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Google Boss: We Follow The Law On Tax

16 points by ceekays 13y ago

dotcoma 13y ago
Then it must be the law which is crooked.
- DannyBee 13y ago
  I think it was jon stewart who said "these complicated carve outs weren't made by poor people"
  - Svip 13y ago
    He did indeed. http://www.thedailyshow.com/watch/wed-may-22-2013/tax-men---apple http://www.thedailyshow.com/watch/wed-may-22-2013/tax-men---...
  - mseebach 13y ago
    As everyone who's attended internet pundit law school know, the effect of a law is dependant on the net worth of the author of it.
- Nursie 13y ago
  The law, as is always the way, is several steps behind social progress and business practices. I'm not sure this can ever be otherwise.
  - skore 13y ago
    That may be true, I could conceive that if it were otherwise, there would be quite a high potential that you end up with something draconian. However, I don't think that's the issue here. The issue is that there are corporations making massive investments to actively prevent the law from catch up.
Nursie 13y ago
Of course you do dear, but you also exploit every possible loophole of inter-country commerce to make your bill as small as possible, regardless of the intention of the law in the countries involved or any sort of social contract. Expect the law to change.
- pvnick 13y ago
  You would make a terrible accountant.
  - Nursie 13y ago
    So? I'm not an accountant. I'm an individual with an interest in multinationals paying tax on their profits rather than spiriting them out of the country tax free. This is why I hope to see the law change.
dasil003 13y ago
Without specifics this is just so much hot air. Google's responsibility should not be to find ways to pay more tax. If there are tax loopholes it's the government's job to close them.
- takluyver 13y ago
  I see a disturbing amount of this attitude: it's fine for corporations to be as unethical as they can get away with, and it's up to government to constantly rein them in. I don't buy it. No, it's not Google's responsibility to find ways to pay tax, but they also shouldn't be constantly finding ways not to pay tax. A company is not a function relentlessly optimising for money, it's made up of real people making decisions. I expect those people to use some sense of what's morally right, not just what the law allows them to do. The law is a heavy, slow implement, especially when multiple countries are involved. Multinational corporations can rearrange their accounts much faster than we can pass legislation to control them. It's like playing whack-a-mole with a vote before each hammer swing. If they're dodging taxes within the letter of the law, they can expect judgement in the court of public opinion. Which is how this debate started.
  - dasil003 13y ago
    > I see a disturbing amount of this attitude: it's fine for corporations to be as unethical as they can get away with, and it's up to government to constantly rein them in. That's not my attitude at all. My attitude is just one tiny facet of that attitude, which is that no one should have to pay more taxes than they are legally required to. I don't, for instance, think that corporations should be free to maximize profit by toeing the EPA line. With regards to taxes, what's unethical about using the law to one's advantage? This isn't a rich guy socking away millions in the Bahamas; as far as we know there's nothing shady going on at all. Furthermore, we know Google pays some amount of tax all around the world and that they employee a lot of people in the UK all of whom pay gobs of taxes. Google decision of where and how to open offices may well be shaped by these tax laws, so it's really not fair to attract a company to your country with a certain tax regime, and then berate them for not following the "social contract" or whatever. Google is not a UK company. It didn't start in the UK, and it doesn't have to operate here. If tax laws change Google has to deal with it, so do it, but you can't have your cake and eat it too by attracting them in with a certain tax regime and then painting them as some sort of greedy villains because their accounts don't interpret the intention of the law and voluntarily decline tax breaks.
pvnick 13y ago
If my accountant paid a penny more taxes than I owed I would fire them. That politicians are attacking successful companies for trying to pay as little in taxes as possible is offensive and embarrassing. If you're unhappy with the law then change it. Otherwise shut the hell up and stop wasting the tax money you're complaining about.
- skore 13y ago
  Now now, be fair. There IS a difference between "paying only the taxes that I am required to pay" and setting up a Double Irish with a Dutch Sandwich. One is investing resources to minimize failure ("I want to make sure we don't pay more than we need to pay"), which I completely agree with - if your accountant fails to do that, it's not a good accountant. But the other is a proactive investment of even more money to pay even less taxes ("I want to pay even less than what would be normal by the intent of the tax law").
  - pvnick 13y ago
    "My good friend and CFO, Larry, why didn't you set up that offshore account that would legally save us millions of dollars in taxes per quarter like we talked about? That way we could hire more workers so they could feed their families and receive adequate health coverage." "Oh that wouldn't be fair to the people that couldn't do that." "You're fired."
    - skore 13y ago
      Alright, you really are just trolling, got it. So unless you are setting up multiple subsidiaries in tax havens and funnel the money around in a way that lets you narrowly avoid the laws that otherwise quite clearly determine what your fair share to society is, there is no way to have a proper business and in the end, the children get hurt and poor little Rebecca can't afford to pay for lunch at school and everybody points fingers at her. Boo, boo, haa, haa, money, money. Understood. This kind of strawman argument really used to make me sick, but these days, I'm mostly bummed out about how I've become so used to seeing it.
mcintyre1994 13y ago
Google is clearly in the right here, unless somebody can actually point out a law they're breaking. Simplifying a lot, Google have 2 responsibilities here: Pay at least the amount of tax they owe, maximise stuff shareholders care about. It doesn't take much to work out the optimal solution to them two problems is to pay exactly the minimum amount of tax possible.
- pvnick 13y ago
  Seriously, what's up with politicians recently, both in Europe and here in the States, hammering at successful companies for trying to minimize their tax liability? I specifically avoided saying "leftist" politicians because even the right is guilty (I'm looking particularly at that sniveling fool John McCain). Expect the law to change, creating an even more complicated tax structure and destroying even more economic value while providing zero benefit to common citizens. We should be looking in the opposite direction. Do away with large swaths of the tax code and ask less of the companies that support the global economy. Especially now that apparently the organizations that extract those taxes (specifically the IRS) have become political tools to harass those people whose politics our "leaders" disagree with.
  - svenkatesh 13y ago
    I agree with you about simplifying the tax code, but do not agree about reducing the tax-liability. Since these corporations benefit from society just like private individuals do, they should contribute to society (in the form of taxes) in kind.
    - pvnick 13y ago
      Why not reduce the tax liability as well for people like you and me then? It would be one thing if governments could be trusted to spend the money wisely, but so far as I've seen (other than obvious exceptions such as emergency services and libraries) that's rarely the case.
      - 13y ago
Shivetya 13y ago
Lets see, politicians have created a system so complex they themselves cannot understand it. Then they act upset that someone else has to that others advantage and attempt to vilify them instead of acknowledging that the system is too complex. Sounds about right. You would think that they would instead focus on making a system even they could understand.
- svenkatesh 13y ago
  Actually, if you look at the video from the Senate hearing, some of the senators are clearly fawning over, and pandering to, Tim Cook. It's disgusting.
  - pvnick 13y ago
    What's your point? I thought that senate hearing was disgusting because they were hammering away at Apple for obeying the law. Apple is an incredible success story and they should be lauded as an example of free markets, not vilified for trying to avoid giving extra money to the incompetent fools in congress. Which would you prefer - successful companies that lawfully avoid paying too much in taxes while supporting western economies, advancing technology, and providing countless jobs? Or a top-heavy, zero-liabilty, exploitive government that, even as it grows unsustainably larger, still demands more and more, always chasing that unreachable pie-in-the-sky ideal of the "fair share."
ancarda 13y ago
Is "Don't be evil" just a joke or was it actually the motto of Google?
- ndr 13y ago
  http://www.google.com/about/company/philosophy/ http://www.google.com/about/company/philosophy/
- roopeshv 13y ago
  https://plus.google.com/+MattCutts/posts/4U2mpZ6hazU https://plus.google.com/+MattCutts/posts/4U2mpZ6hazU I 'll leave it here again. do no evil is not don't be evil
noonespecial 13y ago
I think politicians are just upset that those tax law loopholes that were supposed to be just for their friends are now being exploited by those upstart interweb companies like "the google". Our supporters paid good money for those exclusive exemptions, dammit. This is just making us look bad...
- mjw 13y ago
  Fair point, although it's rather disingenuous for multinationals (not singling out Google) to say to taxpayers: "don't like our tax avoidance? well just change the rules then!" Arguably one of the main reason we're not able to change (or at least, enforce) the rules easily is because of regulatory capture of tax agencies around the world, and multinationals are (directly or indirectly) funding this regulatory capture via their investment in complex tax avoidance schemes and the whole industry around them which is in constantly in and out of the "revolving door" between regulators and accountancy firms. So, likely there's always going to be opportunities out there for aggressive tax avoidance, because of exactly these kind of agency problems. And so a multinational is always going to have a decision to make about exactly how aggressive they choose to be. And they are going to be judged morally by the taxpayer for the decisions they make, whether they like it or not. If they are judged badly as a result of their choices, they should have the good grace to just admit that they're being selfish because they can get away with it and that's the way things are, and not come up with disingenuous self-serving rationalisations.
- genwin 13y ago
  I think the politicians here are just trolling for campaign cash and other favors in kind. When Google greases the right palms the spotlight will shift elsewhere.
- nijk 13y ago
  Or maybe not all politicians are in favor of the loopholes.
rayiner 13y ago
I see a lot of talk about "tax loopholes" but not any specifics about exactly what those loopholes are. It's easy to blame the law (a process which is mostly just a self-reinforcing talking point), but has it occurred to anyone that maybe neither the law nor Google are "crooked?" You can take the most straightforward law and it still won't withstand a company putting all their IP in a tax haven and then attributing most of their revenues to their tax haven subsidiary. That's not taking advantage of a "loophole" that's taking advantage of the fact that: 1) accounting for revenue is inherently complicated, regardless of the tax laws, especially for service businesses and software services businesses at that; and 2) multi-national corporations must have some way to attribute income to the various countries in which they operate; it wouldn't be fair for every country to individually tax all the company's income separately. It's instructive to try and figure out a tax law that would allow say the U.K. to reach some portion of Google's income. It's harder than it seems. For example, is it relevant that Google has customers in the U.K.? It shouldn't be--there is no sales tax on search services. If someone in the U.K. for example calls up their accountant in the U.S. for advice, as a general rule the accountant isn't liable for income taxes in the U.K. Is it relevant that Google has servers in the U.K.? Sure. But how relevant? How much of the value of Google's service derives from the servers in the U.K. versus the code and algorithms that were developed in California? I think most people would agree that the servers are just incidental--the real value of Google's services is the algorithms and data. So why should the mere existence of servers in the U.K. entitle the country to tax some substantial amount of Google's income?
- polshaw 13y ago
  Google doesn't sell searches, it sells advertising. They do much of that sales process for UK advertisers (effectively all of it according to one whistle-blower) in the UK, and 'close' them (and declare them) in Ireland. Nobody is suggesting double taxation, but google does a substantial amount of (profitable) business in the UK, and (at least morally) that portion should be taxed in the UK.
  - rayiner 13y ago
    But that's doesn't make things any clearer. Google might do the sales process in the UK, but how much should that count when the ads are shown internationally and the platform that brings in the eyeballs is developed outside the UK? Clearly they should pay some taxes in the UK, but how to divvy it up? And how to achieve that process when there is nobody with overarching jurisdiction over the whole entity?
deleted 13y ago
[deleted]

16 points by ceekays 13y ago

dotcoma 13y ago

Then it must be the law which is crooked.

DannyBee 13y ago
I think it was jon stewart who said "these complicated carve outs weren't made by poor people"
- Svip 13y ago
  He did indeed. http://www.thedailyshow.com/watch/wed-may-22-2013/tax-men---apple http://www.thedailyshow.com/watch/wed-may-22-2013/tax-men---...
- mseebach 13y ago
  As everyone who's attended internet pundit law school know, the effect of a law is dependant on the net worth of the author of it.
Nursie 13y ago
The law, as is always the way, is several steps behind social progress and business practices. I'm not sure this can ever be otherwise.
- skore 13y ago
  That may be true, I could conceive that if it were otherwise, there would be quite a high potential that you end up with something draconian. However, I don't think that's the issue here. The issue is that there are corporations making massive investments to actively prevent the law from catch up.

Nursie 13y ago

Of course you do dear, but you also exploit every possible loophole of inter-country commerce to make your bill as small as possible, regardless of the intention of the law in the countries involved or any sort of social contract. Expect the law to change.

pvnick 13y ago
You would make a terrible accountant.
- Nursie 13y ago
  So? I'm not an accountant. I'm an individual with an interest in multinationals paying tax on their profits rather than spiriting them out of the country tax free. This is why I hope to see the law change.

dasil003 13y ago

Without specifics this is just so much hot air. Google's responsibility should not be to find ways to pay more tax. If there are tax loopholes it's the government's job to close them.

takluyver 13y ago
I see a disturbing amount of this attitude: it's fine for corporations to be as unethical as they can get away with, and it's up to government to constantly rein them in. I don't buy it. No, it's not Google's responsibility to find ways to pay tax, but they also shouldn't be constantly finding ways not to pay tax. A company is not a function relentlessly optimising for money, it's made up of real people making decisions. I expect those people to use some sense of what's morally right, not just what the law allows them to do. The law is a heavy, slow implement, especially when multiple countries are involved. Multinational corporations can rearrange their accounts much faster than we can pass legislation to control them. It's like playing whack-a-mole with a vote before each hammer swing. If they're dodging taxes within the letter of the law, they can expect judgement in the court of public opinion. Which is how this debate started.
- dasil003 13y ago
  > I see a disturbing amount of this attitude: it's fine for corporations to be as unethical as they can get away with, and it's up to government to constantly rein them in. That's not my attitude at all. My attitude is just one tiny facet of that attitude, which is that no one should have to pay more taxes than they are legally required to. I don't, for instance, think that corporations should be free to maximize profit by toeing the EPA line. With regards to taxes, what's unethical about using the law to one's advantage? This isn't a rich guy socking away millions in the Bahamas; as far as we know there's nothing shady going on at all. Furthermore, we know Google pays some amount of tax all around the world and that they employee a lot of people in the UK all of whom pay gobs of taxes. Google decision of where and how to open offices may well be shaped by these tax laws, so it's really not fair to attract a company to your country with a certain tax regime, and then berate them for not following the "social contract" or whatever. Google is not a UK company. It didn't start in the UK, and it doesn't have to operate here. If tax laws change Google has to deal with it, so do it, but you can't have your cake and eat it too by attracting them in with a certain tax regime and then painting them as some sort of greedy villains because their accounts don't interpret the intention of the law and voluntarily decline tax breaks.

pvnick 13y ago

If my accountant paid a penny more taxes than I owed I would fire them. That politicians are attacking successful companies for trying to pay as little in taxes as possible is offensive and embarrassing. If you're unhappy with the law then change it. Otherwise shut the hell up and stop wasting the tax money you're complaining about.

skore 13y ago
Now now, be fair. There IS a difference between "paying only the taxes that I am required to pay" and setting up a Double Irish with a Dutch Sandwich. One is investing resources to minimize failure ("I want to make sure we don't pay more than we need to pay"), which I completely agree with - if your accountant fails to do that, it's not a good accountant. But the other is a proactive investment of even more money to pay even less taxes ("I want to pay even less than what would be normal by the intent of the tax law").
- pvnick 13y ago
  "My good friend and CFO, Larry, why didn't you set up that offshore account that would legally save us millions of dollars in taxes per quarter like we talked about? That way we could hire more workers so they could feed their families and receive adequate health coverage." "Oh that wouldn't be fair to the people that couldn't do that." "You're fired."
  - skore 13y ago
    Alright, you really are just trolling, got it. So unless you are setting up multiple subsidiaries in tax havens and funnel the money around in a way that lets you narrowly avoid the laws that otherwise quite clearly determine what your fair share to society is, there is no way to have a proper business and in the end, the children get hurt and poor little Rebecca can't afford to pay for lunch at school and everybody points fingers at her. Boo, boo, haa, haa, money, money. Understood. This kind of strawman argument really used to make me sick, but these days, I'm mostly bummed out about how I've become so used to seeing it.

mcintyre1994 13y ago

Google is clearly in the right here, unless somebody can actually point out a law they're breaking. Simplifying a lot, Google have 2 responsibilities here: Pay at least the amount of tax they owe, maximise stuff shareholders care about. It doesn't take much to work out the optimal solution to them two problems is to pay exactly the minimum amount of tax possible.

pvnick 13y ago
Seriously, what's up with politicians recently, both in Europe and here in the States, hammering at successful companies for trying to minimize their tax liability? I specifically avoided saying "leftist" politicians because even the right is guilty (I'm looking particularly at that sniveling fool John McCain). Expect the law to change, creating an even more complicated tax structure and destroying even more economic value while providing zero benefit to common citizens. We should be looking in the opposite direction. Do away with large swaths of the tax code and ask less of the companies that support the global economy. Especially now that apparently the organizations that extract those taxes (specifically the IRS) have become political tools to harass those people whose politics our "leaders" disagree with.
- svenkatesh 13y ago
  I agree with you about simplifying the tax code, but do not agree about reducing the tax-liability. Since these corporations benefit from society just like private individuals do, they should contribute to society (in the form of taxes) in kind.
  - pvnick 13y ago
    Why not reduce the tax liability as well for people like you and me then? It would be one thing if governments could be trusted to spend the money wisely, but so far as I've seen (other than obvious exceptions such as emergency services and libraries) that's rarely the case.
    - 13y ago

Shivetya 13y ago

Lets see, politicians have created a system so complex they themselves cannot understand it. Then they act upset that someone else has to that others advantage and attempt to vilify them instead of acknowledging that the system is too complex. Sounds about right. You would think that they would instead focus on making a system even they could understand.

svenkatesh 13y ago
Actually, if you look at the video from the Senate hearing, some of the senators are clearly fawning over, and pandering to, Tim Cook. It's disgusting.
- pvnick 13y ago
  What's your point? I thought that senate hearing was disgusting because they were hammering away at Apple for obeying the law. Apple is an incredible success story and they should be lauded as an example of free markets, not vilified for trying to avoid giving extra money to the incompetent fools in congress. Which would you prefer - successful companies that lawfully avoid paying too much in taxes while supporting western economies, advancing technology, and providing countless jobs? Or a top-heavy, zero-liabilty, exploitive government that, even as it grows unsustainably larger, still demands more and more, always chasing that unreachable pie-in-the-sky ideal of the "fair share."

ancarda 13y ago

Is "Don't be evil" just a joke or was it actually the motto of Google?

ndr 13y ago
http://www.google.com/about/company/philosophy/ http://www.google.com/about/company/philosophy/
roopeshv 13y ago
https://plus.google.com/+MattCutts/posts/4U2mpZ6hazU https://plus.google.com/+MattCutts/posts/4U2mpZ6hazU I 'll leave it here again. do no evil is not don't be evil

noonespecial 13y ago

I think politicians are just upset that those tax law loopholes that were supposed to be just for their friends are now being exploited by those upstart interweb companies like "the google". Our supporters paid good money for those exclusive exemptions, dammit. This is just making us look bad...

mjw 13y ago
Fair point, although it's rather disingenuous for multinationals (not singling out Google) to say to taxpayers: "don't like our tax avoidance? well just change the rules then!" Arguably one of the main reason we're not able to change (or at least, enforce) the rules easily is because of regulatory capture of tax agencies around the world, and multinationals are (directly or indirectly) funding this regulatory capture via their investment in complex tax avoidance schemes and the whole industry around them which is in constantly in and out of the "revolving door" between regulators and accountancy firms. So, likely there's always going to be opportunities out there for aggressive tax avoidance, because of exactly these kind of agency problems. And so a multinational is always going to have a decision to make about exactly how aggressive they choose to be. And they are going to be judged morally by the taxpayer for the decisions they make, whether they like it or not. If they are judged badly as a result of their choices, they should have the good grace to just admit that they're being selfish because they can get away with it and that's the way things are, and not come up with disingenuous self-serving rationalisations.
genwin 13y ago
I think the politicians here are just trolling for campaign cash and other favors in kind. When Google greases the right palms the spotlight will shift elsewhere.
nijk 13y ago
Or maybe not all politicians are in favor of the loopholes.

rayiner 13y ago

I see a lot of talk about "tax loopholes" but not any specifics about exactly what those loopholes are. It's easy to blame the law (a process which is mostly just a self-reinforcing talking point), but has it occurred to anyone that maybe neither the law nor Google are "crooked?" You can take the most straightforward law and it still won't withstand a company putting all their IP in a tax haven and then attributing most of their revenues to their tax haven subsidiary. That's not taking advantage of a "loophole" that's taking advantage of the fact that: 1) accounting for revenue is inherently complicated, regardless of the tax laws, especially for service businesses and software services businesses at that; and 2) multi-national corporations must have some way to attribute income to the various countries in which they operate; it wouldn't be fair for every country to individually tax all the company's income separately. It's instructive to try and figure out a tax law that would allow say the U.K. to reach some portion of Google's income. It's harder than it seems. For example, is it relevant that Google has customers in the U.K.? It shouldn't be--there is no sales tax on search services. If someone in the U.K. for example calls up their accountant in the U.S. for advice, as a general rule the accountant isn't liable for income taxes in the U.K. Is it relevant that Google has servers in the U.K.? Sure. But how relevant? How much of the value of Google's service derives from the servers in the U.K. versus the code and algorithms that were developed in California? I think most people would agree that the servers are just incidental--the real value of Google's services is the algorithms and data. So why should the mere existence of servers in the U.K. entitle the country to tax some substantial amount of Google's income?

polshaw 13y ago
Google doesn't sell searches, it sells advertising. They do much of that sales process for UK advertisers (effectively all of it according to one whistle-blower) in the UK, and 'close' them (and declare them) in Ireland. Nobody is suggesting double taxation, but google does a substantial amount of (profitable) business in the UK, and (at least morally) that portion should be taxed in the UK.
- rayiner 13y ago
  But that's doesn't make things any clearer. Google might do the sales process in the UK, but how much should that count when the ads are shown internationally and the platform that brings in the eyeballs is developed outside the UK? Clearly they should pay some taxes in the UK, but how to divvy it up? And how to achieve that process when there is nobody with overarching jurisdiction over the whole entity?

deleted 13y ago

[deleted]