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Google Warns Irish Government Against Tax Increase 542

Posted by timothy
from the shame-if-anything-was-to-happen dept.
theodp writes "The Irish government has been given a stark warning from some of the biggest American companies in Ireland on the risk of a mass exodus if the country's controversial low corporate tax rate is raised in return for an IMF/EU bailout to shore up the country's beleaguered banking system. According to The Telegraph, a statement signed by senior execs at Microsoft, HP, Bank of America, Merrill Lynch, and Intel points out that although Ireland's tax rate may be low in European terms, it is not when compared with locations such as Singapore, India and China. Separately, the head of Google's 2,000-strong European HQ in Dublin told the Belfast Telegraph, 'anything that impinges on Ireland's competitiveness is going to be a big thing for Google,' adding, 'anything that increases the cost-base of a business is negative for competitiveness.'"
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Google Warns Irish Government Against Tax Increase

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  • Of course... (Score:5, Insightful)

    by Serenissima (1210562) on Sunday November 21, 2010 @02:07AM (#34296224)
    God forbid any company would actually contribute taxes to the infrastructure of the countries in which they operate. I mean, that would just make too much sense.
    • Re: (Score:2, Insightful)

      by Dachannien (617929)

      Except they do contribute - indirectly. By exporting goods to other countries, those companies bring money into their host country, where they pay it out as wages, spend it on locally-purchased supplies, etc. The host country then has ample opportunity to obtain tax revenue via personal income, payroll, or consumption taxes.

      • Re:Of course... (Score:5, Insightful)

        by MightyMartian (840721) on Sunday November 21, 2010 @02:54AM (#34296420) Journal

        A lovely theory, however, right now Ireland is going tits up, so this sort of trickle down economics won't get them back up soon enough. It's Ireland's fault, and probably in part because of very low corporate tax rates to attract companies like Google.

        • Re:Of course... (Score:5, Insightful)

          by VanGarrett (1269030) on Sunday November 21, 2010 @03:10AM (#34296476) Homepage

          After the Irish raise their corporate tax rates, and all of those large, international businesses pull their facilities out, how many jobs will be lost? Thousands? Tens of thousands? How many businesses besides Google, Microsoft, HP, Bank of America, Merril Lynch and Intel will leave? How many businesses will close their doors, because much of their income was based on the spending and consumption of those businesses, and their employees?

          A raise in tax rates can result in lower tax revenue. Higher taxes cause a decrease in in the rate of taxable transactions. At a certain point, the ratio of tax rate to taxable transactions produces a maximum possible tax revenue. Any attempt to increase tax revenues beyond that limit, is futile.

          • Re:Of course... (Score:5, Interesting)

            by Runaway1956 (1322357) on Sunday November 21, 2010 @05:18AM (#34296930) Homepage Journal
            Perhaps you're not looking at the question properly. Please, change your perspective. slightly, then take another look. Let's ask the question, like this: "If having all those corporations in the country tax-free is so good, then WHY is Ireland going bankrupt?" I'll be honest - I am no economist. I don't understand all the tax schedules, or who gets tax breaks, or why, or how. What I DO KNOW for certain is, the corporations are parasitic entities, with only their own welfare in mind. If the corporations were symbiotic, instead of parasitic, they would be examining how taxes benefit the host nation, and negotiating over those taxes. You know, give and take, compromise, stuff like that. Instead, we see here that the parasites are ready to find a new host if this one goes belly up.
            • Re:Of course... (Score:5, Informative)

              by Splod (40032) on Sunday November 21, 2010 @07:00AM (#34297250)

              If having all those corporations in the country tax-free is so good, then WHY is Ireland going bankrupt?

              Because they are not related. The country is going bankrupt because the government gave guarantees to a large commercial bank and a number of commercial/consumer banks that had lended heavily to support a ridiculous property bubble. They didn't do proper due dilligence on the guarantees, were lied to by the bankers about the size of the hole they were in and now the tax payer is now faced with a debt so large that the 'real' economy can't possibly generate enough revenue to repay.

              There's a decent explanation here: http://finance.yahoo.com/news/Why-the-Irish-Crisis-is-Going-usnews-4028366968.html?x=0 [yahoo.com]

              • Re: (Score:3, Insightful)

                by ScrewMaster (602015) *

                If having all those corporations in the country tax-free is so good, then WHY is Ireland going bankrupt?

                Because they are not related. The country is going bankrupt because the government gave guarantees to a large commercial bank and a number of commercial/consumer banks that had lended heavily to support a ridiculous property bubble. They didn't do proper due dilligence on the guarantees, were lied to by the bankers about the size of the hole they were in and now the tax payer is now faced with a debt so large that the 'real' economy can't possibly generate enough revenue to repay.

                There's a decent explanation here: http://finance.yahoo.com/news/Why-the-Irish-Crisis-is-Going-usnews-4028366968.html?x=0 [yahoo.com]

                Hm. I'm an American, and that sounds eerily familiar.

            • Re: (Score:3, Insightful)

              Ireland is in trouble because the government stupidly guaranteed the gambling loans of investors in Anglo Irish, not because of foreign direct investment.
          • Re: (Score:3, Insightful)

            by KDR_11k (778916)

            They suggested leaving to India, China or Singapore, I don't think they're actually going to go through with that. Those countries may be cheap but they come with a laundry list of disadvantages, e.g. the Chinese totalitarian government.

            • Re:Of course... (Score:5, Insightful)

              by turbidostato (878842) on Sunday November 21, 2010 @08:43AM (#34297664)

              "Those countries may be cheap but they come with a laundry list of disadvantages, e.g. the Chinese totalitarian government."

              Which is a problem for a big corporation exactly how?

            • Re: (Score:3, Insightful)

              by KyBoiler (1904190)
              locations such as Singapore, India and China

              Are Google, Microsoft, etc. telling Ireland they should tax the way India and China do so that the citizens of Ireland can have the same wonderful living conditions?
          • doubtful (Score:4, Interesting)

            by Weezul (52464) on Sunday November 21, 2010 @08:01AM (#34297452)

            There are actually two separate issues here.

            Issue 1.

            We're talking about American companies based in the U.S. that base their European headquarters in Ireland for the Tax breaks. All this occurs only because higher level executive can order some European executive to live in Ireland. Alcatel, Airbus, Nokia, etc. are not based in Ireland because Ireland is a shit hole.

            If Ireland raises their tax rates, but still keeps their taxes slightly lower than France, German, England, etc., all these American companies will keep their existing European corporate headquarters in Ireland. Ireland would need to raise their tax rates slight above some other European country before any corporate headquarters moves.

            Issue 2.

            All these American companies maintain European work forces in Ireland because the corporate tax rates are lower. If Ireland raised it's tax rates, they might consider moving some facilities to European countries with cheaper labor, like Spain, Poland, etc.

            We're not talking about a terribly fast process however for various reasons such as : The company benefiting from specific work forces being near their European corporate headquarters, which we've established won't move. Inability to simple move the people coupled with a lack of suitable workers in the new country. etc.

            So what is the real cost of raising taxes?

            Easy, Ireland will cease growth due to new foreign investment. American companies will not establish new divisions in an expensive shit hole like Ireland once the corporate taxes rise to European standards. Instead, they'll either look for lower wage locations in Eastern or Southern Europe, or preferably India and Singapore. Or they'll invest in more expensive but better educated workers in probably Germany, but maybe Scandinavia or France.

            In fact, almost any jobs that could be exported to India and Singapore will most likely be exported eventually anyways. So honestly all the other countries of Europe will benefit enormously from forcing Ireland to raise it's corporate tax rates. I'd argue this holds true even if this means the ECB must bail them out eventually.

            Ireland fucked up. Germany & co. now own their ass. Time to pay the piper guys. And one payment will be more American investment in Germany instead of Ireland.

            p.s. Don't forget that China isn't exactly an option. Google is currently only discussing their moral qualms with China. All the industrial espionage is however a major problem for *all* companies. You realize even being married to a chinese national precludes you from any kind of U.S. security clearance? It's entirely realistic that the U.S. could start banning software developed in China from any sort of sensitive industrial processes. etc. China isn't a good option, plus the Indians do software better.

            • Re: (Score:3, Insightful)

              by datapharmer (1099455)
              Having seen some oracle code developed in India I would hardly consider "better" to mean "acceptable" and certainly not "good".
          • Re:Of course... (Score:5, Insightful)

            by Dan667 (564390) on Sunday November 21, 2010 @09:35AM (#34297876)
            Ireland did everything that conservatives wanted regarding their finance policies. Why is Ireland cratering if they are suppose to be sooooo good? And Ireland already has high unemployment as a result of these policies and it will get worse either way. They should recognize they don't work and start moving to polices that do as there will be no getting out of a painful correction or if they don't change a full depression.
          • Re:Of course... (Score:4, Insightful)

            by cowboy76Spain (815442) on Sunday November 21, 2010 @09:37AM (#34297890)

            A raise in tax rates can result in lower tax revenue

            You are refering to the Laffer Curve [wikipedia.org]. What most people who do refer to it often ignore, is that the curve is described as a parabole, so you can lose taxation either by overtaxing or by undertaxing.

            Giving that Ireland is going bankrupt and the rates are low... are you suggesting that they lower them yet more?

            Note also that some of the examples of maximum revenue are in the 30% bracket...

            Now, if you have data (any kind of data) showing that the trouble with Ireland is that they are taxing too much, please tell me. It will be more interesting than repeating the mantra of "if the government does not tax then it will suddenly have a lot of money".

            • Re: (Score:3, Funny)

              by sjames (1099)

              It's just like the .com boom. Governments can lose a bit of money on every transaction and make it up in volume!

          • Re: (Score:3, Informative)

            What facilities? What jobs?

            Many companies use Irish tax rates through complicated legal arrangements that rarely involve actual business operations other than a post-office box.

            Google uses an arrangement called the 'Double Irish' which involves a chain of an Irish-registered entity, to a Dutch-registered entity, and then to another entity which also comes under Irish law (hence double irish) which gives them something like a 2% corporate tax rate. They attribute their profits (I'm not sure if that's all pro

      • Re:Of course... (Score:5, Informative)

        by williamhb (758070) on Sunday November 21, 2010 @03:07AM (#34296462) Journal

        Except they do contribute - indirectly. By exporting goods to other countries, those companies bring money into their host country, where they pay it out as wages, spend it on locally-purchased supplies, etc. The host country then has ample opportunity to obtain tax revenue via personal income, payroll, or consumption taxes.

        Not in the Irish case. Companies "in Ireland for tax reasons" don't necessarily employ many people there. They just have to allocate certain revenues to an Irish subsidiary for tax purposes, and then re-"export" these same on-paper revenues to tax havens like Bermuda. The so called "Double Irish" and "Dutch Sandwich" (they use another holding company in Holland too) that meant Google paid only 2.4% tax [bloomberg.com] rather less than Ireland's 12.5% to 25% rates. It doesn't depend on how many people you employ. Nor on actually making much in Ireland. Just on sharp practice to ensure that even the toilet cleaners at these countries pay higher rates of tax than the company does.

        • Re: (Score:3, Insightful)

          It's refreshing to see arguments informed by empirical fact instead of ideologically motivated anti-tax dogma. We need to see the world's spreadsheet. It is counterproductive to rely on qualitative generalities about quantitative specifics.
          • Re:Of course... (Score:4, Interesting)

            by hedwards (940851) on Sunday November 21, 2010 @09:55AM (#34298010)
            There's a reason for that. The anti-tax folks don't want to name the cuts they'd make in order for it to work out to a balanced budget. I don't think there's anything inherently wrong with wanting low taxes, but there is something inherently wrong with Bush/Regan style tax cuts which not only aren't backed by spending cuts, but are really backed by spending increases of a substantial amount. At some point somebody has to find the money and it seems to usually end up in the lap of the Democratic party. The alternative being at some point defaulting on the loans.

            Most of the folks complaining about the tax burden are unwilling to allow the spending which is focused on benefiting them to be cut. It's easy to call for cuts when the cuts don't affect you but quite a bit harder to actually be the one to make the sacrifice. Likewise it's easier to cut programs that you don't expect to need than ones that you do expect to need. And easier to cut things you hope to never need than the ones you hope to someday need.
        • Re:Of course... (Score:5, Interesting)

          by shutdown -p now (807394) on Sunday November 21, 2010 @05:24AM (#34296956) Journal

          Not in the Irish case. Companies "in Ireland for tax reasons" don't necessarily employ many people there. They just have to allocate certain revenues to an Irish subsidiary for tax purposes, and then re-"export" these same on-paper revenues to tax havens like Bermuda.

          What I don't understand is why this is legal outside of Ireland (i.e. in those countries which are losing money because of it).

          Don't get me wrong - if countries want to compete on income tax to attract businesses, I'm all for it. It's up to the citizens of a democratic state to decide how they want to run things in it, and that includes tax rates. And Google, Intel, Microsoft etc are quite welcome to enjoy the benefits of those low taxes - by moving their actual production facilities to those places.

          But why the hell do they get to pay low taxes in Ireland off products that are actually made - and often sold! - on US soil? Their businesses enjoy all benefits of that society, but then skirt their obligation. Why is this legal?

          • Re: (Score:3, Informative)

            by rpillala (583965)
            The political donor class pays good money for loopholes like these.
          • Re:Of course... (Score:5, Informative)

            by hedwards (940851) on Sunday November 21, 2010 @09:58AM (#34298044)
            Probably because there is no logic to it. There's been a considerable amount of conservative anger about proposals in the US to require that companies book their profits in the US before they're allowed to book their losses here. The reason being that they'd been able to get deductions without having to pay taxes here, in effect subsidizing the investments they were making in other countries without providing the US tax payers doing the subsidizing with any benefits.

            And really of the proposed ways of handling the problem, it's probably the most moderate as corporations would still be allowed to not book profits from overseas operations in the US, they just wouldn't be allowed to offset domestic profits with overseas losses.
      • Re: (Score:3, Insightful)

        And that's worked out so well for Ireland, hasn't it?
    • Re: (Score:2, Insightful)

      by Anonymous Coward

      They do pay in the form of sales tax to buy things to keep the business running. The people that work for companies pay tax. If you had a business that pays 0 taxes, it will still be contributing to the tax base. The companies that get heavily taxed are at a huge disadvantage to companies which are in countries which don't have much for corporate taxes. Putting taxes on a company just puts a penalty on them in the global market.

    • Re:Of course... (Score:5, Insightful)

      by Lumbre (1822486) on Sunday November 21, 2010 @02:51AM (#34296400)

      Well, Microsoft isn't avoiding taxes in Washington by "selling" from Nevada. Oh, right, they are.

      Are interstate commerce excise taxes somewhat proportional to international tariffs? I'd like corporations to feel a pinch of pain when they export, just like what I feel with my small business. Then again, corporations have less personal liability.

    • Re:Of course... (Score:5, Insightful)

      by alphatel (1450715) * on Sunday November 21, 2010 @03:00AM (#34296442)

      Imagine if corporations actually paid taxes based on where their clients reside, not where they choose to set up a tax chop-shop.

      Google is an American company, founded by Americans, with the majority of its operational offices in America, listed on the American stock markets, with board members and officers who are American citizens living and working in America, offering services to Americans. So what if they expanded globally? Good for them, but they are clearly still an American company - pay the American taxes or go get EU citizenship and move your corporate arses!

    • Re:Of course... (Score:5, Informative)

      by Anonymous Coward on Sunday November 21, 2010 @03:09AM (#34296472)

      Don't be naive, companies don't pay taxes. It's an indirect tax on people. People are the only source of tax revenue.

      If you raise corporate tax, they simply raise their prices and lower their operating costs in other ways. If they are unable to maintain their margin, they move the business somewhere else. Companies can move faster than labor can follow. The barrier to labor mobility is maintained by companies through their subtle manipulation of nationalism. Companies being able to move and labor not being able to follow, allows companies to keep playing the "we'll relocate your job right from under your ass" game.

      Silly people (ie: most people, aka: "joe average", "john q. public", "unwashed masses", "chumps") buy the illusion that corporations actually pay tax. It allows politicians to pretend they're screwing someone other than the people. Corporations are only logical entities, not real ones.

      Bottom line: the people *always* pay.

    • Re:Of course... (Score:5, Interesting)

      by arivanov (12034) on Sunday November 21, 2010 @03:15AM (#34296494) Homepage

      Kind'a...

      If you do not contribute to the economy of your host country one of the results is that it will have a low living standard, housing in disarray, unemployment through the roof. This will automatically put a number of limitations on what kind of people you can hire. To be more specific - you can hire only wageslaves with non-working dependants.

      While that may be OK if your aim is to import labour from Talebanic countries where the wife is a houseslave, it does not work well in the civilised world. If it did, Google would not have had to post 200+ positions on a weekly basis for Dublin and consistently _FAIL_ to fill them. The situation with a lot of other emloyers in Ireland is not much different. They all continue to have a long list of positions for qualified labour open.

      That is to expected, because foreign labour does not want to move into the middle of a dump (and Ireland in the economic sense is a dump) and the Irish educational system does not have enough money (taxes are actually used for something ya know) to produce an equivalent.

      So overall, Google should stop wingeing here and realise that by moving a high skilled labour activity into a low tax rate country it has shot itself in the foot in the long term. High skilled labour, Low Taxes and Growth - you have to pick two. All three together are mutually exclusive.

      • Re: (Score:3, Interesting)

        by Maxo-Texas (864189)

        You know, I think it would be great if the executives were forced to move to china, india, and singapore.

        If they want to live under those rules and are subject to those restrictions and risk, then fine by me.

        They are actively destroying their host countries at this point. Stop letting their executives live under one set of rules while they try to have their workers under another set of rules.

  • by Anonymous Coward on Sunday November 21, 2010 @02:09AM (#34296238)

    I can't begin to count how many times over the past few years I heard that we needed to emulate the "Celtic Tiger."

  • Call their bluff (Score:4, Insightful)

    by Anonymous Coward on Sunday November 21, 2010 @02:11AM (#34296246)

    If they're actually that big and that well entrenched in Ireland, they won't just pick up their ball and go home that easily
    And if they're not, then who gives a fuck if they leave?

  • by Christian Marks (1932350) on Sunday November 21, 2010 @02:23AM (#34296268)

    If only raising taxes in the United States were enough to get rid of J.P. Morgan Chase, Bank of America and Merrill Lynch. Ireland should jump at the chance to jettison these systemically dangerous financial institutions and replace them with sound banks of their own.

  • It seems the countries they compare to Ireland such as China have a completely different lifestylet. Different lifestyle and social norms that usually run on the more luxurious side and the average person perhaps has higher expectations about how things should be or what they get out of the system.

    Wouldn't that mean it's a bullshit comparison? Yes, China's tax rate is lower, but the government is not expected to provide the services that Ireland's is expected to?

    • Re: (Score:3, Insightful)

      by sumdumass (711423)

      It's not a bullshit comparison. You see, the companies are not interested in running the government, they are interested in running their own business which means that if it is cheaper in China or India or with the same results, then that's where they can run their business for less.

      The comparison here isn't about what government provides it's citizens or the citizen's expected lifestyle, the comparison is on where the company can be run the most effectively for the least amount of expense.

      Personally, I thi

      • Re: (Score:3, Insightful)

        Except that Google and many other tech companies don't pay out dividends at all.

        Corporate tax is the equivalent of income tax for corporations. So if everyone has to pay their income tax, why should corporations be exempt of that?

        You seem to have a strangely optimistic fate that the corporations will do good with the money, but fail to present a good reason why they should do so.

        Employees are just assets/liabilities of them, but don't really belong in the same bucket with the obligations of their income.

  • by theodp (442580) on Sunday November 21, 2010 @02:28AM (#34296290)

    Fareed Zakaria [time.com]: "While businesses have a way to navigate this new world of technological change and globalization, the ordinary American worker does not. Capital and technology are mobile; labor isn't...That makes it more difficult for the American middle-class worker to benefit from technology and global growth in the same way that companies do. At this point, economists will protest. Historically, free trade has been beneficial to rich and poor. By forcing you out of industries in which you are inefficient, trade makes you strengthen those industries in which you are world-class. That's right in theory, and it has been right in practice...And yet something feels different this time."

    • by Count Fenring (669457) on Sunday November 21, 2010 @02:43AM (#34296350) Homepage Journal

      The difference is, largely, that corporations can have their cake, and eat it too. International law is set up so as to, for example, allow primarily U.S. companies like Google and Microsoft to incorporate in countries with much looser strictures on corporations, while still operating freely in the U.S.

    • Re: (Score:3, Interesting)

      by DarkOx (621550)

      And yet something feels different this time.

      I actually agree with that sentiment but one has to consider the possibility that we only feel this way because we are experiencing the painful part right now. When we have the benefit of twenty years of history to look back across to the events of 2007-20011 we might indeed find that the middle-class worker has benefited from technology and global growth.

    • by Flambergius (55153) * on Sunday November 21, 2010 @09:19AM (#34297818)

      I tend to agree that it's different this time, but not necessarily for the same reasons Zakaria is pointing to. (Didn't read the Time article, just what the parent was quoting.)

      Labour is less mobile than capital and technology, but that's not the problem. Labour's basic problem is that it's value is decreasing globally. You can't found a business on labour any more, because you can't produce stuff that people want for long. Our economy has become so productive and skill-based that labour can't keep up. Any skill that labour has will become redundant in a decade or so. This is a big problem, and as society and economy we really don't have any tools to cope with this.

      Another development that disadvantages labour is that people, especially young people, tend to value things that are post-scarcity. They don't want big house that they can fill with designer furniture, they want an address with a broadband connection that they can fill with music, comedy and games.

      Developing world labour has a competitive advantage right now, but that won't last for more than decade or two. They will caught in the same bind.

      I think we need seriously start to think how to bring about sustainable labour.

  • Business as usual (Score:4, Insightful)

    by HW_Hack (1031622) on Sunday November 21, 2010 @02:35AM (#34296312)

    A corporation serves only its self interest - it cares not about the local area(s) it operates in as long as it can get some sort of special tax treatment etc. They want full use of roadways - airports - water -etc by paying nothing or as little as possible. Yes they hire locals who have to make up the "sweetened tax deals" out of their own earnings.

    I say let them move all their crap to crappy nations and see how that works out for them.

    • by t2t10 (1909766) on Sunday November 21, 2010 @03:54AM (#34296654)

      Google does care about the local area it operates in, the area that nurtured it and that it relied on for much of its talent: the Bay Area.

      Ireland, on the other hand, is just a place that offered itself cheaply a few years ago. If it's not cheap anymore, it's time to pack up and leave. It's unreasonable for Ireland to expect loyalty given how Google ended up there in the first place.

  • This madness has got to stop.

    Executives for healthy companies that move a bit too many activities abroad for no good reason should be forced to stand behind their acts and move their ass where they put our money and jobs.

    Yeah. Just joking.

  • by Keruo (771880) on Sunday November 21, 2010 @02:38AM (#34296328)
    Google is using the standard "report income where tax is lowest" strategy in EU. Google has subsidiaries in multiple countries, and they can avoid paying more taxes by moving their income around as internal expenses.
    Subsidiaries appear to be barely breaking even, and mothercompany reports higher profit.
  • Ireland has been courting globalised corporations for years by offering grant incentives in addition to the low corporation tax. Now, they must learn to compete on a fair and level playing field. If it means a measure of short term pain as corporations jump ship out of the Emerald Isle, then that is just a medicine that Ireland needs to face. They can prevent it of course: Ensure that those corporations considering fleeing see that their Irish employees add significant value to their company and that it wou

  • by Anonymous Coward on Sunday November 21, 2010 @02:48AM (#34296384)

    Enjoy state ownership/competition in China and gross incompetence in India that will cost you more in sales and long-term brand recognition than you'd ever pay in actualized taxes.

    Now Singapore is a relatively new and untested place for offshoring, which is a risk in itself.

    It's also worth noting, of course, that none of these places are in Europe, which was the whole point of opening offices in Ireland to begin with. All these companies already have a presence in Asia, so basically they are threatening to do something that they already did, and they want people to believe that they'll give up their regional presence in Europe in order to effectively gain nothing.

    It's a poor bluff.

  • by postmortem (906676) on Sunday November 21, 2010 @02:48AM (#34296386) Journal

    .. and to eat it at same time. It does not mind all governments to be near broke, as long as they have the money. Well it does not work that way, as it seems that all countries that give them safe tax haven will either fail or be unstable to do business in long term.

    Corporations should not be above people and government - as we can see they can abuse both to get what they want ($). It is okay to make money, don't get me wrong, but it appears in this process there's only one winner - Big Co, and Joe Smith ends up with the (tax) bill.

    How come we have situations where companies make insane amount of money and governments that allow them to be in market are near broke? Well answer is obvious - they abuse system, or lack of it.

    So if google wants to help - well it can pay their debt bill. Because they are partially responsible for it.

  • ...since a company wants to hold your country hostage to its demands.

    If they want to leave, make it hurt badly(if not something that outright kills the company). Then make the company an example of how things can go wrong in a robbery. The government isnt there for the company, it is for the people that end up getting hit when the company decides to leave.

    • Re: (Score:3, Insightful)

      by Rakarra (112805)

      If they want to leave, make it hurt badly(if not something that outright kills the company). Then make the company an example of how things can go wrong in a robbery

      And then no company will want to set up shop in your country again. Why would they, when the risk is driven up that high?

  • Wrong (Score:4, Insightful)

    by happyhamster (134378) on Sunday November 21, 2010 @04:38AM (#34296800)

    When a private corporation attempts to dictate to a sovereign state which policies the state should adopt, there is something terribly wrong with the world.

    • Re: (Score:3, Interesting)

      When a private citizen is told to shut up about any political issue it is time to hold a revolution.

    • Re:Wrong (Score:5, Insightful)

      by Aquitaine (102097) <sam.iamsam@org> on Sunday November 21, 2010 @09:55AM (#34298006) Homepage

      I wish I had an 'overrated' mod point.

      'If you raise taxes, I will move' is hardly 'attempting to dictate.' It is the prerogative of any private person or entity to move for whatever reason they like, whether or not it is a good idea. This happens all the time -- look at the number of businesses moving out of California and to places like Texas.

      I'm astounded at the number of posts claiming that all of Ireland's problems are due primarily to its low corporate tax rate, as if those were the only two things that foreigners know about Ireland and so therefore one must have caused the other.

  • by erroneus (253617) on Sunday November 21, 2010 @04:39AM (#34296806) Homepage

    Everyone knows why they are in Ireland to begin with. If they raise the rate just a little at a time, they will not feel the need to leave. Companies like that almost never follow through on threats like that just because they said they would. All they have to do is raise the rates just enough that they won't leave and also get enough of an increase to make a difference for Ireland.

  • by FishandChips (695645) on Sunday November 21, 2010 @07:16AM (#34297306) Journal
    Ireland is just being used as a proxy here, imho. This is really aimed at the EU which is generally a high tax area. Corporations probably wouldn't dare to insult the EU directly but it's OK, apparently, to diss Ireland now that it's been brought low by corruption and incompetence. Given its history, location out on the fringes of mainland Europe and the strength of lack of it of the Irish economy, attractive rates of corporation tax are probably one of the few USPs Ireland has to attract jobs and business. So it's probably a good idea to keep these tax rates low but that is, or should be, the sovereign decision of the Irish people and what they decide we should respect. It's worth pointing out that of the corporations doing the complaining, two are utterly discredited and owe their continued existence to public funding (the banks) and three are gross monopolies. Complaints from outfits like these that poor people should become poorer so that rich people elsewhere can become richer are pretty darn sickening. If the Irish people decided to send these fellows home in a rowing boat, one couldn't blame them.

    However, the larger question here is whether the EU/IMF bailout of Ireland will be sensitive and sympathetic. If the rulers of the EU (i.e., France and Germany) use the exercise as an excuse to strip Ireland of the few advantages it has, such as the option of offering low rates of corporate taxes, claiming "harmonisation" but with the real aim of luring these companies elsewhere then the "rescue" will really amount to a rape. These days you don't need to strip factories and ship them home, you just need to shuffle the foreign bank accounts and trusts around. Given the arrogance and clumsiness of those who run the EU, it would be prudent not to be too confident.
  • Enough already! (Score:5, Informative)

    by j_col (1895476) on Sunday November 21, 2010 @08:24AM (#34297562)
    I live in Ireland, and like many Irish people I'm sick about hearing about the economy. Things on the ground in Ireland are actually pretty good: people are still spending so VAT income is good, and our exports are doing well throughout this recession. It is widely predicted that we will have a medium-term export led recovery. The problem we have is that the financial markets are not prepared to lend to us at less that an exorbitant interest rate of ~8% due to the perception that our deficient is massive, which is an anomaly due to the EU forcing us to include our own internal bank bailout (NAMA) on the countries balance sheet. Basically our problems are at the macro level not at the micro level: lots of Irish companies including the one I work for are still doing very well in this tough global economy thank you. The only reason we have to go to EU & IMF for funding at 5% interest is because the markets are screwing us at 8%. It is the markets that are hurting us, not corporations like Google etc. which are creating a lot of wealth in the country with the high salaries they pay.
  • by Animats (122034) on Sunday November 21, 2010 @12:03PM (#34298758) Homepage

    This is a huge issue for Google. But not because of Google's operations in Ireland. Google's whole tax-avoidance strategy, which gets Google's tax rate down to 2.4% (!), is based on a tax strategy which exploits Irish law [bloomberg.com]:

    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 Bloomberg article describes how this works. Google "licenses its advertising technology" to "Google Ireland Holdings", which owns "Google Ireland Limited". That unit sells 88% of Google's $12.5 billion in non-US advertising. Google Ireland Limited then pays royalties to Google Netherlands Holdings B.V. in Amsterdam (which, according to Bloomberg, is a dummy company with no employees), to get the benefit of a tax break for royalties paid between European Union countries. Then Google Netherlands Holdings B.V. pays royalties to Google Ireland Holdings (headquartered in Bermuda) $5.4 billion in "royalties". "You accumulate profits within Ireland, but then you get them out of the country relatively easily. And you do it by using Bermuda." After all that, the tax liability has been laundered out of existence.

    That's why Google is concerned about changes in Ireland's tax laws.

  • Keep taxing (Score:3, Interesting)

    by mr100percent (57156) on Sunday November 21, 2010 @04:18PM (#34300442) Homepage Journal

    Back in like 1905, corporations paid 50% of all Federal taxes, meaning individuals weren't taking the hit. Now corporations are paying like 5% of the federal taxes. I'd say rebalance the taxes onto corporations.

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