Google's Tax Responsibility Gets Lost In Bermuda Triangle

Bermuda is not only a land of beautiful beaches — as well as a cornerstone of a famed mysterious triangle known for making things disappear — it’s where Google goes to protect billions in profits from the sticky fingers of Uncle Sam.

Bloomberg reports Google filters its business through the offshore tax haven in order to stay in the 2.4 percent corporate tax bracket. On paper, most of its profits made outside of the United States go through Bermuda, where there’s no corporate income tax. Most comparably sized tech companies pay overseas earnings tax rates that range from 4.5 percent to 25.8.

An economist tells Bloomberg the setup is eyebrow-raising:

“It’s remarkable that Google’s effective rate is that low. This company operates throughout the world mostly in high-tax countries where the average corporate rate is well over 20 percent.”

A Google spokesoman told Bloomberg “Google’s practices are very similar to those at countless other global companies operating across a wide range of industries.”

The Tax Haven That’s Saving Google Billions [Bloomberg]

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  1. obits3 says:

    “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 any public duty to pay more than the law demands.”
    -Judge Learned Hand

    • Charles256 says:

      I’m going to have to say I think this line should be drawn at like 10% minimum. 2.4% is ridiculous. Makes me even more irate that cooperations are “people” .

      • drizzt380 says:

        And this is Google’s fault?

        Google doesn’t write its own tax code.

        To me, this is a story about problems with tax legislation.

        • Charles256 says:

          Eh, semi disagree but more from an ethical standpoint. I know there are certain things in this world I’m allowed to do but since other people would suffer because of it I do not. In this case, our economy further suffers because Google is just being silly. I understand they are legally right to do so but sometimes the law is lacking and everyone could take a large dose of “be a fucking person”. When you see your effective tax rate is 2.4% any rational being would think “I can’t believe we’re getting away with this”.

          • UCLAri: Allergy Sufferer says:

            Exactly. Just because what they’re doing is legal doesn’t make it ethical.

            • drizzt380 says:

              Legality doesn’t equal ethical.

              But legality doesn’t equal unethical.

              I would say that Google is being ethical and they have a responsibility to certain people to keep their tax rate as low as possible.

              • UCLAri: Allergy Sufferer says:

                I don’t think they’re being ethical, but you’re right that the inverse is true.

                One of the big problems with how Americans frame debates on ethics is that they’re often (not always) overly legalistic.

                “It’s the law! It MUST be ethical!” Not necessarily. Nor does breaking a law necessarily make you unethical either. e.g. Rosa Parks.

                • drizzt380 says:

                  I think when we’re debating the ethics of paying taxes(a highly legal area), the legality is a crucial part.

                  You’re saying its unethical to greatly lower the amount you pay in taxes. Thats far too simple for an ethical debate, so what I think you are really saying is that Google has an ethical responsibility to help provide for the public good and by paying too little in taxes they are not fulfilling that responsibility.

                  I’m not sure how this article can support that viewpoint.

                  • UCLAri: Allergy Sufferer says:

                    Well, I think taxation should also represent one’s usage of public goods. In the case of Google, they’re a significant user of public infrastructure and public goods. They hire a ton of people out of the UCs, for example, and UC grads aren’t cheap to produce.

                    It’s impossible to say exactly how much is the right amount to pay, but paying less isn’t always going to be ethical, even if it’s legal.

                    Just my $0.02.

          • drizzt380 says:

            Google has an ethical responsibility to its shareholders and employees to maximize its profit.

            In business, decisions are one or more of three things. They are business decisions, legal decisions, or ethical decisions.

            The decision to lower their taxes as much as possible is definitely a business decision. And they have not broken any laws. And one could argue that the decision was even ethical.

            When it comes to taxes, people have to rely on the government to tell them what is the proper amount. The government said 2.4% was fine. So I don’t see how Google is being unethical.

            Also remember that this 2.4% rate is only Google’s overseas earnings. I’m sure their actual tax rate is higher. And its save google approximately 3.1 billion since 2007. Thats about a billion a year.

            In their very recent quarterly reporting, google pulling in 7 billion. For the quarter. This 2.4% tax is not horrifically unbalanced when you look at the kind of money google brings in.

          • obits3 says:

            “any rational being would think ‘I can’t believe we’re getting away with this.'”

            Are you sure ANY rationl being would? What about those single people who made say… $9,350 for 2010? Let’s take a look:

            AGI: $9,350
            Standard Deduction: -$5,700
            Personal Exemption: -$3,650
            Taxable Income: $0

            But wait…

            Earned Income Credit (estimated): $313

            Effective tax rate: – 3.35% (Yes that is a NEGATIVE tax rate!)

            People do this every year ;)

            • obits3 says:

              *2009 numbers

            • RadarOReally has got the Post-Vacation Blues says:

              Yeah, those people who live on under $10,000 a year have it so easy. Wish I could find a sweet deal like that… oh, wait.

              You’re comparing that to Google’s billions?

              • obits3 says:

                I never said that they have it easy. I said that they don’t pay taxes and that they don’t seem to have a problem with thier tax rate. I was showing that Charles256’s assertion that ” rational being would think…” was false by using logic and the truth.

                • peebozi says:

                  They got that tax rate the same way publicly traded corporations got theirs…they bribed and bought congressional members.

                  actually, maybe they’re not taxed because of compassion and empathy…i realize that has no place in an argument about laws.

                • jessjj347 says:

                  You failed to consider that they do pay taxes throughout the year, which makes a person’s life a lot harder when he/she cannot afford basic living needs. Also, why does it make sense for people making $10,000 to pay a higher percentage of their income than multinational corporations?

                  Receiving a tax refund through refundable tax credits is typically because these people either have kids or are pursuing education. Most tax credits are not refundable to get the “negative” tax rate.

                  In addition, even to get to the “zero” tax rate through deductions and exceptions, a person typically has kids, is a widow, etc or just has a really really low income.

            • ill informed says:

              they make 10,000 dollars a year. cry me a river.

            • peebozi says:

              yea, even at paying 2.4% google contributes more than those lazy deadbeats only making $9,000/year! I bet the poor assembled their army of lawyers to lobby and or attain positions within the government to get their sweetheart deal!

      • obits3 says:

        What law have they broken? If you think that Google is wrong to try to lower their taxes, then I challenge you this:

        Don’t itemize or take the standard deduction.
        Don’t take any personal exemptions.
        Don’t take any deductions for your busness activities.
        Don’t take any tax credits.

        There are more, but I think you get the point. If you don’t like the law, then have it changed. Companies that lower thier taxes are no more “evil” than when you take deductions and credits (as long as they follow the law).

      • TuxthePenguin says:

        To blame Google for this is stupid. This is the blame of the government and our crazy tax laws.

        For example… when you buy something that is on sale, do you go to the register and say you’d rather pay the normal, full price? Same concept here – there are methods you can use to structure the transaction to minimize the tax – ie, get it on “sale”.

        You don’t like the arrangement? Get elected and reform the tax code. Lord knows it needs it.

    • lymer says:

      “There is not even a patriotic duty to increase one’s taxes. “

      Someone tell Joe Biden.

    • technoluster says:

      Excellent quote. If they weren’t trying to find ways to shell out the least amount of money possible, they would be cheating the share holders then. The conservative in me would rather see more money in the pockets of share holders with buying power than in the pockets of Uncle Sam and his ridiculous spending habits…

      • DH405 says:

        Yet another example. Conservatives rage against the deficit, yet want less less less taxation. One plus two doesn’t equal potato, and that plan on taxes doesn’t equal a solution.

        • craptastico says:

          google sheltering their income through Bermuda is the result of high taxes here. before you try to tax the heck out of corporations and wealthy individuals you have to realize that they tend to be the most mobile in terms of relocating to someplace with less taxes

          • DH405 says:

            Well, then perhaps that financial mobility needs to be cut. Nobody has the absolute RIGHT to do business in the US ,make money from US citizens, and then funnel the money outside of the country to keep from paying their part.

        • Maximus Pectoralis says:

          The solution to outrageous deficit spending isn’t more taxes, it’s less spending. Take a look at what has been going on in New Jersey in recent months for a good example. The governor has been bound by the constraints of the legislature and cours, and forced to deal with the mistakes of the past, but is at least setting the right pace for responsible spending. And for an even better example, take a look at France, UK, [insert European country implementing austerity measures here].

    • peebozi says:

      and now that google is, legally though not rationally, a person, your quote fits your long held beliefs!

      • obits3 says:

        Corporations owe a fiduciary duty to their shareholders. Their shareholders are people.

        • peebozi says:

          Corporations only have one responsibility. To return profit to their human/corporate hedge fund shareholders. Ethics and morals that conflict with the corporations sole responsibility have no place in a corporate culture. Correct?

          • Sneeje says:

            So, are you suggesting that morally/ethically corporations should pay *more* than the minimum under the law? Exactly how should that “more” be determined?

            • ARP says:

              No, but I think many of our laws assume that people will generally do the “right” thing, not just the legal thing. Otherwise, we’d need laws for nearly every behavior/activity out there. But since you’re saying that corporations really don’t have any moral code, then it would make sense to heavily regulate them since they can’t simply be trusted to do the “right” thing, only the moral thing.

              • ARP says:

                sorry can’t be trusted to do the right thing, only the legal thing, which means we have to comprehensively define what’s legal to encompass ethics.

                • Sneeje says:

                  Well, you’ve made some broad assertions that we have to parse through. Do corporations have a moral code? No–I don’t think this is a surprise to anyone and it isn’t a recent thing. Corporations are made of people that may or may not follow a moral code. If a corporation continually acts in blatantly immoral or unethical manners then their are other consequences to that decision: people may not work for it, customers may not want to give their business to them, etc.

                  Does it automatically follow that we have to heavily regulate them? Well, you need to consider that there are natural counters to negative behavior (see above) and that regulations have many drawbacks (unintended consequences, ethics and morals are not uniform so regulations to achieve them cannot be either, etc.).

                  So I guess I disagree, for a couple reasons: I don’t think it is possible comprehensively define what’s legal based on what’s ethical because there is no uniform standard of ethics/morals and I don’t think it is necessary because there are other checks against the behavior.

                  Other things you have to take into consideration: making things illegal does not prevent the behavior and in some cases may either increase the behavior or just change how people engage in the behavior (see texting bans), and what is the capacity of the government to handle additional regulations?

      • DanRydell says:

        So it would be ok if Google was a person, but because Google is not a person you think what they’re doing is wrong?

  2. FatLynn says:

    Whatever happened to that whole corporate motto thing, Google?

    • zegron says:

      How is it evil to legal pay as little tax as possible? Remember that the IRS even approved this in writing back in 2006.

    • ArcanaJ says:

      That’s pretty much what I was wondering.

    • TheRedSeven says:

      I posted this elsewhere before I read your comment:

      -Google’s motto: “Do no evil.”
      -Paying taxes is evil.
      -Hence, Google’s motto should be, “Do only 2.4% evil.”

      • Dover says:

        “Don’t *be* evil.”

        While I get your point, there is a difference.

        • TheRedSeven says:

          Fine…[edits furiously]
          -Google’s motto: “Don’t be evil.”
          -Paying taxes is evil.
          -Hence, Google’s motto should be, “Be only 2.4% evil.”

  3. TuxthePenguin says:

    And this, as I’ve been saying, is why you never collect the taxes you assume. I’m sure it took thousands and thousands of hours (and probably millions of dollars) of accountant and attorney time to make sure everything was set up correctly and exploited every loophole they needed to minimize their taxes… but how much are they saving now because of this?

    The absolute easiest way to fix this is to go back and radically simplify the tax code. The more rules you have, the more opportunities for loopholes…

  4. wrjohnston91283 says:

    There is no 2.4% tax bracket that Google is “staying inside of”. Google’s effective tax rate (tax divided by net income) is 2.4%. If I make $40,000 and pay $5,000 in income taxes, I’m in the 25% tax bracket, but paid an effective tax of 12.5%.

    • obits3 says:

      Thank you. You win at life. =)

    • Dover says:

      Tax Cat heartily approves!

    • humphrmi says:

      “Most comparably sized tech companies pay overseas earnings tax rates that range from 4.5 percent to 25.8″

      Correction – most companies use the same loopholes as Google to pay an effective tax rate of 4.5 to 25.8 percent. Google. just uses those loopholes more effectively than they do.

      There is only one US Corporate tax bracket – 35% – and only companies that cannot afford the legal costs of offshoring their revenue pay that rate.

  5. Loias supports harsher punishments against corporations says:

    Google puppet-statement is absolutely correct.

    Which is exactly why we need major domestic and international tax reform. Hundreds of billions of dollars a year of tax revenue are missed because of loopholes like this.

    • Dover says:

      I agree. Tax laws are *way* too complicated. We could have lower tax rates and better ensure everyone’s paying their fair share if taxes were simpler and no-nonsense.

      • ARP says:

        Agreed. I’m no CPA, but why not propose a simplified corporate tax? For example, the first 100M is of Revenue (money or equivalent value that comes in) is taxed at 3% and $100M+ is taxed at 6%. That’s it- no deductions, credits, losses, etc. If you have bad debt, that’s too bad. If you spent a lot of money to build a new facility, good for you, but you’re not getting any deductions. In this situation, any money coming in to the US from another Google entity would be viewed as revenue and taxed as that. It seems like our elaborate system of credits, deductions, losses, etc. was designed to incent the right behavior, but more often than not, is manipulated and we lose more than we save.

        The same could be said for personal income taxes, but that’s for another disucssion.

    • smartmuffin says:

      I’ve got your reform riiiiiiiight here

      http://www.fairtax.org/

      • ARP says:

        Yes, if you’re wealthy, this is great, but if you’re poor, you just got yourself a steep tax increase as the equivalent NST would be around 20-25%. The NST also assumes lower spending levels. Add to that the state and city sales taxes and you’re looking at at total of upwards of 35-40% tax rates. Again, the only people who would benefit from the law is the ultra wealthy.

        I could get behind a model with lower NST and then a “millionaires tax” and a flat business tax For example 15% NST(around the standard in Europe and Canada) + 25% income tax (no deductions, credits, losses, etc. stock options worth their present value, capital gains part of income for determining) on any income over $1M and a flat 5% tax on all business revenue (again, no deductions, losses, captial gains part of revenue, etc.). The wealthy would pay roughly what they should be paying now (which the lowest income taxes they’ve had since the 1920’s).

        • RobSmalls says:

          The FairTax incorporates a prebate of all sale taxes on necessities up to the poverty level for everybody. The poor would not see their taxes increase; they would instead see a total tax payment of 0, since all their payroll deductions would stop.

          I highly recommend you read the Boortz/Linder book. It lays it out in great detail.

    • Griking says:

      So, technically where is Google based out of? Are they a U.S. company or do they technically reside in Bermuda? If they’re technically in Bermuda then what would revising out tax laws accomplish?

      • ARP says:

        They’re incorporated in multiple countries, but they’ll sell through their Bermuda entity, then the cash to the US entity, essentially avoiding US income tax.

    • danmac says:

      That’s exactly what I was thinking…the last sentence of the consumerist post is very telling.

  6. jtheletter says:

    Dig deeper, this arrangement had to be (and is) officially sanctioned by the IRS. There are policies and people at the federal taxing authority which allow corporations to do this. Without the political will this would not be legally possible. Blame stretches past the corporation and into the government for giving companies, Google and otherwise, the ability to shortchange the American public.
    Yes, shortchange. They reap the benefits of American infrastructure, laws, economics, and the educated populace as employees, yet pay less than 10% the tax rate of most of those employees.

    • u1itn0w2day says:

      Not only is this sanction by the IRS it’s sanctioned by the politicians that legislate and advocate this crap. It also takes or has taken various administrations over the years of signing off on this crap.

      And before they got lost in the Bermuda Triangle they ate a “Dutch Sandwich”

    • obits3 says:

      I see that you like the “debt to society” way of thinking.

      It could also be argued that the U.S. reaps the benefits of Google’s navigation tools for the internet. You owe a debt to your parents for your very existence, but does that give them the right to a % of your income for the rest of your life? Just a thought…

      • jtheletter says:

        The US infrastructure, policies, biz environment, etc. all came first. This is not a chicken-egg argument. Google was able to be created and become what it has because of the US, not vice-versa. I don’t need to debate the underlying philosophy of taxation to make the case that 2.4% is an appallingly low rate for a US founded and primarily-based corporation.
        To further hammer home my point, tell me who provided the GPS satellites which allow Google Maps to function as they do? Who paid to develop that technology and deploy it? The US did and could survive w/o Google, the opposite does not necessarily hold true for Google’s inception.

  7. Thyme for an edit button says:

    Don’t be evil, but do avoid taxes.

    Eh… pretty much what most of us try to do.

  8. ARP says:

    In May of 2009, Obama asked Congress to reform some of these tax laws- specifically, the ones that allow foreign income to be brought to the US without paying taxes.

    It didn’t go so well. Republicans and ConservaDems opposed it and it died.

    • thewritejerry says:

      Obama’s plan was blocked because what he wanted to do was basically make companies pay the higher US tax rate. The more stimulating solution would be to lower the US tax rate to make it more competitive with those of Ireland and other tax haven countries so that companies would be encouraged to keep their business here in America. It’s the high taxes that cause companies to search out and use these loopholes. Being punitive as Obama would have it just increases the desire to find more ways to avoid the taxes and penalties.

      • ARP says:

        Your answer presumes that supply side economics actually works. What’s more likely to happen is that we have a race to the bottom among nations that we’ll never win as we need to maintain some level of infrastructure and defense that most other tax haven nations do not have. So, we’ll lose even more money. I do agree that we should lower our tax rate for companies though. If you see my answer on another thread, I propose a “flat tax” for corporate revenue and get rid of all the deductions, credits, etc.

        Re: Ireland. I work for a company that recently moved to Ireland. However, Ireland has been steadily increasing their corporate tax rates due to the deficit issues many nations are facing.

  9. TheRedSeven says:

    Google’s motto: “Do no evil.”

    Paying taxes is evil.

    Hence, Google’s motto should be, “Do only 2.4% evil.”

  10. Nigerian prince looking for business partner says:

    I can’t blame Google on this. They’re gaming a broken system just like every other multi-national corporation out there.

    On the micro level, I do exactly the same thing. I purchase many things online to avoid sales tax, drive across state lines to buy alcohol and gas, I funnel excess money into my HSA to avoid taxes, buy prescriptions from Canada, maximize every conceivable deduction when I file my taxes, and I fully plan on retiring early to either Belize or Costa Rica.

    I don’t consider paying more taxes than I have to my patriotic duty.

  11. peebozi says:

    This is the free market working at peak efficiency. If you don’t like it then YOU bribe the politicians with billions of dollars!

  12. bermygirl says:

    I live in Bermuda, and there are hundreds of companies that do this. They set up and “office” here, usually a small closet with one person to answer the phone, then they reap the no tax benefits. Why do you think so many insurance and re-insurance companies are based here.

  13. suez says:

    I say, if they now have the unlimited right to fund politicians without accountability, which effectively gives them a more powerful vote than the individual citizen, then they can pay for the privilege via taxes like the individual citizen.

  14. evnmorlo says:

    We should all follow this example and stop paying taxes to a government that supports money laundering.

    • humphrmi says:

      What example? Google isn’t doing anything illegal, their tax havens are sanctioned by the IRS.

      Not paying your taxes, on the other hand, is illegal.

    • ill informed says:

      please learn what money laundering is

    • u1itn0w2day says:

      Money laundering is a better description of this loophole than a shell game. It might be legal but that’s essentially what it is.

  15. Back to waiting, but I did get a cute dragon ear cuff says:

    Yep, this is what the people we (assuming a primarily US readership) voted for set up. Don’t like it or think it is unfair? Vote for politicians with the backbone to vote to change/ close these loopholes.

    BUT…. realize that some of these “loopholes” include:

    The mortgage interest tax deduction that many of us take.
    Charitable donation deductions
    Medical expenses deductions
    etc.

    Also, do you think that if they close these loopholes, that the politicians will lower the tax rate so that the total tax intake will remain constant? Or will they lower the rate just enough to look good, but tax revenues will actually increase? And where do you think that extra tax money will come from? Corporations lowering their profit margins or raising prices to cover them?

  16. mac-phisto says:

    you know what? it doesn’t matter so long as we tax repatriation at a level equal to or greater than the current domestic corporate tax rate.

    google can keep their money in bermuda tax-free, but the second they transfer it to their american holdings, they pay a tax. that is, as long as there is a tax there to pay. occasionally, the big guys get together & convince congress that it’s a good idea to let them bring their money back here to the safe vaults of the federally-insured u.s. banks at a discounted rate. that’s what we need to stop.

    letting companies skate on earned income abroad = an incentive to send jobs/business/investment abroad.

    • ARP says:

      Obama proposed this very thing in May 2009 and it was shot down by Republicans and Conservadems.

      • DanRydell says:

        The democrats have a significant majority in both houses of congress.

        • ARP says:

          You’re right, which is why I said that Republicans AND Conservadems stopped it. Those two groups combined have enough votes to slow this legislation. The remaining Dems don’t have enough of a backbone or they’re also in the pocket of big business, so they gave it some lip service and then let it die.

        • crashfrog says:

          I would describe the Democratic Senate majority as insignificant, given that it comes with the power to pass absolutely no legislation.

          The Senate doesn’t operate by majority rule. The House, where Democrats actually do have a significant majority, passed the legislation. Indeed the House’s agenda has been a progressive masterpiece. It’s the Senate, controlled by Republicans, where all that legislation goes to die.

        • RandomHookup says:

          The Senate can effectively shut down just about any vote by filibuster (or threat of a filibuster) as long as there are at least 40 votes, so a 60-40 majority can be stymied pretty easily, even if no one crosses the aisle.

    • A42NT1 says:

      The US tax code with respect to foreign income is screwed up in a number of ways, many of which provide a HUGE incentive to NOT invest in the US namely:
      1) The US is one of the few nations to tax worldwide income. Say you’re Ford and sell cars in Germany and compete worldwide with VW. VW pays US taxes on their US income and German taxes on their German income. Ford must pay US taxes on worldwide income, unless they leave the $$ permanently offshore. Who has the advantage here?

      2) US corporate tax rates are among the highest in the developed world (Japan being one of the few countries with higher rates). There is a huge incentive for firms to move activity that generates income from international markets out of the US.

      3) In 2005, the American Jobs Creation Act was passed and allowed a 1-time repatriation of offshore cash at a 15% rate. BILLIONS were moved back to the US. The treasury collected $$$ of taxes that otherwise would never have been collected and these funds were returned for investment in the US.

      Washington (both Rep & Dem) has long stood in the way of meaningful tax reform that would actually ENCOURAGE multinational US firms to reinvest back in the US vs. effectively force them to build/expand overseas. Let’s change that on November 2!

      • crashfrog says:

        The US has among the lowest effective corporate tax rates in the industrial world, actually. Largely because of the widespread use of “loopholes” as described above. The majority of US corporations pay no income tax whatsoever.

        • craptastico says:

          when the gov’t taxes too much, people find ways around it. even big corporations are always going to be able to stay one step ahead of our slow gov’t. that’s why lower tax rates can create higher tax revenues. imagine if great companies all over the world domiciled in the US b/c our tax rates were lower.

      • mac-phisto says:

        those are some well-reasoned points, but i happen to be on the other side of the aisle. i believe allowing companies to repatriate funds encourages expansion & investment overseas & discourages domestic investment. this is because it allows companies to reap profit abroad & yet still benefit from significant advantages that US companies have in the global marketplace. some of the main advantages:
        1) a globally accepted & stable currency
        2) a federally-insured banking system
        3) the leading stock & commodity exchanges
        4) an established IP protection system & judicial authority with significant corporate rights
        5) foreign trade agreements with most of the world backed by a robust foreign service with embassies in almost every nation
        6) a standing army that protects global interests of domestic corporations

        now, think on this a moment: a company like google pays 35% corporate tax on all domestic income. they pay roughly 2.4% on all foreign income. if we allow them to repatriate that without taxing it (or taxing it at a low rate), then google will have saved significant money in taxes, labor, regulatory costs, etc. operating abroad vs. operating domestically AND benefiting from the advantages of being a US corporation. it’s like getting the milk without buying the cow.

        so, maybe you can explain to me how repatriation of funds = increased domestic invesment, b/c i can’t see it.

  17. ill informed says:

    remember a few months ago when congress tried to give 9/11 workers lifetime healthcare, and the bill was going to be funded by closing this loophole? and republicans voted against it?

    • frank64 says:

      So, based on the logic of politics, the Republicans must hate 9/11 workers!

      It is like when a politician wants to increase a tax and says it is for the children, and then by voting against it you are against children. The ads are humorous, but I guess they work.

      • ARP says:

        I believe that was used throughout the Bush term. If you don’t support my policy, you want the terrorists to win, hate the troops, hate the US, etc. I’m still trying to figure out who a Real American is and where is Real America. The only difference is the Dems, are wimps and will give in to such tactics, while Republicans usually don’t.

      • ill informed says:

        we’re not talking about hating 9/11 workers. we’re talking about a loophole in our tax structure being exploited, and republicans voting against closing it, you ass.

  18. Hoss says:

    There is no advantage here for the investor. Higher profits equal higher company valuation which will ultimately produce capital gains taxes (in the US) well in excess of what the company would have paid in even the highest taxing countries.

    • frank64 says:

      I am not sure but a corp has to make a provision for income taxes, I would think that they would do this on those earnings if they know when they bring them back they will have to pay. This is on both their income statements and balance sheets as negative to income and assets if they are taxes due.

      Otherwise the company would be over valued.

      • Hoss says:

        The provision equals taxes paid. Not sure of the point

        • frank64 says:

          No, it takes into account the taxes that will be due based on the current year activity. If a tax is deferred it is still recognized as a current year tax expense, called provision for income tax. So the point is the value of the company IS NOT over valued.

          What I am not sure about, is if THIS tax is deferred like that. It should be if the tax is actually going to be paid in the US at some point. There could be something I am missing, so I am asking.

  19. Mcshonky says:

    My client, a well respected thief steals in a very similar manor as other well respected thieves. So screw you and here’s my check to the Chamber of Commerce!

  20. frank64 says:

    I know this is standard knowledge, but there is a double taxation that happens with corporate earnings. If it is paid in dividends it is taxed to the stockholder at 15% and if it stays in the company it is taxed as cap gains when the shares are sold. If the tax rate of 35% applies you are looking at corporate earning being taxed at 50%. I know actual tax paid by corps are lower, but once that overseas money come in, the gov gets a good share of it by taxing both the corp and the investor. 50% seems enough.

  21. u1itn0w2day says:

    Tax avoidance is a BIG business in which the whole country participates. Google and other corporations might use their own private tax avoiding experts but the general public uses their own tax avoiding ‘experts’ like H & R Block and Jackson Hewwitt.

    Like anything else the more money you have the more and better experts you can buy. Except corporations can buy politicians to assist their experts. The general public can’t.

  22. frank64 says:

    If you look at their income statement, they have income before taxes of 8.4 billion and income tax expense of 1.9 billion. I think this is more in line with what they will actually end up paying based on their real income.

    http://finance.yahoo.com/q/is?s=goog&annual

  23. maruadventurer says:

    I don’t think either consumerist of bloomberg are telling the whole story. Like for example are you aware that the entire arrangement, including the loophole, has been approved and sanctioned by the IRS?

    If the IRS says its legit, then pray tell how it is a loophole.

  24. sparc says:

    Isn’t this all about income made overseas?

    Google is paying all the appropriate taxes for money actually made in the US. However the money made in foreign countries is not being repatriated to the US as it would be taxed at the full corporate rate.

    If Google brings the money back in, then the tax man gets paid. That’s not a loophole. That’s how the system works as Google already paid taxes in other countries.

  25. Happy Tinfoil Cat says:

    Enron

  26. H3ion says:

    Our tax code is not intended only to produce revenue. It’s intended to encourage certain kinds of economic behavior and discourage others. The Congress could solve the ridiculousness of our taxing system at any time with a flat tax and no deductions or exceptions, but they don’t have the political will to do so. Until they do, I’ll keep using the Bahamas and Luxembourg to shield my clients’ revenues from the tax man.

  27. AnthonyC says:

    While this is a great argument for corporate tax reform, it is in no way a mark against google. As a corporation, google has 1 responsibility- fiduciary duty to it’s shareholders. If it didn’t use every legal means available to minimize it’s tax liability, it would have failed to execute it’s duty.

  28. bluline says:

    Do any of you pay more taxes than you have to, even if paying less means that someone else might have to pay more? Do any of you turn down legal exemptions or other ways to reduce your tax burden? None of us enjoys paying taxes, and none of us pays a nickle more than the law requires (if we know what we’re doing). Why should Google or any other corporation (and they all do it) be any different?

  29. dush says:

    2.4% of a gagillion is a lot of money.