Google Inc. cut its taxes by $3.1 billion in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda.
Google’s income shifting — involving strategies known to lawyers as the “Double Irish” and the “Dutch Sandwich” — helped reduce its overseas tax rate to 2.4 percent, the lowest of the top five U.S. technology companies by market capitalization, according to regulatory filings in six countries.
“It’s remarkable that Google’s effective rate is that low,” said Martin A. Sullivan, a tax economist who formerly worked for the U.S. Treasury Department. “We know this company operates throughout the world mostly in high-tax countries where the average corporate rate is well over 20 percent.”
The U.S. corporate income-tax rate is 35 percent. In the U.K., Google’s second-biggest market by revenue, it’s 28 percent.
Google, the owner of the world’s most popular search engine, uses a strategy that has gained favor among such companies as Facebook Inc. and Microsoft Corp. The method takes advantage of Irish tax law to legally shuttle profits into and out of subsidiaries there, largely escaping the country’s 12.5 percent income tax.
The earnings wind up in island havens that levy no corporate income taxes at all. Companies that use the Double Irish arrangement avoid taxes at home and abroad as the U.S. government struggles to close a projected $1.4 trillion budget gap and European Union countries face a collective projected deficit of 868 billion euros.
The high corporate tax rate in the U.S. motivates companies to move activities and related income to lower-tax countries, said Irving H. Plotkin, a senior managing director at PricewaterhouseCoopers LLP’s national tax practice in Boston. He delivered a presentation in Washington, D.C. this year titled “Transfer Pricing is Not a Four Letter Word.”
“A company’s obligation to its shareholders is to try to minimize its taxes and all costs, but to do so legally,” Plotkin said in an interview.
Administration Concerned
While the administration “remains concerned” about potential abuses, officials decided “to defer consideration of how to reform those rules until they can be studied more broadly,” said Sandra Salstrom, a Treasury spokeswoman. The White House still proposes to tax excessive profits of offshore subsidiaries as a curb on income shifting, she said.
Read the article. There are days I feel like I have “SUCKER” stamped on my forehead.
Leona Helmsley told us “Only the little people pay taxes !” and they THREW HER IN JAIL FOR SPEAKING THE TRUTH !!!
Same as with the “piracy” in audio visual world: reduce complications (in this case accounting requirements and regulations) and bring price to acceptable level (in this case cut business tax from insane 35% to LESS than any other competing state) … “piracy”/tax evasion will drop to minimal levels.
I’m not going to RTFA. Its all “by design, bought and paid for.” Find the tax loophole at issue and see who contributed how much money to whom to get it into law.
USA==best democracy money can buy.
Cue Alfie: Rich Republican Ass should be kissed because they provide jobs.
Yes, we are being “jobbed” but not the employment type. As too often stated: it makes sense for greedy self centered asswipes to avoid paying any tax or fee as much as possible. Why people who don’t, and never will, benefit from Billion Dollar Corporations paying less marginal rates than they do themselves is the f*cktarded question of the day. What a base. How close is the teabag movement to the drain?????
Yea, verily.
F*ctarded Example on Display: I give you #2-dismal: “in this case cut business tax from insane 35% to LESS than any other competing state) … “piracy”/tax evasion will drop to minimal levels.” /// Yea, because Google will gladly pay 10% when the alternative Irish Sandwich is 3%.
Shit for Brains thinking like this only makes sense if you yourself are benefiting from it.
Dismal–are you a major stockholder in Google? Do you know Google Management would be subject to stockholder lawsuits if 10-9-8-7-6-5-4-% tax is paid when 2.4% is available?
Yes, a system designed to fail brought to us by the throat cutting likes of dismal and the Republitard crowd.
“We need the rich, because they give us scraps.”
Tax evasion? No. All of this is reportedly legal – so that’s tax avoidance. As #2 said, if we’d normalize our rates with the rest of the world, it would probably be easier to lower rates and eliminate (legal) loopholes and revenues would go up.
That’s great news! It means Google should be drastically increasing its hiring rate, right? Shouldn’t this be trickling down as we speak?
Jobs jobs jobs!
Tax avoidance is not illegal. I suspect as Google’s use of the loopholes is widely publicized, some lawmaker will try to close it. Probably really screw the system up. I don’t think you can fault Google for this. If they knew about it and DIDN’T take advantage of it, then they’d be idiots. It’s just tax avoidance. McCullough, you use tax avoidance to some extent. I use it to some extent. Even Bobbo avoids taxes when he can. It’s tax EVASION that gets you tossed into gaol. I don’t fault Google for doing what many other corporations are likely doing. Using words like “sketchy” and “miserly” in your headline is simply childish drama queen stuff.
Things like this would happen less often if our lawmakers could write a bill that was straightforward, easy to understand and didn’t run to volumes. And the tax code? Geez, you can’t even pick up the US tax code. A half dozen burly guys couldn’t lift it. It’s literally hundreds of thousands of pages long! I’d prefer a straight flat tax and VAT and no loopholes. Not likely to happen.
Any law that can be clearly understood by the general populace is dangerous to the government.
In the article, which a*wipe boobo won’t read (god forbid he know the facts), it says which helped cut Google’s overall effective tax rate to 22.2 percent last year, shows one way that loopholes undermine that top U.S. rate.. I wasn’t sure if this 22.2 percent was their effective US rate or total (US and International) rate. If it is the US rate, seems like giving the gov’t 1 out of every 5 dollars you earn is not avoiding taxes.
And the argument about federal money being used to fund the research is bogus. How large is Google’s US payroll? How much do you think that contributes is taxes as compared to, let’s say, some nutball artist that take National Endowment of the Arts money, smears feces on a wall and gets hugs all around from bobbo’s liberal lovers?
Don’t be evil, it’s what they said. I didn’t believe it then and I don’t believe it now. Move along, nothing to see here, same old, same old.
Animby–actually, I itemize mainly to get the tax advantage on my house “but” I don’t do the detail work on other common deductions. I feel VERY PRIVILEGED to make the money I do and don’t feel the need to secure every loophole created by politicians to pander to me. This pisses the wifey off totally which also makes it fun.
Course, I read about a taxpayer years ago who paid more than he was required to and he either got sued or was told he could be sued by the IRS for over reporting his income. Something doesn’t add up there, but the point is, the law is an ass.
#8–Truth==Why do you support deficit spending?
huh?
Actually, my not taking deductions flows from my experience at top corporate management: I see it all too often that when management wants to get rid of a person for whatever reason, they get a trump card when they find employees/CEO’s/Board Members “fudging” their expense accounts. When the powers that be want to get rid of you “It’s my secretary’s fault” doesn’t cut it.
I’ve gotten into the habit of filing expense accounts with only the “main” expenses listed: airfare and hotel room. I don’t submit for taxi’s, food, booze and what not. When I get fired, there is a pretty clean slate for management to work thru.
That habit has simply carried on to the IRS as well. My concern for a functioning society and the welfare of my kiddies is only a happy coincidence.
Exactly.
It’s also what destroyed Ireland’s economy.
Almost all US corps in the EU are headquartered in Eire for this reason. Ireland not only has the lowest rate of corporate tax but it doesn’t care if nobody pays it, it makes enough money out of the staff and property.
The rest of the EU (well Germany+UK) is getting a little annoyed that HP/MSFT/Google/Apple apparently make a loss on all their sales in the EU except in Ireland and are closing the loophole.
It also meant that when the US economy tanked Ireland suddenly lost 1/3 of it’s GDP overnight – it had been busy reporting all the money that flowed into Ireland from US corps without mentioning that none of it stayed there. It seems the Celtic tiger was basically just a tax dodge.
A company only pays tax on profits.
Now let’s pretend that Google paid 0% income tax. It currently employs 10s of 1000s of people in the U.S. They make good money, and they all pay income tax. That’s a lot of tax revenue.
President Obama (I know you read this blog): please announce a 2-year tax-free holiday for any US-based company which hires additional employees for at least 2 years.
It must be a net increase of employees. If the company has laid off 1,000 and then hires back 500 that is not a net increase.
Companies which have received bail-out money from the Feds do not qualify.
And that “independent” bipartisan tax commission is expected to recommend instating a VAT tax. Boy this country is corrupt and fucked.
I am pretty sure that the Obama administration plans some IRS audits here… of anyone speaking ill of his friends.
Where can i get this book.
Nothing NEW HERE…
MOST corps are doing something EQUAL or better..
@chuck
So abolish corporation tax.
You still have to get the money from somewhere so you have to increase income/property/sales tax.
Income tax is the cheapest to collect.
How much tax revenue is generated from the salaries that Google pays its employees? How many people do they employ? How valuable are the innovations that Google creates? Without “loopholes” like this they would have fewer employees, fewer inovations, etc.
Pass the fairtax and see how many loopholes they use.
#20 – exactly my point – tax is only paid by people.
Corporations may be legally defined as people, but they don’t eat (buy food) and any tax they pay is actually paid by the people why buy their products.
Better yet, tax corporations, not people. oops! I forgot, you have to get the Supremes to differentiate between the two..not likely.
In both the Santa Clara County v. Southern Pacific Railroad Co. and the Citizens United v. FEC the Supreme Court has deemed corporations as persons. If Google and other corporations want to enjoy the same rights as flesh and blood human beings, then they should also be expected to take on the obligations of citizenship. If individuals in the U.S. have to pay a 35% tax rate in the top income bracket then the “person” Google should also have to pay. This isn’t an issue of treating corporations differently, it is about treating all legal “persons” equally/equitably.
#4
Yea, because Google will gladly pay 10% when the alternative Irish Sandwich is 3%.
Countries, like businesses, are in competition with each other. If the US wants to entice businesses declare profits in the US, then they should lower the corporate rate. 3% is still greater than zero last I checked.
#14
If there is a loophole to be closed, then go ahead and close it. However, don’t bitch about companies that take advantage of the loophole. Bitch to the lawmakers for putting in the loophole (and/or not closing it).
#26
Tax them however you wish but at the end of the day, corporations will hire armies of tax accountants to find every conceivable legal loophole with which to pay the least amount of tax they can including moving their business to another country where the cost of doing business outside the US makes up for the lower tax revenue they pay.
Like many progressives the people running Google want everyone else to pay high taxes while doing everything they can to avoid doing the same thing.
Of course they owe it the their investors don’t they?
# 23 Derek said, “Pass the fairtax and see how many loopholes they use.”
Pass the fair tax and see how many new loopholes Congress creates.
@Thomas – But google didn’t move it’s business overseas, it just moved it’s accountants.
It still sold ads in the US and UK – that’s where it’s business is – it just didn’t want to pay taxes to support those countries.
I wonder what would happen if the US and UK pulled Google’s business licences to sell ads in those countries? Google presumablywouldn’t care since it’s heart is the caymans.
Rachael Madow reported tonight that Bank of America, Citi Group, and GE all paid ZERO income tax “this year.” Could easily be some issue with tax averaging, loss carry overs or whatever but “really”===zero for the largest corporations in America while their CEO’s make mega millions in bonuses for good management?
Idiots who think (sic) that starving the beast and similar programs are good social policy will be eaten by the Frankenstein they create. They or their kiddies.
Yes, its one issue when people cheat and connive to avoid paying their taxes that are due, but when they cheat and connive to have special loopholes put into law, that is an entirely different matter==as is idiots who support such action under the throat cutting rubric of “free market,” market competition, international competition or what have you.
Any party/candidate that doesn’t lay out a 5-10 year fairly detailed budget plan is a go with the flow pandering self serving politician not worth his franking privilege: ie, all of them.
The only remarkable thing is the number of idiots that support them.
VOTE THE LEAST OBJECTIONABLE DEMOCRAT INTO OFFICE.