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To reduce its tax burden, Google expands use of the “Double Irish”
- tensafefrogs 13y agoI've always been curious about the pressure of shareholders in situations like this. Google is a publicly shared company, right? So if they don't maximize the shareholder's value, don't they open themselves up to lawsuits by shareholders? So even if they wanted to "do the right thing" and pay some taxes on this money, they couldn't, else their board would get voted out by large shareholders who are only in it for the money.
- jamesaguilar 13y agoNot commenting about google specifically, but please observe that many companies donate to charity, and, extrapolating from this observation, resist the urge to trot out the "legally obligated to maximize profits" thing in the future.
- judk 13y ago3 people constitute a majority ownership of Google.
- Pxtl 13y agoAs all gamers know: the best way to fix a badly-broken rule is to exploit it relentlessly.
- falcolas 13y agoAnd get banned by the developers when they get around to fixing the problem. Getting stomped by the IRS when the close this loophole probably isn't high on Google's priority list...
- ucha 13y agoI wouldn't blame Google (or any multinational corporation) as much as I blame our legislators who failed to prohibit this kind of tax evasion schemes.
- jcampbell1 13y agoYou might as well blame them for creating free trade, and the european union. If legislators had the power to change the tax code, they would. Realistically they can't without doing something awful like currency controls or trade restrictions or something that will get shot down by the WTO. I am not a huge fan of corporate taxation because it is so indirect, but I do think we need some new global rules around IP transfer pricing.
- icelancer 13y ago>If legislators had the power to change the tax code, they would. Huh? They absolutely have the power to change tax code. Who do you think does? The IRS just executes the tax doctrine (with varying levels of compliance, of course).
- jfoutz 13y agoThe people who donate to legislators campaigns. The senator from Disney is a pretty good example of doing whatever it takes to represent his funder's best interests.
- jcampbell1 13y agoHow could legislators in the UK impose higher taxes on Google without violating EU / WTO trade agreements? If there was an easy way to do it, then they would have already. That was my point. Of course the legislators have the power to abandon all free trade agreements, leave the EU, and go Hugo Chavez and attempt to nationalize Google or something.
- Zoomla 13y agowould you blame Google if they gave money to legislators for allowing this kind of tax evasion scheme?
- RexRollman 13y agoNot so long as it was done in a legal manner.
- itchitawa 13y agoIs this really a problem? Isn't corporate tax rate one of the ways countries compete for businesses to be registered with them and pay them tax? I'm sure any government efforts to reduce this will just make it harder for everyone to run companies from other countries.
- georgemcbay 13y agoTry moving large sums of money (even money earned abroad) around like this to avoid taxes as a private US citizen and you're likely to get 10-20 years of mostly distraction free time to ponder the question of whether this is or isn't a problem.
- jamesaguilar 13y agoAs long as you don't break any laws while doin it, I don't see why.
- moinnadeem 13y agoMeh, tax code is still grossly over-complicated in the US, simplifying it would help everyone.
- icelancer 13y agoNot everyone. It would help those who don't have the disposable income to find and use these loopholes, which is mostly everyone. Unfortunately the vast majority of the people that it WOULD help have little to no power to effect that kind of change.
- javert 13y agoGood for them. The government shouldn't be taking their money.
- alphakappa 13y agoAnd how do you propose that government finds money to pay for roads, bridges, dams, police, firefighters, national security, national parks, environmental protection, regulatory standards etc?
- JoshTriplett 13y ago> roads, bridges, dams, police, firefighters, national security, national parks, environmental protection, regulatory standards Congratulations, you've enumerated most of the uncontroversial activities of government, which take up a few percent of the budget, and several of which are paid for in whole or in part by use fees.
- chiaro 13y ago>few percent of the budget >national security http://en.wikipedia.org/wiki/File:U.S._Federal_Spending_-_FY_2011.png http://en.wikipedia.org/wiki/File:U.S._Federal_Spending_-_FY...
- jamesaguilar 13y agoTo be fair, if it was only actually used for defense, it really would be only a few percent. And then to be extra fair, "old people and the poor should not die of starvation or easily preventable diseases just because they haven't saved," is also not very controversial, and takes up more than a few percentage points of our governments budget.
- alphakappa 13y agoThese aren't just a few percent. Defense spending itself is a fifth of the budget [1]. Regardless of how much of the budget each of these items are, the point is that these are paid through taxes. Corporate taxes are just another one of the many forms of taxation we have, so while you can make an argument to simplify these, or to cut some spending, it's silly to characterize taxation itself as some sort of robbery. Your western standards of living would not exist if not for the things that society has deemed appropriate for government to do. 1. http://www.cbpp.org/cms/?fa=view&id=1258 http://www.cbpp.org/cms/?fa=view&id=1258
- jgalt212 13y agoFine they don't pay taxes on the earnings, but they can't really use that money either--it must remain permanently abroad. Part of the reason AAPL did that $17 Billion bond issue (largest ever until the Verizon $49B deal) even thought they have like 8 quadrillion dollars in the bank is they cannot use those permanently abroad monies to pay dividends to shareholders. So, in short, what is good is tax-free money if you cannot use it? Are these companies all hoping that one day their will be a tax holiday and they can re-repatriate the funds?
- sliverstorm 13y agoAre these companies all hoping... I think the answer is yes?
- valleyer 13y agoPresumably companies like Apple and Google spend a decent amount of money abroad (e.g., manufacturing phones). Can't they use it for that?
- judk 13y agoThey already do. This debate is about the profits
- prostoalex 13y agoWhat you do is you issue bonds in your high-tax market to raise capital, and to pay interest/principal on those bonds, you slowly bring in the funds from your low-rate piggy-bank country. http://www.reuters.com/article/2011/05/16/us-google-bonds-idUSTRE74F5II20110516 http://www.reuters.com/article/2011/05/16/us-google-bonds-id...
- vellum 13y agoThere was one in 2004. Brought in $300+ billion, but didn't create a lot of jobs, so who knows when the next one will be.
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- koenigdavidmj 13y agoI bought a car a couple counties away from where I live for the lower sales tax rate than my home county. How is this ethically any different than that (other than the scale)?
- chiaro 13y agoWell I'd argue that the ethical difference is fundamentally the scale. How many lives could be changed if they paid taxes according to their social contract? Poverty, crappy healthcare and soaring incarceration are all problems that need money to alleviate.
- eru 13y agoThe money they saved isn't destroyed. They can use it for all kinds of good things now---like giving it back to their shareholders.
- 21echoes 13y agoi do hope you're kidding..
- tomfakes 13y agoThey have a fiduciary duty to do this to make more money for their shareholders. They have no enforceable social contract to provide taxes more than what they can legally pay. They can be sued by their shareholders for not using these schemes Not saying this is right, but this is the way the law works right now.
- chiaro 13y agoI'm referring to the tacit social contract between the state and its citizens, in this case, the idea that the state supports the entrepreneur in the beginning, so that later the entrepreneur can support the state, if they can. I'm probably butchering the term, so: http://en.wikipedia.org/wiki/Social_contract http://en.wikipedia.org/wiki/Social_contract
- Arcticus 13y agoGoogle by law has to take advantage of these "loop holes". They are a publicly traded and thus by law have the obligation to maximize their shareholder returns. So taking advantage of these tax loop holes they are fulfilling that duty. Doesn't excuse it but it does prevent Google from just saying no we won't do it.
- judk 13y agoThis is patently false. Read Google's S-1 and Letter to Shareholders.
- 21echoes 13y agothe "shareholder value theory" is a myth: http://blogs.law.harvard.edu/corpgov/2012/06/26/the-shareholder-value-myth/ http://blogs.law.harvard.edu/corpgov/2012/06/26/the-sharehol... http://www.nytimes.com/2012/08/11/opinion/nocera-down-with-shareholder-value.html http://www.nytimes.com/2012/08/11/opinion/nocera-down-with-s... there is no "law" that makes Google obligated to do this.
- patrickdavey 13y agoMay I recommend the book "Treasure Islands" by Nicholas Shaxson. http://treasureislands.org/ http://treasureislands.org/ A brilliant read if one that might make you slightly angry about the system!
- RafiqM 13y agoI'm Irish. They provide 2000 jobs here in Dublin, and that has the potential to double even in the next few years. The fact of them being here is a direct reason Facebook, LinkedIn, and a load of other companies are also here. They're indirectly responsible for, I would guess, about 10,000 jobs. I couldn't care less if they don't pay 12.5% corporation tax - they've provided massive social value even without it.