind of thing. Is it ethical to avoid paying tax as an individual? Many would say no. But when a company does it, they lay their blame on the shareholders and the market. So the more outrage about this subject, the better. Our governments can either raise taxes or lower taxes. But they shouldn't let individuals and business get away with pretending to pay taxes when they're not.

pg 16y ago
Is it ethical to avoid paying tax as an individual? Many would say no. Do you mean avoid (by legal means) or evade (by illegal means)? Any government that uses tax incentives to affect citizens' behavior is saying it's ok to avoid taxes. If they promise your taxes will be lower if you do x rather than y, they're counting on your desire to avoid taxes to motivate you to do x.
- patio11 16y ago
  Including -- very relevantly for many people here -- huge incentives given to creating wealth via capital gains relative to creating wealth via salaried employment. I mean, memo from Congress to you: if you either a) make a business then sell it or b) invest in a retirement account, we will literally let you keep a few million more of your own money than we would have otherwise.
- tyn 16y ago
  Using tax havens is certainly not one of these cases.
  - patio11 16y ago
    You probably mean "tax haven", which is a rhetorical slight-of-hand to suggest that jurisdictions competing for attention via tax rates are somehow enticing people to sin. Competing via tax rates is just another way of enticing people to behave differently. Some people are under the impression that this happens only internationally. This is incorrect. One of the healthiest features of the American experiment is a federal system where you have a broad spectrum of options in terms of tax rates versus social services. People (and companies) can, and do, pick legal regimes which optimize for the outcomes they find important. You may have heard people sort of like living in California, especially if they work for political subdivisions of it: that comes at a price -- you'll pay a gobsmacking amount of money in taxes relative to a similarly situated individual in Texas. (I managed to pay California several hundred dollars in taxes last year and I don't even live there. Yay, hotel tax.) Competition among governments internationally is also healthy, for much the same reason. The market in tax and legal protection encourages governments to not just expropriate all the surplus from their wealth-creating constituents.

llimllib 16y ago

> bilking us for billions It's my understanding that the way we've defined fiduciary duty (roughly speaking) requires public corporations to do this if it's legal. Can anyone comment on that?

jbooth 16y ago
Sure. Yes, you're right. So we should redefine tax law so that it's not legal, and have everyone pay their fair share. Only ourselves to blame, I'm certainly not blaming corps for chasing dollars.

benmccann 16y ago

This is a commonly accepted best practice in corporate accounting. In 2006 the IRS approved Google's transfer pricing arrangements. Also, it's so common that there is a name for it - "The Double Irish". Bloomberg recently had an article on the same topic: http://www.bloomberg.com/news/2010-05-13/american-companies-dodge-60-billion-in-taxes-even-tea-party-would-condemn.html http://www.bloomberg.com/news/2010-05-13/american-companies-...