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Former Google Exec Turns Whistleblower On Company’s Tax Avoidance In The UK
- magicalist 13y agoThis is techcrunch blog spam of the actual story in the sunday times. actual story: http://www.thesundaytimes.co.uk/sto/news/uk_news/National/article1261720.ece http://www.thesundaytimes.co.uk/sto/news/uk_news/National/ar... previous discussion: https://news.ycombinator.com/item?id=5730861 https://news.ycombinator.com/item?id=5730861
- thrill 13y agoI love when someone wants to use the word "scam" and "immoral" when talking about "technically" avoiding taxes. It's either legal or it ain't - and there's nothing that shows it was illegal.
- arrrg 13y agoSomething can be legal and also immoral.
- camus 13y agoImmoral according to what ? to whom ? There is only the law , the rest is b.s.
- bdcravens 13y agoI'm pretty sure if you replace "Google" with "Microsoft" or "Apple" it would change the number of people dismissing it as b.s.
- rodion_89 13y agoMicrosoft and Apple are engaging in similar behaviours. https://en.wikipedia.org/wiki/Double_Irish_arrangement#Companies_using_the_arrangement https://en.wikipedia.org/wiki/Double_Irish_arrangement#Compa...
- dvt 13y agoMoral philosophy doesn't really work that way. You may live in a lawless no-man's-land. Even though murder may not be "technically illegal," that doesn't somehow make it any less wrong.
- arrrg 13y agoSo you solved the question of what’s right and wrong. All we need is some people, elected using a byzantine voting process, who, with weird rules and centuries of inertia, come up with the Truth. That’s it, everyone else can pack their things and go home. Why do you elevate the law in such a way? It’s possible to have a perfectly productive discussion about whether and why something is immoral without even so much as mentioning the law. People define what’s moral and what’s not just how people define what’s legal and what’s not. The discussion about whether something is immoral or not is one that is completely separate from whether something is illegal.
- deleted 13y ago[deleted]
- sokoloff 13y agoYes, but morality cannot be adjudicated whereas legality can. So, when it's important for a point to be settled definitively, talking about the legality is generally more fruitful than talking about the morality. I suspect that was camus's point.
- arrrg 13y agoIt’s not important for this to be settled definitively. I suspect it never will be. Plus, I think many here probably agree that it’s likely that Google didn’t do anything illegal. So why discuss something most people agree on? That’s pointless.
- jussij 13y agoMorality has nothing to do with law.
- xtc 13y agoWhistleblowers pointing fingers in the wrong direction. What they're doing is most certainly legal. What should be looked as is the legislation enabling it. Or rather if it's even a bad thing in the first place.
- cpursley 13y agoIt's not likely illegal. Anyways, 'immoral' is all relative to one's political philosophy. Some find taxes immoral - especially when they're used to bailout and/or protect competitors, bomb and maim 'enemies' and spy on it's own citizens. Depriving poorly run corrupt governments of tax benefits everyone, including said government.
- shubb 13y agoTax in the UK makes me very sad. For businesses big and small, and for individuals like me, it's a huge burden. A lot of business owners in my town have been forced out of business by local taxes. They lose business to charity shops, which sell donated, or sometimes new items, and pay profits to charity. They do not pay local tax, and often do not pay rent [1]. In some cases, after paying much of the money to the owner, that charity profit can be slim[4]. It is hard to compete with those who do not pay tax. It is not a level playing field. I'm sure that those trying to compete with Google, Amazon, and similar large companies that pay very little tax feel the same way. The times article says "Although Google’s London sales staff would negotiate and sign contracts with British customers, and cash was paid into a UK bank account, deals were technically booked through its Dublin office to minimise its liabilities here. Jones, a devout Christian and father of four, is ready to hand over a cache of more than 100,000 emails and documents to HM Revenue & Customs (HMRC), detailing the “concocted scheme”. "[2] At the same time, Google's CEO made a thinly veiled threat to withdraw work from the UK if the government here plays hard ball on tax. BP would claim that fines made against it in the US were politically motivated[3], and with some credibility. I think that whether Google is fined in this case will be very much a political decision. Which perhaps supports your point. [1]http://www.ft.com/cms/s/0/d8bee184-112c-11e1-a95c-00144feabdc0.html#axzz2TmyzKMVH http://www.ft.com/cms/s/0/d8bee184-112c-11e1-a95c-00144feabd... [2]http://www.thesundaytimes.co.uk/sto/news/uk_news/National/article1261720.ece http://www.thesundaytimes.co.uk/sto/news/uk_news/National/ar... [3]http://www.bbc.co.uk/news/business-22549710 http://www.bbc.co.uk/news/business-22549710 [4]http://www.independent.co.uk/money/money-charity-shops-and-the-cash-that-wont-reach-the-needy-1276435.html http://www.independent.co.uk/money/money-charity-shops-and-t...
- duncan_bayne 13y agoGo Google! Perhaps? An issue I always face when considering tax evasion is that I'm pleased when someone manages to avoid at least some compulsory taxation, but I'm disturbed that it's often very large and very wealthy organizations, which suggests a level of corruption (conscious or emergent) in our systems of Government.
- aarondf 13y ago"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes a public duty to pay more than the law demands." Judge Learned Hand in Helvering vs Gregory, 1934.
- arrrg 13y agoThe power differential involved can make it very sinister, at least from my perspective. If everyone could be equally resourceful in avoiding taxes then I would agree completely. If everyone is able to avoid paying taxes with equal ease (or difficulty) there is no problem. However, I don’t think that’s the case. Some can throw lawyers at the problem, others can’t. That makes it problematic. Yes, it’s a systemic issue, too (and that is likely the place where it has to be fixed), but I don’t think there is anything wrong in thinking that using more esoteric tax avoidance schemes available only to the few is deeply immoral, if not illegal.
- adamt 13y agoI suspect though that that US Supreme Court ruling has little impact and no jurisdiction on an HMRC (HMRC = Her Majesty's Revenue and Customers, the UK's equivalent to the IRS) investigation into the tax practices of Google's UK subsidiary.
- DanBC 13y agoEvery time people say "What's the problem if they're obeying the law?" These companies are using very complicated schemes, bought from well funded well staffed multinational accountancy companies (any single one of the big four has more staff in an off shore tax haven than the HMRC has in total). Don't forget that law consists both of statute and case law - a bunch of this stuff has never been before a judge so we don't know if it's legal or not. These schemes are not normal tax planning. While they're not tax evasion (use of clearly illegal methods to not pay tax) they're borderline, and may not actually be legal. For these schemes to be legal requires a suspension of disbelief - for example, Starbucks doesn't make any profit in the UK[1]. (Baffling if you've ever bought a £4 coffee.) Forensic accounts investigation is complex, time consuming, and expensive. It's not surprising that overworked under funded understaffed tax offices can't spare the resources to investigate companies who are trying to obfuscate their tax arrangements. When companies are caught they negotiate deals to repay some, but not all, of the tax. Not paying your tax and risking getting caught is just a cost of doing business.[2] A company using English staff, in English offices, to sell English products to English staff working for other English companies, using English money through English banks should probably be paying tax in England, even if the company have arranged for someone in an Irish office to sign a bit of paper at the end of the chain. And we've got ourselves into this weird situation. The big four firms lend staff to HMRC to help draft tax law. The big four firms then use their inside knowledge of these laws, that they helped to draft, to create schemes on the edge of legality[3ab]. What I'm gently worried about is an employee of Google (apparently from an accounts department but maybe I got that wrong) siphoning off 100,000 emails, and keeping them for years before coming forward. That feels like a significant fail, but I have no idea of the law around that kind of thing. I trust that Google has much tighter controls around user data. [1] (http://www.independent.co.uk/news/uk/home-news/starbucks-is-right-not-to-pay-uk-tax-because-it-makes-no-profit-says-coffee-chains-tax-advisor-8589459.html http://www.independent.co.uk/news/uk/home-news/starbucks-is-...) [2] (http://www.guardian.co.uk/politics/2011/dec/20/inland-revenue-sweetheart-tax-deals http://www.guardian.co.uk/politics/2011/dec/20/inland-revenu...) [3a] (http://www.ion.icaew.com/TaxFaculty/26745 http://www.ion.icaew.com/TaxFaculty/26745) [3b] (http://www.guardian.co.uk/business/2013/apr/26/accountancy-firms-knowledge-treasury-avoid-tax http://www.guardian.co.uk/business/2013/apr/26/accountancy-f...)
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- tsotha 13y agoThis is just another reason we should ditch corporate income tax. It never made any sense anyway.
- smartician 13y agoAnd replace it with what? A corporate wealth tax?
- tsotha 13y agoNope. I would recover the difference by raising personal income or sales taxes. After all, when you tax corporations their customers are the ones who ultimately pay the tax.
- i_s 13y agoWho "ultimately pays" depends. "...tax incidence or tax burden does not depend on where the revenue is collected, but on the price elasticity of demand and price elasticity of supply." http://en.wikipedia.org/wiki/Tax_incidence http://en.wikipedia.org/wiki/Tax_incidence
- rayiner 13y agoCorporate income tax makes perfect sense. If you have a system that: 1) taxes income to persons; 2) treats corporations as distinct legal persons, as both the U.S.'s and U.K.'s does, a corporate income tax falls out naturally. That is to say, the fact that the corporation and the shareholders are taxed distinctly is a natural consequence of the fact that the "corporation's money" is distinct from the "shareholders' money." This fact is the basis for the advantages of corporate form: that a lawsuit against the corporation only endangers the "corporation's money" not the "shareholders' money." The resulting state of affairs creates a common sense choice for businesses: if you want to treat the corporation as a separate entity when it comes to legal liability, you also have to treat the corporation as a separate entity when it comes to taxation. But though a corporate income tax is theoretically justified, the challenges of enforcing one may make it desirable to get rid of it as a practical matter.
- smartician 13y agoIsn't this just the Double Irish scheme[1] that Google and other multi-nationals have been doing for a long time now? How is it "whistle blowing" if something is public knowledge? If it goes beyond that, then the article hasn't really done a good job at pointing that out. [1] https://en.wikipedia.org/wiki/Double_Irish_arrangement https://en.wikipedia.org/wiki/Double_Irish_arrangement
- ensignavenger 13y agoI am in favor of replacing all income tax with a consumption tax- one that is really easy to calculate, like the Fair Tax. The Fair Tax may have some kinks that need to be ironed out, but the concept is really solid.
- andrewflnr 13y agoMy understanding is that consumption taxes (we're talking about things like sales tax right?) disproportionately affect poorer people, who spend more of their income, as opposed to rich people who tend to invest more. I'm not 100% sure of the science, but it makes sense. I'd rather just see a simple income tax.
- ensignavenger 13y agoYes, typically a sales (consumption tax) does effect to poor more than the rich, because the poor tend to consume 100% of their earnings to survive, whereas the rich only consume a very small portion of their overall earnings. The Fair Tax attempts to address this via 2 mechanisms- first, it does not tax used goods. Poorer people are more likely to buy used goods than new ones. Second, the Prebate. Under the Fair Tax, the a prebate is given, based on the Federal Poverty Line, and the amount of tax that would be paid if a family spent up to the federal poverty line. Families that are spending less than the Federal Poverty line actually would pay negative taxes, and those spending more, would progressively be taxed more. As written, some analysts of the Fair Tax have criticized it for putting the squeeze on the middle class- because many spend everything/most of what they earn, but earn well over the poverty line. Whereas the wealthy still consume very little of their overall income, and the poorest of the poor pay negative taxes. I would tweak the prebate a little from this model, requiring the legislature to specify the prebate level each year as a part of their budget. This means they can't hide behind tweaking the way the poverty line is calculated- they have to make the decision directly, and be held accountable for it. I would also require the legislature to set the actual tax rate annually or at some other regular interval.
- dm2 13y agoSomebody is really trying hard to spread this negative press against Google. The issue isn't even news, it's well known that Google and many other large multi-international companies do the Double-Irish to avoid taxes. Until Congress plugs the loophope, what should Google do, they hire companies to manage their taxes and the hired company does it to the best of their ability, who is to blame? Our representatives, IMO.
- brohoolio 13y agoI would like to point out that this is about Google actually breaking the law and not just gaming the system. Seems most commenters assume that this is about gaming the system. Google is walking a fine line here and if they step over that line they can't expect folks to go easy on them.
- throwaway1980 13y agoWhen Google first came out with "don't be evil", this was exactly the kind of thing I thought they wanted to avoid, especially since the corporate bogeyman of the day was Microsoft and they were doing exactly this (Apple too). Turns out I don't really have any idea what Google thinks don't be evil means. It looks like they operate like any other corporation, where the only people they truly care about in a bottom-line sense are shareholders. May as well be up front about that. From what I've seen, a better motto is probably: Don't be evil unless it makes money than being good, but never admit to evil or talk about it in any way.