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Google The Almighty Buck United States News

IRS Auditing Google 328

theodp writes "Bloomberg reports that the IRS is auditing how Google shifted profits offshore to avoid taxes. According to Bloomberg, Google cuts its tax bill by about $1 billion a year using a technique that allocates profits to a unit managed out of a law firm in Bermuda, where there is no corporate income tax. In 2009, the most recent year for which records are available, this subsidiary collected 4.34 billion euros (about $6.1 billion) in royalties from a Google unit in the Netherlands. A spokesman for Google, whose stated mission is 'to organize the world's information and make it universally accessible and useful,' called the IRS probe 'a routine inquiry' and declined to comment further."
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IRS Auditing Google

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  • oops (Score:5, Insightful)

    by shentino ( 1139071 ) <shentino@gmail.com> on Friday October 14, 2011 @10:03AM (#37714116)

    Hmm, this is well known for a long time, and only NOW the IRS is getting around to auditing them?

    I think Google just pissed off the wrong politician somehow.

    Methinks their goody two shoes nature finally rubbed some corporation the wrong way.

    • by cdxta ( 1170917 )
      So they can change them back taxes with outrageous interest and penalties? Na that’s hoping too much of the government, they only do that to hard working individuals.
      • Re:oops (Score:5, Informative)

        by Sponge Bath ( 413667 ) on Friday October 14, 2011 @11:36AM (#37715452)

        ...back taxes with outrageous interest and penalties?

        Unless they committed a crime, the penalty is interest, just like with individuals. The interest rate is reasonable (currently 4% for individuals and corporations). On top of that, the IRS pays you interest (again 4%) if you overpay. I know it's popular in some circles to paint government as the ultimate evil in all things, but people will take you more seriously if you start with facts.

        • by bberens ( 965711 )
          If my withholding is too much (meaning I'm going to get a return) I don't get 4% return on that money. If I did I'd withhold a ton more since savings accounts give about 1% currently.
    • Re: (Score:2, Insightful)

      by Anonymous Coward

      Google is neither the first, nor the only, nor the largest company that pulls this exact same tax dodge. I'm not excusing Google, I'm saying that if the IRS is starting to crack down on this the shit is going to hit the fan with a number of larger corporations too.

      • You're assuming what they are doing is illegal. It's entirely possible, likely even, that everything they are doing is perfectly allowable under the IRS's own rules. Some where on their website they explain the difference between tax evasion and tax avoidance; avoidance is perfectly legal, evasion is not.

      • Microsoft was doing spectacular tax transfers for a decade through Ireland. Now that other places have joined the race to the bottom in terms of throwing tax loopholes at big companies, Microsoft has "diversified".

        Hint: Remember how Ballmer was saying that the Skype purchase wouldn't impact Microsoft because the funds were being repatriated from elsewhere? How do you think those billions in "loose change" got there in the first place? You "park" them elsewhere until you can bring them back onshore at t

      • Re: (Score:2, Insightful)

        by mr1911 ( 1942298 )
        GO IRS. Keep making the US even more anti-business so that companies not only shelter their earnings off shore, but they move more operations and maybe even their entire operation off shore. Then you won't have to worry about all of the income, property, and sales taxes the employees pay either, because they won't be here.

        We have been waiting too long for the government deficit to completely explode. Continue the good work of accelerating the process.
        • Did you read the part about it being a part of Google that was ALREADY OFF-SHORED that was the tax shelter? No one's going to move their entire operation away from the worlds largest economy. It's pretty simple: If you want to do business in our economy, you should have to pay the same taxes that all other businesses in our economy pay.

          As far as I can tell, they're talking about Euros, which I'm not certain you're aware, would likely have been collected by Google's European operation. I am not an Int
      • Comment removed based on user account deletion
    • Re:oops (Score:5, Insightful)

      by bryan1945 ( 301828 ) on Friday October 14, 2011 @10:19AM (#37714366) Journal

      Don't a whole bunch of corporations do this? Maybe not to avoid all taxes, but I thought there were tax incentives/breaks for companies to have a global footprint. (Like they pay all the taxes here anyway, with all the breaks they get already.) I, along with my classmates, found it amusing that for our MBA financial class test questions that the corporate tax rate was ALWAYS a set 35%. Then the following class we would do a case study that showed how XYZ corporation actually paid only 7% tax.

      Cognitive dissonance at $45K a year!

      • Re:oops (Score:4, Insightful)

        by MickyTheIdiot ( 1032226 ) on Friday October 14, 2011 @10:26AM (#37714460) Homepage Journal

        It's just another dishonest talking point.

        On twitter every day there are people screaming about the U.S. "high corporate tax rate" and they always forget to mention that NOBODY pays that rate... to many ways around it.

        What I want to know is how lowering corporate tax helps anyone at all when such a huge percentage of corporations pay 0%.

        • Re:oops (Score:5, Insightful)

          by VolciMaster ( 821873 ) on Friday October 14, 2011 @10:48AM (#37714752) Homepage

          What I want to know is how lowering corporate tax helps anyone at all when such a huge percentage of corporations pay 0%.

          If you lower it and remove all "loopholes" and exclusions, then everybody pays it. It's pretty simple, really.

          • Corporate income it too nebulous a concept to remove *all* the loopholes.

            For your average wage slave, income it pretty simple. It's your paycheck.

            For a corporation, income = gross revenue - expenses.

            We can monkey with both revenue and expenses. It's obvious that raw materials are an expense, but is the CEO's limo a necessary expense? If a customer places a big order with a contract that covers many years, when is the corporation required to report that as income? What happens when you report
        • Re:oops (Score:5, Insightful)

          by NotQuiteReal ( 608241 ) on Friday October 14, 2011 @10:48AM (#37714760) Journal
          What I want to know is how lowering corporate tax helps anyone at all when such a huge percentage of corporations pay 0%.

          If the tax were lower many companies would find it cheaper/more convenient to pay the tax rather than go the the trouble to avoid it.

          So, why not lower the tax? Oh, I know - we don't want to give those "evil corporations" a break!

          If "a huge percentage of corporations pay 0%", then lowering the rate can do no harm, right?

          Things are so much harder when economic reality doesn't match political fantasy.

          The irony is that folks of the political persuasion that want to "tax the rich" more and make corporations "pay their fair share" take every tax break and loophole available too.
          • Re:oops (Score:5, Insightful)

            by gstoddart ( 321705 ) on Friday October 14, 2011 @11:08AM (#37715064) Homepage

            Things are so much harder when economic reality doesn't match political fantasy.

            That statement works both ways ... just because in someone's political fantasy of the world corporate tax cuts make all of our lives better, doesn't make it true either. the Libertarian view of economics to me is somewhat detached from economic reality, but it is an economic theory that presupposes conditions which don't actually exist.

            So far other than some hand waving with a "then a miracle occurs", I have never been convinced that these tax cuts ever actually generated the claimed outcomes. In fact, from what I've seen, it generates the exact opposite outcomes.

            • I have never been convinced that these tax cuts ever actually generated the claimed outcomes. In fact, from what I've seen, it generates the exact opposite outcomes.

              There's never been any proof that tax cuts this low stimulate the economy. The best I've ever found is CBO scoring on certain tax cuts that say for every dollar cut, you put 60 cents back into the economy. Not exactly a good deal, considering things like food stamps put 1.2 dollars back into the economy.

              The real data does seem to support your assertion that the opposite occurs. Data since 1979.

              http://motherjones.com/politics/2011/02/income-inequality-in-america-chart-graph

          • If "a huge percentage of corporations pay 0%", then lowering the rate can do no harm, right?

            Then we'd be giving the corporations money!

          • A 'huge' percentage do not pay zero percent. You are undoubtedly regurgitating a figure about how GE paid no taxes a few years ago. It's because they carried over the loss from a previous year. If you lose 100 mil in 2006 and profit 50 mil in 2007, you pay no taxes on the 50 mil because of your prior losses.

            If this sounds unfair to you, imagine what would happen if it didn't work this way. Enormous business decisions would revolve around artificial time spans just to keep their profit (and loss) as close to

            • It's because they carried over the loss from a previous year.

              We used to call that "income averaging", however, this was repealed in 1986 for individuals. Just another case where corporations get preferential treatment over individuals.

              They do their corporate taxes on turbotax and they pay 35%..

              They may be paying 35% on their taxable income, but that's where the slippery slope is. If I made $1 Million in profits last year, but through creative accounting I can show that I had $ 900,000 in tax-deductible investments, tax shelters, etc, then I'm only going to pay 35% on the $ 100,000, which means, in effect I'm "really" only pay

              • We used to call that "income averaging", however, this was repealed in 1986 for individuals. Just another case where corporations get preferential treatment over individuals.

                You seem to suggest that corporations and people should be treated the same way under tax laws. Maybe this comes from the facile suggestion that 'corporations are people' because of Citizens United, but it has no bearing on actual corporate accounting or taxes.

                which means, in effect I'm "really" only paying 3.5% of total revenue.

                You aren't supposed to pay 35% of revenue. Taxes are paid on profits. If you want to start taxing gross receipts (and some localities do) then you just drove every industry with high costs and high income out of your area, because nobody is going to p

                • by djlowe ( 41723 ) *

                  Maybe this comes from the facile suggestion that 'corporations are people' because of Citizens United, but it has no bearing on actual corporate accounting or taxes.

                  You seem to be arguing that this is a good thing. It is not, and here's why: Corporations are citizens, at least in the US, and have been for a very long time. You summed up the problem very nicely: "it has no bearing on actual corporate accounting or taxes."

                  In effect, the US now has a two-tier citizenry - the "human citizens" and the "corporat

          • This whole argument that "corporations are evil" and "corporations should pay their fair share" is based on the bizarre human tendency to anthropomorphize corporations (and groups of people in general). Saying corporations should pay their fair share of taxes is really no different from saying my wallet should pay it's fair share of taxes based on the money it has in it.

            Corporations shouldn't be taxed, period. Money that comes OUT of that corporation through stock dividends and wages and bonuses and per
        • by GauteL ( 29207 )

          "What I want to know is how lowering corporate tax helps anyone at all when such a huge percentage of corporations pay 0%"

          It would help the small businesses that don't have the resources or know-how to avoid corporation tax. I find all of this rather distasteful, especially in light of the old "do no evil" mantra of Google, but the current system gives big companies an unfair competitive advantage, because they have the resources and know-how to avoid corporation tax.

        • by 0123456 ( 636235 )

          On twitter every day there are people screaming about the U.S. "high corporate tax rate" and they always forget to mention that NOBODY pays that rate... to many ways around it.

          Well then, there'll be no problem with cutting the tax rate than no-one pays anyway.

          Of course in the real world, no corporation pays tax. They either pass the increased costs onto their customers or the reduced income onto their employees in lower wages or layoffs. So anyone demanding that we 'tax rich corporations' is really demanding higher prices and/or lower wages and/or less jobs.

          • Of course in the real world, no corporation pays tax. They either pass the increased costs onto their customers or the reduced income onto their employees in lower wages or layoffs.

            I'm a bit unclear on some of the details here. Care to explain how they pass the increased costs onto their customers - I mean, I thought a company already asks whatever price it thinks will maximize income? Which, of course, won't change even if that income is taxed.

            And if you tax profit rather than income (or make payroll tax-

        • What I want to know is how lowering corporate tax helps anyone at all when such a huge percentage of corporations pay 0%.

          It doesn't. No more than "tax cuts for the rich" benefits anybody except the rich.

          Essentially the corporations and the millionaires say that if only they had to pay less taxes, that would free up loads of money on investment and other things, and the economy would go whoosh and suddenly be reinvigorated. Of course, that hasn't ever happened.

          I have yet to ever see any evidence that "tric

        • Because corporations are owned by actual people and those people ALREADY pay taxes on that money at the individual level whether through income taxes, capital gains, or dividend taxes. When you receive money from a corporation, no matter what kind (wage, dividend, contracting, capital gain or whatever) --- that money is TAXED when you go to pay your income taxes. It is YOU paying the tax as an individual citizen.

          The problem here is that corporations are taxed on their profits. Well, the profits are a
        • On twitter every day there are people screaming about the U.S. "high corporate tax rate" and they always forget to mention that NOBODY pays that rate... to many ways around it.

          That's the trouble. Some people do. The largest companies don't, because there is a trivial and pretty unavoidable way around it: They report their profits in another country with lower taxes. So e.g. Microsoft Ireland will own the copyright for Windows, then license Microsoft America as an authorized distributor, but on terms favorable to the Ireland company so that they're the ones who keep all the profits. Then Microsoft America makes no profit and there is nothing to tax -- you can't tax companies outsi

        • Very few people pay the individual tax rate either. The system as it is currently setup is simply too complicated. They need to remove all deductions and get some reasonable income band flat tax.

          Also, while I'm ranting, why do I need to file taxes each year anyway? The government has all the information. Send me something to check, sign and send back if I agree. If I don't agree then I can go down the path of filing.

      • Yes many companies do this [cbsnews.com], including one of the most valuable, Exxon-Mobil. There are headquartered out of a small office in Switzerland on paper even though all their key personnel are in Houston, TX.
        • And some are even carrying this even further with plans for moving their corporate headquarters out of the country to avoid this scrutiny. After all it's easy to point the finger at a company that is only registered in a foreign country on paper but it's harder if their corporate headquarters are physically in that country.

      • Really? That tripped you up? Well, had you actually been in an MBA level class instead of just taking a test, you'd have learned the difference between a tax rate and effective taxes. Hint: it has to do with tax deductions and tax credits

        You don't need cognitive dissonance to understand why a corporation who's tax rate is 35% only pays 7%. You just need to read a little bit and understand how the tax system works at the most basic level.

        Once you understand why it is the way it is, then you can
    • Hey, good deal! I, of course, wait for every other Fortune 500 company to get hit with these same investigations. It's about time ALL of these companies hiding money off-shore get nailed.

      Google must have forgotten to give the appropriately sized "campaign contribution" to the right candidate...

    • I think there is more to it than that.

      The way things seem to work these days is one company with controls over one or more politician has decided to use their influence to put some heat on Google.

      This "selective justice" has a way of biting people in the ass though -- Google only needs to buy their own politicians to pull the same in return. And Google tends to "fix" things in a way they don't break again. So I think whoever is really behind it will feel some serious heat in a way that it won't come back

    • Methinks their goody two shoes nature finally rubbed some corporation the wrong way.

      Don't drink, don't smoke, what do you do?
      Don't drink, don't smoke, what do you do?
      Subtle innuendos follow
      Must be large scale multi-billion dollar tax evasion.

      / Obscure?
      // Hang on, this isn't Fark
      /// Who cares, slashie slashie

      • by Pope ( 17780 )

        Hey, they're just following ancient (corporate) history! If they dodge for you, they'll dodge for me.

    • Google's actions speak for its self. Google is not alone, but they became the bad guys when they went offshore. It is a personal embarrassment to see Ugly Americans [wikipedia.org].
    • by PPH ( 736903 )

      I think Google just pissed off the wrong politician somehow.

      Google +GOP +"underage boys"

  • by Joce640k ( 829181 ) on Friday October 14, 2011 @10:03AM (#37714130) Homepage

    I assume the reason they don't close these tax loopholes is because they're the same loopholes used by senators, congressmen, etc.

    • As the kids say:

      Don't hate the player....

      • Have we fallen so far into austerity measures that hatred is now being rationed?

        Hate the player, the game, and everybody who uses the phrase "Don't hate the player, hate the game."
    • Well.. don't underestimate the power of the campaign contribution, the revolving door, and the lobbyist... The congresscritters have many other ways they can get benefits from a situation like this...

    • Re:Loopholes (Score:5, Insightful)

      by fuzzyfuzzyfungus ( 1223518 ) on Friday October 14, 2011 @10:13AM (#37714284) Journal
      I suspect that that isn't quite correct: members of congress tend to be of substantially above-average wealth; but not nearly so much that they would have personal need for the same accounting tricks used to hide the incomes of major multinationals.

      Now, of course, the major multinationals who serve as important campaign donors and likely future employers, funders of think-tanks, etc. for them do have need of the accounting tricks used to hide the incomes of major multinationals, so the effect is largely the same.
    • Re:Loopholes (Score:5, Insightful)

      by TheRaven64 ( 641858 ) on Friday October 14, 2011 @10:17AM (#37714332) Journal
      Not so much the congress-denizens themselves, but the people who contribute to their campaigns and employ their constituents. If you're a senator, and you propose closing a tax loophole, you're likely to get a visit from a lobbyist saying 'my client has a factory in your state that employs 200 people. Without that loophole, we'd have to relocate the jobs to {this week's offshoring nation of choice}'. Senator votes for it, and the next election his opponent runs a campaign about how he cost the state 200 jobs in a single vote. More likely, the senator backs down and tries to find a loophole that none of the companies in his state are using. Unfortunately, when he does, he finds senators from other states experiencing the same pressure and the proposal never makes it out of committee.
    • I think the problem is more structural - the economy is global, but government is only national, for the most part. Companies can easily stay a step ahead of governments by playing them off each other, resulting in the race to the bottom you see today. Notice that you do see more effective international regulation where powerful special interests are concerned - intellectual property for example. But the same thing for environmental and worker protection, no so much.
  • by jonpublic ( 676412 ) on Friday October 14, 2011 @10:05AM (#37714168)

    I'm waiting to find out that I paid more than Google in taxes.

    If only I could pull something so crazy off with my own income, shipping it to two different countries to avoid paying taxes.

    • I'm waiting to find out that I paid more than Google in taxes.

      It's not just Google, here's a place to start [theatlantic.com]. The problem is larger than that as some of the largest companies (Boeing, Ebay, GE) spend more money lobbying politicians than paying taxes [huffingtonpost.com].

    • making the world's data useful should include everyone's ability to find loop holes in the tax code!
    • by Ihmhi ( 1206036 )

      This will be par for the course until we get something like FairTax. There's no reason to have this insanely complicated system when we can just have a nationwide sales tax that does basically the same thing while simultaneously eliminating most of the IRS. We can save money on closing down a huge arm of government bureaucracy, save money on making it impossible to dodge taxes, and avoid any complaints about tax disparity for the wealthy.

  • by HangingChad ( 677530 ) on Friday October 14, 2011 @10:09AM (#37714224) Homepage

    Why are they picking on Google instead of someplace like, for instance, Koch Industries? Or News Corp? Or any of the other big companies pulling the infamous Double Dutch accounting tricks?

  • Google's probably got nothing to worry about. They've been doing this for a while. So has Microsoft. And Facebook. And probably most other large companies [bloomberg.com]. Most of this falls under something called transfer pricing [wikipedia.org]. Which is a global problem [irsfraud.net] that you will find anywhere from China to Britain to Argentina.

    It's not quite right for this article to make it sound like a solely Google problem. It's far far larger than that. In the end, Google's got enough of the highest paid lawyers and accountants that this audit should turn up just about nothing.

    Hmmm, maybe I'll just transfer all my profits to Bermuda ... oh, right, I'm poor. We pay taxes. Corporations and people rich enough to afford shifty accountants don't. And, really, what motivation do my representatives have to change this situation? Their soft money doesn't come from me and my fellow citizens are too stupid, too easily misled and too illiterate to vote someone who would change this into office.
    • by MickyTheIdiot ( 1032226 ) on Friday October 14, 2011 @10:20AM (#37714382) Homepage Journal

      The corporate MSM has always obscured this problem (and it's variants) and will continue to obscure this problem because they're into ass deep themselves. I've never heard a TV news show bemoan the fact that many corporations affectively have a negative state income tax rate and I suspect I never will (but it's well document in books like "JobsScam" and other places).

      They don't want people thinking that the people have OWS have a point now, do they?

  • by sirwired ( 27582 ) on Friday October 14, 2011 @10:11AM (#37714258)

    This, unfortunately, is a very common way for corporations to avoid taxes. The rules to decide which country "earned" a particular chunk of income are inherently complicated (with little way to simplify them), as there are plenty of legitimate reasons for part of a company to owe a foreign subsidiary money. It's a constant cat-and-mouse game between corporations and the IRS chasing this money around.

    It's a complicated problem with no good answers. (Though you would never know it to listen to people on either end of the political spectrum... on one end you have people saying we should "eliminate loopholes", betraying their ignorance of why the problem exists to begin with. On the other end you have people that argue that corporations should pay no income tax since they spend so much effort complying (or fighting) with tax laws, but offer no way to make up that lost revenue, or volunteer cuts.)

    • there is a good solution. Don't tax corporate incomes. If you can't really do it anyway, then you are just going to be constantly frustrated. Instead, change the taxes to allow companies to do what's right.
      • Completely waiving tax by corporations isn't a solution either. How is that, in any way, fair to companies that have not incorporated in a way that would allow them to avoid tax? (i.e. your average small business.) Due their corporate "personhood", a corporation involves a certain fixed amount of perfectly-justified administrative and legal overhead that is untenable for many small businesses.

        We do collect a substantial amount of corporate income tax, even if that is far less than the official rate.

    • by artor3 ( 1344997 )

      It is a simple problem to fix. Cheating on taxes is akin to stealing from your neighbors. Give the executives one week in prison for every million dollars not paid. Watch the problem disappear over night.

      Of course, the robber barons are above the laws and would never be charged, even if they were lax enough to allow the bill to pass. But that's a problem with the system, not some inherent difficulty in levying taxes.

    • I prefer to say "they have failed to convince Congress" to write a tax exception/grant that is applicable to the methods they have available for protecting their profits.

      As in, our entire tax system is a sham to benefit the big three, politicians, big corporations, and unions. Much of the laws passed in this country serve those same three interest.

      So when people go off on a tirade about corporations avoiding taxes or not paying enough there a few things they need to consider.

      1) NO CORPORATION PAYS ANY TAXES

    • Why is it unfortunate that companies avoid paying some taxes? It's very fortunate.

      What is US gov't doing anyway, that you support so much? Which wars do you like? Is it the Afghan war? Iraq? War on drugs maybe? Maybe it's war on poverty?

      How about war on education? War on energy independence? War on your liberties?

      How about reforming the tax code, not the 9 9 9 Hermain, I can't count, Cain (which in reality is 18 9 9, if somebody bothered to look at the actual statement and realize that companies wouldn't be

  • non-news (Score:3, Insightful)

    by superwiz ( 655733 ) on Friday October 14, 2011 @10:20AM (#37714380) Journal
    Google is a publicly traded company. They have to be audited every quarter simply for that reason. Every publicly traded company has to be independently audited every quarter. I doubt IRS will find anything Google can't.
    • Would these independent auditors be graduates of the Arthur Andersen school?

    • Every publicly traded company has to be independently audited every quarter. I doubt IRS will find anything Google can't.

      The "independent" auditor is hired by the company to perform the audit every year. This company makes significant amounts of money performing audits, and attracting customer loyalty. How much incentive do you think they have to dig deep, and find anything really wrong?

      Anyone who knows anything about audits knows the audit is only as good as the auditor. Think the IRS might have some de

      • Hiring auditors to overlook things (even in a wink-wink nodge-nodge manner) would constitute any number of felonies. Any publicly traded company is so awash in money that it would find it fairly difficult to make felonies more profitable than simply sticking to its core business. Everyone is corruptible, of course, but corruption on large scale simply doesn't pay enough to bother with it.
    • The question comes down to interpretation of tax law. Did Google's accountants correctly interpret tax law so as to allow them to avoid taxes in all of these cases? My bet would be that after a 5-10 year investigation the IRS will conclude that Google made several "innocent" mistakes and owes the IRS some significant sum and that they will agree to a settlement with Google that covers the cost of the workers time.
    • I doubt IRS will find anything Google can't.

      Yeah, after all, how often does someone say "I IRSed myself this morning to see what potential employers might find about me"?

  • I like Scott Adam's take:

    http://dilbert.com/strips/comic/2010-12-28/ [dilbert.com]

    Information from Wikipedia:

    http://en.wikipedia.org/wiki/Double_Irish_Arrangement#Dutch_Sandwich [wikipedia.org]

    It's quite common, and is done by a *lot* of companies

  • by Anonymous Coward

    The offshoring of profits needs to end. Google is doing it because it saves on their tax bill. Microsoft does it too, and most banks. I remember seeing a program on TV that interviewed a man who cut the lawn of banks in the Grand Cayman Islands. There were over 350 (different corporate) banks on the island, but it was difficult for the locals to find banking services because there was only a local credit union serving the island. Zero corporate taxes means profits aren't taxed. I remember hearing abou

  • Regardless of whether this is just normal corporate practice how does this sit with the 'Do No Evil' motto?

    Personally I'd avoid paying any tax I could, but then I've not portrayed myself as anything other than a normal individual. Google, through their motto, have set themselves a higher bar. To me this shows that the pressures of being a public company have made the halo slip a little,

  • Under W, large amount of tax breaks were put in place. However, they actually encouraged offshoring. At the same time, other tax changes were put in place that made it easy for companies like Google, MS, Apple, etc to shift profits offshore. This needs to stop.
    • by geekoid ( 135745 )

      Change ot our tax policy do need to change, especially these loophole. But they idea of re-doing the taxes in mass is a bad one.

      The changes we really need are:
      Close the off shoring loop holes
      Tax all 'wall street' trades at .007 percent (7 cents per 1000 dollars)
      Remove tax deduction for non profit.
      Charge non profit taxes.

      They won't because people are emotionally attached to those thing, but they would solve are economic issues while providing some defense vs. the next down cycle.

      Really, if they did that, the

  • Good (Score:2, Troll)

    by geekoid ( 135745 )

    I like Google. Really like them, but this is good.
    While the off shore practice they utilize isn't uncommon for large corporation, it is wrong.
    Double Irish and Dutch Sandwich, and other loopholes need to be closed. If it means putting a company I like in the hot seat, so be it.

  • by NicknamesAreStupid ( 1040118 ) on Friday October 14, 2011 @11:05AM (#37715022)
    If you believe that every system has flaws, then you might be able to see when it may fail. For example, the income tax system has always been ham handed. Those who understood it well enough could always slip between the regulations to avoid some or all of it. In the early days, about 90 years ago, most people ignored them. In the 1940s, they passed payroll withholding and started collecting from those who were employed by others.

    When most of the revenues were coming from a large "middle class" the system worked because it was easier to pay the government than to pay a tax attorney to find the cracks. People who were really rich could still afford to pay tax attorneys to minimize or limit their taxes, but it was a relatively small percentage of federal income tax revenues.

    But as wealth began to concentrate, an industry of bright financial and legal professionals flourished, allowing more income to be shielded from the IRS. The rich, who got richer, weighed the cost of the tax verses the cost of testing the tax avoidance in tax court and decided the best return was "playing in the gray." The IRS has no choice but to go to tax court when someone challenges them. They do not have enough people to fight every rich person or company. Often, the well-paid lawyers of the taxpayers are better versed on the law than the civil servant IRS lawyers. As the rich get richer, they influence tax laws to gain a greater advantage. Eventually you have a society of people who are either too poor to pay much tax or a few too rich to need to pay tax. That is when the tax system fails. Frankly, no tax system can succeed when the money is too closely held by a few.

    The irony is that we tax productivity. Imagine a company going to its most productive people and cutting their pay as they worked harder and better. There is a better way to collect federal revenue -- http://www.forbes.com/sites/kellyphillipserb/2011/09/02/guest-post-income-tax-alternative/ [forbes.com] .
  • To seeing GE, Apple, Oracle, IBM all audited.

    I don't know what would be worse, if this gets modded as funny or insightful.

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