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Maybe it's because I'm young and don't have experience with large-scale tax problems, but I have struggled for years and still cannot understand why companies d

• DigitalJack 14y ago
  You are free to send the government as much money as you like. How much do you send? If you are in the US, do you just send the amount that turbo tax tells you to, or do you send more? Do you take any deductions (i.e. the standard deduction, or itemizing)? By the reasoning of your post, that would make you "something close to evil."
  • ed209 14y ago
    yes, I do send more [than I could]. I could set up my salary through some finance companies in europe that help you keep up to 85% of your salary, but I don't.
    • 3825 14y ago
      Priorities. I would pay the lowest possible amount I can legally pay in taxes and give to things that I prioritize. For example, the ACLU, the EFF, and the NRA. You sound like someone who already gives but for everyone else's benefit, here is a link [1]. Contributions to the ACLU Foundation are tax deductible for charitable purposes. (This means talk to your accountant if you make a lot of money.) Give, won't you? [1] https://www.aclu.org/secure/support-aclu-foundation https://www.aclu.org/secure/support-aclu-foundation
      • ed209 14y ago
        But I don't want you to give money to the NRA (I assume that's the gun club), I would much rather you paid taxes. I see the danger in the system you mention that lots of money will go to niche organisations out of proportion with societies requirements. Better to pay taxes in the hope that they are distributed where they are most needed.
        • 3825 14y ago
          But that means I have to participate in the democratic process!
        • 3825 14y ago
          I just saw [this](https://www.youtube.com/watch?v=SZb8EXUrQTo https://www.youtube.com/watch?v=SZb8EXUrQTo) video and I hereby withdraw any and all association I had or I implied I had with the deranged senile people. I hope everyone who still is a part of the NRA dies a slow and painful death (without the use of guns).
  • Anechoic 14y ago
    If you are in the US, do you just send the amount that turbo tax tells you to, or do you send more? Speaking for myself, I enter deductions into the H&R Block program and watch the estimated payment. When the payment is something I think is reasonable, I stop entering deductions. So yes, I do send more than I have to.
    • graeme 14y ago
      You do realize this is highly unusual behaviour, correct? OP's question was more or less hypothetical, in that almost everyone who isn't a programmer sends exactly the amount they have to, and no more. (and often less, if they think they can get away with it)
      • anon1385 14y ago
        That isn't equivalent to what Google does at all though; if they didn't shift business around to shell companies in Ireland or Luxembourg and just paid the "the amount they have to, and no more" they would pay a hell of a lot more tax in the UK. You are comparing two different things: sending in extra money, which I think we can all agree is rare (although I also could pay less tax than I do), and actively using complex accounting involving other countries so that you pay far less then you normally would (and other equivalent dodges for individuals), which is not common among individuals. Of course, it is not so easy to avoid tax as a salaried individual, which is why your comparison is failing. Somebody on PAYE (i.e. most people) can't create a clone of themselves in Ireland to pay their income tax there instead of the UK. If that option was available to individuals then I'm sure plenty would take it (assuming Irish income tax is lower, I have no idea). That is what the debate is about though: some entities have great flexibility and can avoid tax if they want, others (individuals of average means or less) don't have the choice to pay less.
        • graeme 14y ago
          Agreed, it's different. I didn't want to make a broader comment, actually. Was just letting OP know that his behavior (used as an anecdote to counter the other poster's hypothetical) is highly unrepresentative. On a side note, one point I've been stuck on is what to call the commentors above me. I know there's established language for it (parent, grandparent) but I have trouble using it right. Anyone know what I should have called the poster of the hypothetical, and the response that I responded to?
  • flyinRyan 14y ago
    No matter how much cryptoz makes, he won't get near paying $2B in taxes. The extra taxes cryptoz could pay would have no effect on anything in the government but could really alter his/her quality of life. Google looks like they will make over $12B in profits this year, so $2B less of it wouldn't be noticeable in any tangible way.
• rlpb 14y ago
  This strikes me as a tragedy of the commons. It's in everyone's individual interest (including corporations) to pay as little tax as possible. Assuming that this is entirely legal, I don't see how this is a problem in Google's behaviour. If there is a problem, it is in the tax code, and the Government has sole responsibility for that. Making tax codes simpler would make it easier to not leave loopholes, but politics always seems to drive it in the other direction. Perhaps the need to avoid this kind of situation can be a good force in keeping tax codes simpler.
  • rayiner 14y ago
    These "loopholes" are not really what you think they are. Most of the complexity of the tax code doesn't come from "loop holes," but from trying to define a framework for computing net income as opposed to gross income. In the corporate tax case, complexity also comes from trying to avoid taxing companies for profits that have nothing to do with American operations.
    • flyinRyan 14y ago
      Also, a lot of "loopholes" come from the government trying to shape behavior via tax breaks.
      • polyfractal 14y ago
        A good example of this is the Mortgage Tax Credit, a much loved tax break for average, middle class families. This is essentially a "tax loophole" for people who buy houses. It's just more fun to yell about tax loopholes that corporations utilize, because big faceless corporations sound more evil than tax breaks that John and Jane benefit from.
        • Nursie 14y ago
          I disagree. Loopholes are unintentional on the part of the legislators, tax breaks are deliberate.
• TazeTSchnitzel 14y ago
  Not to mention that California's state government is in lots of debt. If the big tax-avoiding companies in CA paid a bit more tax, well...
  • 3825 14y ago
    Why is California's state government in lots of debt? A city of 36,664 with a 16% unemployment and a per capita income of $24,800 paid its council men twice of what is the salary of the POTUS[1]. I am personally opposed to capital punishment but I would not mind the strictest possible sentence to these people other than a death sentence. Perhaps suspend their drivers' license and passport and make them pay some enormous amount of money (in addition to the money they took from the government) which they cannot wipe away with a bankruptcy. [1]: https://en.wikipedia.org/wiki/City_of_Bell_scandal https://en.wikipedia.org/wiki/City_of_Bell_scandal
  • Jach 14y ago
    If the CA government had more income, I'm sure they would just find new ways to deplete it even faster. More money does not fix behavioral problems. This is a common pattern which many fail to observe.
• slash-dot 14y ago
  From the tax money they would pay only a very little part would go towards their community and employees. Most of it would be wasted on a lot of nonsense. If their goal was to make the world a better place it would be a lot more efficient to take the matter in their own hands and use their money directly on stuff they think should work better. States and governments are hugely inefficient.
• nikcub 14y ago
  Google pay taxes on all US income (not to mention payroll taxes, consumption taxes, etc.). There is a massive miscomprehension of these tax stories as they portray Google, Apple etc. avoiding all taxes when this is not the case. The income housed in Bermuda is from non-USA receipts, each of which have already passed through a local tax jurisdiction from wherever they were generated. They are not avoiding any taxes. The reason they are kept offshore is because if the funds were naturalized back in the USA they would be double-taxed. It is difficult to argue that Google should pay local taxes once where a product is sold and then pay taxes again on that same money when it is transferred back to the USA. Many large corporations that hold large cash balances keep them offshore. Around 75% of Apple's large cash holdings are held offshore. They have already paid tax on that money. It is the US naturalization laws that are broken, and the perception that Google, Apple et al aren't paying taxes or somehow avoiding them. The best thing the US Government could do would be to institute another repatriation tax holiday. There is precedent for it as happen in 2004. As much as a trillion dollars could make its way back into the US economy if a deal could be worked out - a private mini-stimulus that the economy of 2 years ago really needed.
  • arethuza 14y ago
    Google paid £6M on tax on a turnover of £395M in the UK - given that they don't have that much operations in the UK that suggests they they have been avoiding tax on their UK operations by manipulating where they choose to make profits so that the profits occur offshore rather than in the UK. Nothing particularly unusual or illegal about this. So they have been "avoiding" tax - but there is nothing illegal about that, or from my perspective, particularly immoral about it.
    • nikcub 14y ago
      > £6M on tax £6M in corporate income tax, which is only one of many taxes (and usually the smallest component) that a corporation pays. For eg. they would have collected a 20% VAT (consumption tax in the rest of the world) - which is another £80M, a 13.8% national insurance contribution, which would work out to be approx another £40M, and then on top of that a payroll tax. I am not familiar with the other payroll tax rates in the UK but it is similar in most other countries - the three or four different tiers. In the USA payroll taxes are 5-6x larger than corporate income taxes. Add them up for Google in the UK and you get to £130-140M contributed from a gross of £395M - a very different story to the headline figures that are being argued. edit: forget the figures, I don't know the UK tax system enough to even guesstimate, but the tl;dr is that corporate income tax is the smallest of a number of tax components that a corporation pays and arguing by taking out corporate income tax figures alone is misleading. This is the point that Google attempted to make.
• EvilTerran 14y ago
  It seems to me to be a "tragedy of the commons" situation: It's in each individual business' interest to avoid as much tax as it can, as it receives all the benefits of the extra net income, while the damage to the state is shared by everyone; but, if every business makes this individually-rational economic decision, everyone suffers from the adverse effects you describe in your first paragraph.
• MrVitaliy 14y ago
  Perhaps Google as well as anyone else, including my self, feel that they can spend 2B in a better way than the government would. For example, lobbying for more open internet.
  • rmah 14y ago
    They're not spending that $2B. They're putting into "safe" investments like treasuries or just keeping as cash. Thus, you are effectively paying them to hold onto it via your taxes (for the bonds) and inflation (for the cash).
• polyfractal 14y ago
  As others have said, many people think that corporate tax should be abolished completely. I'm fairly liberal (socially and fiscally), but I also support this. Ultimately, I want corporations to be as profitable as possible, because that is good for our economy. Profitable companies buy and sell goods, hire individuals, the usual talking points. If we want to give more money to public education, increase income/capital gains tax (e.g. individuals)...not corporate tax. Besides, you can make the case that only a small portion of the taxes Google pays actually improves the roads or public education. A large percentage will go towards things like defense research, healthcare, bridges in Alaska, any number of things that have no bearing on Google at all. (I'm not a Google apologist, this would apply to any company.)
  • inthewoods 14y ago
    So corporations should be able to use all infrastructure provided by taxing individuals and make no contribution? Should they pay, for example, local property tax?
    • polyfractal 14y ago
      I'm not sure I understand how those two are equivalent. If you want to tax a company for using public infrastructure...tax them for using the infrastructure (property tax, tolls, etc). Collecting a portion of their profit just because it's another place to add a tax doesn't seem to make sense. Imagine Google compared to a trucking company. Google makes 100x the profit of this particular trucking company. Does Google add 100x the wear and tear on roads that the trucking company does? Why should they be liable for a larger portion of maintenance on said roads simply because they have a larger profit?
      • inthewoods 14y ago
        Good points - I actually misread the OP and didn't see the word "corporate" tax - need more coffee!
  • Nursie 14y ago
    I want corporations to be as profitable as possible, because that is good for our economy What if they spirit all of that money out of the country to somewhere else? Surely it benefits the host country more to tax profits rather than just let them escape entirely?
• kragen 14y ago
  This would make sense if you were talking about Zynga, but we're talking about Google here. A dollar spent on Google's self-driving cars program will improve transport in California more than a dollar spent on resurfacing highways; a dollar spent on removing SEO spam from search results will improve education in California more than a dollar spent on paper textbooks full of lies sold by corrupt monopolies; and a dollar spent on developing Android will improve smartphones more than a dollar spent adjudicating pointless patent cases filed by patent pirates like Apple and Intellectual Ventures to eliminate competition. And then there's the benefit to the rest of the world outside California. And then there's the fact that a third of your tax money goes to the military, whose mission is to make the world a shittier place for everyone outside the US. I'm not a huge fan of Google (see http://lists.canonical.org/pipermail/kragen-tol/2011-August/000938.html http://lists.canonical.org/pipermail/kragen-tol/2011-August/...) but in a competition with the US and California governments for cost-effective ways to use dollars to improve the world, Google wins hands down.
  • willyt 14y ago
    But they can do this already. They could just spend the money on research and then they wouldn't have so much profit to be taxed.
    • kragen 14y ago
      When I wrote that comment, I thought that investment in R&D was taxed because it added to the book value of the company —you carry the results as intangible assets on your books until you depreciate them. Some other comments have asserted that that's not the case, since capital investment is not taxed as profit.
• graeme 14y ago
  Free rider problem. Google would get some benefit from it's local governments being more effective, but it would also pay a cost. Meanwhile, it's competitors keep high margins, and don't pay anything. Say California closes tax loopholes. Then all California companies are placed on an equal footing. But they're now at a disadvantage to non-California companies that don't pay taxes. Usually higher/simpler taxes will be the better solution. The higher the level they're applied at, the better, as far as the companies are concerned. Recall that Amazon has been pushing for Federal rules on state sales taxes. Absent those, it's been simpler for amazon to fight paying taxes rather than set up a compliance system and pay taxes on a state by state basis.
• Jach 14y ago
  California roads are not paid for by companies like Google but by gas taxes. Why do people always bring up roads and other infrastructure?
  • mgkimsal 14y ago
    Because regardless of what people say things are "for", generally all money goes in to a single fund, and everything gets drawn from that.
• ChuckMcM 14y ago
  Many western economies have a graduated tax system, that is the more money you earn, each additional dollar is taxed at a slightly higher rate than the previous dollars (or euros). You will experience this as the harder you work the more money you are obligated to give to the government. But here is the rub, what if the Government spends the money you gave them on an all expense paid trip for themselves to Las Vegas where they ran up big bills at strip clubs and on luxury suites? How do you feel about that? How about the Greek people, their economy in flames, their country ruined, where "not paying taxes is a national pastime" according to The Economist. The insight you are missing is that when "your" opinion of the government's fiscal policy is destroyed by abuse, "you" feel completely justified in exploiting all the legal ways to not give them any more money than you have to. It is hard for an individual to fix government it is easy for an individual to minimize their tax burden. So people take the easy way out.
  • polyfractal 14y ago
    > You will experience this as the harder you work the more money you are obligated to give to the government. This is not really true. There are many ways to make money without expending much effort. Example: capital gains. By simply having a lot of money, I can invest this and make a solid profit...and be taxed in a lower bracket. It has no bearing on effort expended. In fact, you can easily argue that "More Effort = More Money" has a very definite ceiling which you can't cross. At some point, you have to start leveraging other assets (money, employees, etc). Taxing based on the amount of income earned is really the only sensible way to tax. You can't tax "effort"
    • ChuckMcM 14y ago
      I don't disagree with your thesis that earned income is a reasonable basis for taxation, it is certainly better than 'value added.' But wonder if you are arguing that earning money through non-manual labor is 'effortless' ? This could use some clarification: " By simply having a lot of money, I can invest this and make a solid profit...and be taxed in a lower bracket." Is there some magic money pool somewhere that I can put a million dollars into and count on it to make a "solid profit" ? What is a 'solid profit' ? Is it inflation + 4%? 5%? 10%? People have told me that programming takes no effort, they say "Oh yeah, you just go in there and type in some stuff and make a word processor or something and then sell that again and again for $100, its like printing your own money!" I realize that they don't understand what programming involves in terms of making a living at it. For the last 15 years or so I've had the opportunity to manage the funds that I rolled over from a 401K as a 'self managed IRA'. I haven't found making that money 'grow' either easy or effortless. Rather it has been very much a challenge. During the dot-com frenzy I knew people who mortgaged their houses to raise capital that they were going to 'make money hand over fist' with. But I don't know any of them where that turned out to be the best use of that capital. Not definitive I know but it made me cautious.
• danenania 14y ago
  It depends on the country, but in many (certainly in the US) a very significant portion of tax revenues goes toward funding immoral activities and corruption. If you're worried about the health of society, you should be worried about the trillions devoted to war and propping up the financial industry's elite, not the billions Google retains in order to create more free services on the internet.
• B-Con 14y ago
  > Is it truly in Google's interest to work towards the minimization of government capability wherever it is? This is the wrong perspective. They're working toward maximizing their profits, not minimizing their benefit to the state. $1 billion of taxes into the state does not even come close to producing $1 billion of benefit to themselves. Considering how much money gets distributed to parts of the state hundreds of miles away and how inefficiently (and sometimes wasted) the government handles money, it's probably fractions of a penny on the dollar that they actually get back in some benefit. Is it worth it to you to avoid taxes? Yep. Even if it means that your local school where your children actually go to gets a bit less money, you save a couple thousand dollars and the school misses out on a hundred bucks. The impact on you personally is beyond negligible.
• Rhythmic 14y ago
  I would imagine what Google does is less "evil", while also being totally legal, than how California government would actually chose to spend those taxed dollars. Maybe if Google holds off a little longer then California may actually get more competent people handling their debt obligations and future expenditures. Overspending at a local level needs to be reigned in for any tax revenue to be truly effective.