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.
Good for Google. I’d do the same thing if I could.
Starve the beast!
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.
bobbs, didnt’ you recently say vote the incumbents out? an since the primaries are history, how could we vote for the “least objectionable” democrat?
bobbopolar==quite correct. I’m just a changey hopey guy.
No reason/not possible for you to read all the threads here for the past 6-8 weeks but the Teaparty candidates are as corrupted by the money as anyone else. Not crazy enough to bite the hand that feeds them so I’m back trying to thought experiment my way into what “WE THE PEOPLE” can actually do to bring change to our government. Ideas like institute cumulative voting or all other suggestions I have read here (except for MINE)require the filibuster breaking super majority vote of the very people that power would be taken from. Think that will work?
So what can we the people do?
While the two political parties are more the same than different, they are different. Republicans are EXCLUSIVELY for the top .1 per cent of Rich Bastards who will never get into heaven. Democrats are also for the top .1 per cent but every once in a while they throw a scrap of benefit on the floor for us to fight about.
Unless you are in the top .1 per cent of wealth hoarders in the USA, there is no reason to vote Republican, so voting them in when they are the least qualified candidate (aka liebertardians and teabaggers) is not the best strategy. Third Party/write ins tend to elect the worst opposing candidates. No, the only rational thing WE CAN ACTUALLY DO, is vote in the least objectionable democratic candidate.
Life sucks, but its what we gotta deal with.
#31
VOTE THE LEAST OBJECTIONABLE DEMOCRAT INTO OFFICE.
Backpedaling FTW!
I’ll say it again, and I won’t change my line:
Replacing plutocrats with new plutocrats will solve NOTHING!
We need a new constitution and a new form of government for The Republic to survive.
Cursor_
Cursor==are you missing the entire point on purpose?
What is your clever devious plan?
Is your plan as clever as a weasel?
“I won’t change my line.”/// What are you, in a two-step with Alfie?
Silly. RTF post.
#33
True I should not have criticised your changing your point of view.
But on the other hand, trolls trolling trolls is always fun.
Cursor_
Cursor–that wasn’t hard was it? Seeing an error and correcting it should be more fun than calling other people trolls who are not, just because you fancy yourself one. ie=I’m not a troll, and neither are you.
All things are definitional. I have used my definition consistently. I don’t even think Alfie is a troll. He is a true believer. Stupid, but true. Trolls have to be smart enough to change what they post in order to get the reaction. Supple in mind-a required element in knowing what you know and changing your mind.
With the number of federal income non taxpayers approaching the critical mass of 50%, in our nation’s history we have never needed the fair tax more than now. See http://www.christianretirement.com “Learn to Say No.” America is experiencing problems in many areas. Sometimes, difficult issues must be addressed head on. The Fair Tax would insure that everyone would have the opportunity to step up and pay for the freedoms they so readily and freely enjoy.