How Google Avoided Paying $60 Billion In Taxes 1193
bonch writes "Google only pays a 2.4% tax rate using money-funneling techniques known as the 'Double Irish' and the 'Dutch Sandwich,' even though the US corporate income tax is 35%. By using Irish loopholes, money is transferred legally between subsidiaries and ends up in island sanctuaries that have no income tax, giving Google the lowest tax rate amongst its technology peers. Facebook is planning to use the same strategy."
Re:Exactly! (Score:3, Interesting)
Re:Headline Is So Very Wrong (Score:2, Interesting)
Google could not exist without a free and educated society. Maintenance of a free and educated society requires a social framework that includes education and social services. Those things must be paid for. They should be paid for by all, but to the extent that collection of the funds required represents a significant burden, that burden should be shifted towards those upon whom it has the least impact.
A laissez-faire society where everything is a purchase is a recipe for darkness, ignorance, slavery, and chaos.
Note: none of this is actually to argue that there should be a corporate income tax or a punitive one, which based on everything I've seen, there probably should not be, or it should be much, much smaller. But the idea that a fee-based society would function is preposterous.
Re:Headline Is So Very Wrong (Score:3, Interesting)
You need to connect the dots a little better.
If it costs X amount of dollars to build a road, and that money has to come from the collective pool of taxes, and the system is designed so that a good portion of that money is taken from corporations making massive profits, and the rest is evenly distributed amongst the rest of the people - but the corporation doesn't pay its share, that means 1 of 2 things will happen. More of the people's tax money has to go into the road, or the road doesn't get built.
Essentially, corporations not paying their taxes are either stopping the production of services normally provided by the government, or pushing the costs onto other taxpayers. Thing is, a lot of services we can't simply "Go Without" - many people take advantage of the Garbage pickup in their neighbourhood. In Canada we sure do like the roads cleared of snow. Things like that.
If your idea is "Why should Google have to pay those taxes to cover those services?" - it's because the elected representatives created those laws and thats the cost of doing business in that country. If you want to Operate in America, where you have a lot of consumers that have a lot of money to spend, the laws dicatate you have to support that system.
I know its not just Google working these kinds of loopholes - but the fact of the matter is that all these corporations are ripping off the system. I just read your sig now that says Taxation is legalized theft, well - it really wouldn't be so bad if everyone did their part. I understand where you're coming from, why should you have to pay for a service you may not use? There are plenty of countries out there where you can escape paying taxes if you want, see if you enjoy the quality of life provided by a country that doesn't provide those basic services.
Re:Frosh thinks he knows everything! (Score:3, Interesting)
Re:Headline Is So Very Wrong (Score:4, Interesting)
Most people pay no taxes at all. The diminishing middle class is increasingly being held to pay the bulk of taxes. Rich can avoid taxes, the poor don't pay any, and the rest is screwed.
This is why INCOME taxes are evil, especially the progressive income tax structure we have now. For corporations, we need to have wealth transfer taxes instead of income taxes. Dividends are taxed, shifting "fees" and "payments" to foreign (offshore) corporations are taxed, payments for imported goods are taxed etc. Anytime money is transferred there is a "tax" upon that transfer (corporatations).
And, if we understand corporations are creations of the state, we'd better understand their role. However they aren't treated as creations of the state, but rather as "non-person entities" which erode the liberties of people, which is a huge problem.
Re:Headline Is So Very Wrong (Score:3, Interesting)
Corporations do not pay taxes! (Score:3, Interesting)
Re:Headline Is So Very Wrong (Score:5, Interesting)
The real question you should be asking yourself is; why do we (and I mean everyone, rich and poor alike) need to pay so much to a government that simply wastes that money, for the most part.
But is that really true, the government wasting most of it? OK, no organization can be perfect. I accept that. But if there were no government spending on promoting the "general welfare", you might actually be less prosperous than you are now, despite your lower tax burden.
This may seem counterintuitive. Governments, at various levels, can provide roads and an educated populace, to name just a few of the more apparent benefits. These work to increase the value of the people's labors. When you can sell your widgets across the state, the nation and even the world, then you can potentially sell more widgets. When you can hire employees that already know how to read and you don't have to teach them, that's a direct benefit to your business.
But you don't have to believe me or even accept my explanation that taxes collected and spent reasonably actually increase prosperity. Look at data from the World Bank, or the CIA Factbook, or the WTO or wherever you like. Compare the GDP per capita of nations to their effective tax rate. Notice that once your tax rate gets outside the approx. 20-45% range your GDP per capita drops. (There are exceptions to this, of course. Countries with huge resources w.r.t. the size of the population do just fine at any tax rate -- Kuwait's a good example of a country with low tax rate due to their large oil wealth.)
Re:Headline Is So Very Wrong (Score:3, Interesting)
Re:Headline Is So Very Wrong (Score:5, Interesting)
Who gets back more money than they paid? Certainly, when I was young and poor, I got money back at the end of the year, but never more than I had paid in withholding. I see people make this claim all the time, that poor people get more money back than they pay in taxes, and I just want to know, uh, how do they do it?
No one I know vilifies the rich for being successful. In fact, people tend to idolize successful achievers. IF they deserve that success. People love it when smart, plucky, hard working go-getters make it big, but they hate it when conniving sociopathic weasels do. And quite frankly, for every one upstanding rich man who made it big without stepping on anyone along the way, there are ten selfish, amoral pricks who fucked anyone and anything that got in their way. It's not the bad apple that spoils the rich bunch, it is the one lone good apple that somehow resists the all encompassing rot.
Now look at the people who really make a difference, the scientists and engineers who actually make the world a better place. Despite the fact that there work is infinitely more important than that of so called 'industrial leaders' who are mere paper pushers adding nothing of benefit to human society, these scientists and engineers are almost never rich, unless they come from a rich family, or happen to be sociopathic enough to stab their friends in the back when the time comes.
Remember, if you are making a quarter of a million dollars nowadays, you are barely upper middle class. "Rich" doesn't start until you hit eight figures. I know a lot of middle class Americans think they might become rich someday. They won't.
Re:Headline Is So Very Wrong (Score:5, Interesting)
But not before people of extreme wealth were funding groups intended to spark something like the tea party. These are the elites who instigated and control (inasmuch as there is control) the tea party.
You're deluded if you think the tea party is pure grassroots. It's not. And if you consider yourself a tea partier, please ask yourself why people like the Kochs are willing to spend millions astroturfing a group you consider yourself a member of.
And as for the banning of Republican speakers... did that ont serve its intended purpose? Making the Republican party go hard right economically, to the eventual benefit of people like the Kochs?
Re:Headline Is So Very Wrong (Score:4, Interesting)
They don't transfer "all their money there".
They transfer their foreign earnings from SOME countries there AFTER complying with the tax laws of those countries.
If Ireland doesn't like this, Ireland can change its laws.
But if Ireland is ok with this, then what is your problem?
Should google pay Ireland more money than their tax code requires? How much more? How should they compute it?
Google pays all the US taxes they are obligated to pay. READ THE ARTICLE. This is about earnings overseas, which are kept overseas, not about earnings in the US.
How much additional taxes, above what is required by law, did you contribute last year?
Re:Headline Is So Very Wrong (Score:5, Interesting)
Suppose that every day, ten men go out for beer and the bill for all ten comes to $100 If they paid their bill the way we pay our taxes, it would go something like this
The first four men (the poorest) would pay nothing. The fifth would pay $1. The sixth would pay $3. The seventh would pay $7.. The eighth would pay $12. The ninth would pay $18. The tenth man (the richest) would pay $59.
So, that’s what they decided to do..
The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve ball. “Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily beer by $20”. Drinks for the ten men would now cost just $80.
The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free. But what about the other six men? The paying customers? How could they divide the $20 windfall so that everyone would get his fair share?
They realised that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer.
So, the bar owner suggested that it would be fair to reduce each man’s bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay. And so the fifth man, like the first four, now paid nothing (100% saving). The sixth now paid $2 instead of $3 (33% saving). The seventh now paid $5 instead of $7 (28% saving). The eighth now paid $9 instead of $12 (25% saving). The ninth now paid $14 instead of $18 (22% saving). The tenth now paid $49 instead of $59 (16% saving).
Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.
“I only got a dollar out of the $20 saving,” declared the sixth man. He pointed to the tenth man,“but he got $10!” “Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar too. It’s unfair that he got ten times more benefit than me!” “That’s true!” shouted the seventh man. “Why should he get $10 back, when I got only $2? The wealthy get all the breaks!” “Wait a minute,” yelled the first four men in unison, “we didn’t get anything at all. This new tax system exploits the poor!” The nine men surrounded the tenth and beat him up.
The next night the tenth man didn’t show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!
And that, boys and girls, journalists and government ministers, is how our tax system works. The people who already pay the highest taxes will naturally get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.
Re:Headline Is So Very Wrong (Score:5, Interesting)
I'd love it if I was only taxed twice.
1) I get paid, they take taxes.
2) I buy something like a house, I pay sales tax.
3) Then continuing to own that house, I pay a % of value on that house as a tax every year.
3.5) if I sell the house, and make a net profit over what I paid, I pay a tax on that profit as income"
4) if it's a valuable house/property, if I will it to my children on my death, they get hit with a massive estate tax.
It's a great system....if you're a government.
I sell my hammer to my neighbor, according to the government I should be paying taxes on that transaction. Why, again, are they entitled to that?
Re:Headline Is So Very Wrong (Score:5, Interesting)
Notice that I made no mention of political parties or individual politicians other than Hoover. I don't think Democrats or Republicans can fix the current economic problem -- but I'm damn well sure the tea party platform can't.
Or, you know, you could bother to get educated about the subject. Stiglitz & Bilmes estimated the cost (originally) at 3-5 trillion; Stiglitz has revised the cost to 4-7 trillion based upon their original underestimation of the number and cost of disabled veterans returning to the US, among other things.
If you haven't read any of Stiglitz's work on the subject, or any of the papers published in their wake, maybe *you* need to spend some time outside the echo chamber.
Re:Headline Is So Very Wrong (Score:5, Interesting)
Since we only really have the choice between two evils, I choose the Democrats.
I disagree. The tea party is an astroturf for the very wealthy, they are people being led to advocate for policies that aid the extremely wealthy. They have also aligned tightly with the Republican party, which means that any usefulness in re: 3rd parties is gone.
While I agree it would be better to have a multi-party system, they are not the kind of party I could support. Furthermore, given our current political system, we will not ever have a viable third party. So the best option is to throw your lot in with the party that better represents your views, and then work to make that party more closely aligned with your views.
Re:Headline Is So Very Wrong (Score:4, Interesting)
going back to the past (Score:3, Interesting)
Supposedly this was the case before world war 2 as well.
Re:Headline Is So Very Wrong (Score:3, Interesting)
In response to your FYI, the top 5% is earners over $157K, and above 250K is a meager 1.57%. Thus that $700B will be distributed over a mere 1,699 households over the next 10 years.
Somehow, I suspect that the number of small business owners among this group of ~1700 odd households is a tiny fraction of the overall.
2005 census data : http://en.wikipedia.org/wiki/Household_income_in_the_United_States [wikipedia.org]
Re:Headline Is So Very Wrong (Score:1, Interesting)
Individual "poor people" pay minimal taxes. The problem is, right now, that millions of poor people paying very little + millions of middle-Americans paying a little more then very little collectively are paying WAY MORE tax proportionatly compared to these giant corporate entities that fuck their way out of paying billions of dollars a year.
The actual numbers contradict you. The upper income brackets pay much more proportionally than the lower ones. The lowest brackets pay ZERO -- and then get welfare payments called "EIC" or other credits so they actually get money.
The thing is, these teabaggers are also advocating essentially no regulations on business,
That's a lie.
Well, if not teabaggers, per se, then definitely libertarians. What do you think that whole "the market will regulate itself" and "keep the government out of business" thing is about? I mean, their entire premise is that the market (i.e. business in a capitalist system) regulates itself. I'm not validating the argument, just pointing out that they are, indeed, advocating for a lack of regulations.
Basically, they're a bunch of fucks paying the lowest tax rates in decades pissed off that taxes are too high
That the rates might be the "lowest in decades" doesn't mean they aren't still too high. And most of the "fucks" pay nothing at all already and still complain about taxes. The fact that the rates on the people who provide the jobs are going up because Obama doesn't want to extend the existing rates is, basically, a dishonest way of getting the tax increases he promised wouldn't happen.
Who "provide the jobs"? Notice that the Bush tax cuts were in effect for a while before the housing bubble burst, and yet there was minimal (if any) job growth. Does seem to punch a big hole in that "if you don't tax the wealthy and corporations, they'll rain down a bounty of jobs on you" bullshit you're preaching.
Re:Headline Is So Very Wrong (Score:5, Interesting)
In response to your FYI, the top 5% is earners over $157K, and above 250K is a meager 1.57%. Thus that $700B will be distributed over a mere 1,699 households over the next 10 years.
Since I don't know how your citation's methodology compares to the methodology used by the CBO, I'll instead cite the CBO's table in the same URL that I provided earlier.
The first table on page 7 says there were 11.9 million households in the top 10% in 2007. There 5.9 million households in the top 5%, and 1.2 million households in the top 1%.
The last table on page 9 lists the minimum adjusted income for the various categories. For the top 10%, it was $102,900 for a single person household. The methodology is on the last page: multiply the number in the table by the square root of the number of family members. For married without kids, multiply by 1.414 = $144,500. For married with 2 kids, multiply by 2 = $205800.
It's not exactly $250,000 for a married couple, but I thought it was close enough for a rough estimate.
However, I think you might want to read your own citation a bit more closely. It's not 1,699 households. It's 1,699 THOUSAND households.
Re:Summing it up (Score:1, Interesting)
Yes you have, but probably not where you think. It's not from Marx or any of the communits (as you seem to be implying); it's from the bible (Acts 2:44-45 to be specific)
Re:Headline Is So Very Wrong (Score:5, Interesting)
Oh, I agree on that one, emphatically. But in order to have an actual operating free market that would lead to a good outcome, we'd need regulation of the market to ensure the actors in the market can act freely with the real values of their choices explicit to them.
So we'd need:
1. Regulations to enforce internalization of externialities like pollution, social costs, etc.
2. Regulation to ensure equal access to capital to remove that particular barrier to entry
3. Regulation to ensure adequate disclosure of information so that actors in the market could make efficient choices
4. Regulation to ensure that markets do not get captured by a monopoly or oligopoly
5. Regulation to ensure that not only a subset of corporations can take advantage government functions in other areas (like the military, which is a necessary function of government)
6. Regulation and oversight to ensure there is no regulatory capture of items 1-4 above
In short, we'd end up with a system much like today's, if only we could get rid of regulatory capture.
Yes and no. People should be free to join together to mitigate risk, amass capital for large investments, etc. This is what a corporation was originally for. What I'd like to see is corporations not sheltering investors from non-financial risk. We'd see a lot less bad activity from corporations if the owners were personally liable for the evil sometimes done in the name of profit.
Re:Headline Is So Very Wrong (Score:5, Interesting)
I'm curious how you explain the sequence of events. A bunch of libertarians find each other and discover they enjoy each others' company, so they decide to start hosting tea parties, protesting George Bush's policies.
Some Conservative Republican notices, decides it's a great idea, they jump on the bandwagon. It gets noticed and starts getting media attention sometime around the election. Apparently, somewhere in the same time frame, Koch eagerly leaps in and starts throwing around money to his leaders to brainwash his minions to...be more right wing conservative?
There's a lot that's fishy about the whole story. But blaming Koch just doesn't add up. Unless the family's secretly been closet Republicans the entire time they've been pretending to be Libertarian? Do you think David's vice-presidential candidacy in 1980 was a clever plot to infiltrate the party and subvert them with Conservative ideas from within?
Re:I Am Not a Fan of Unfair Taxation (Score:4, Interesting)
Corporate income taxes are a tax on economic inefficiency, monopolies, etc. In a properly competitive market, large rates of profit do not persist, because the invisible hand will reallocate resources to drive prices towards the cost of production (plus an epsilon). If corporations are making large profits, it's by definition because the market they're operating in is failing, and recovering the proceeds of that market failure seems perfectly justified to me..
Re:Headline Is So Very Wrong (Score:5, Interesting)
Them leaving is actually completely fine, albeit completely unrealistic. Rich people don't "create jobs". It's demand from a strong middle class that wants to buy new products, accessories, techno gadgets, etc. that creates the incentive for startups and companies to research and develop new products. Even if you face a 90% tax bracket, the idea of leaving money on the table is ridiculous. There will always be businesses to sell to people with money. Give the poor and middle class money, and they'll spend it. Give to a rich man, and he'll invest it overseas.
But by all means, continue ignoring the reality that our greatest period of growth was right after WW2 when we had 90% tax brackets. 30 more years of America losing jobs overseas, the rich getting ever richer, and millions more becoming homeless, while everyone complains that the rich are "punished", should leave you in a great situation I'm sure. I'm in the highest bracket so it won't hurt me, but I sure do feel bad for those who must suffer for your foolishness.