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."
oops (Score:5, Insightful)
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.
Like Their Lawyers Would Let Something Slip (Score:5, Insightful)
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
It's sad that this is "routine" (Score:4, Insightful)
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.)
Re:Loopholes (Score:5, Insightful)
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)
Re:oops (Score:2, Insightful)
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.
Re:Tax Evasion is Theft (Score:3, Insightful)
Tax evasion is not theft. Tax evasion is tax evasion. It's already illegal and it's pointlessly stupid to try to shoehorn one crime into a different crime's definition.
We take the RIAA and MPAA to task for this shit every time they do it, so let's not make ourselves into hypocrites by doing the same thing, okay?
Re:oops (Score:5, Insightful)
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!
non-news (Score:3, Insightful)
Re:Like Their Lawyers Would Let Something Slip (Score:4, Insightful)
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?
Re:oops (Score:4, Insightful)
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:tax code is such a scam (Score:4, Insightful)
Again, his is just a mindless talking point.
The biggest corporations have enough people and tricks to pay 0%. Rate of percentage is irrelevant. Getting rid of the broken tax code is.
Loophole needs to be closed (Score:2, Insightful)
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 about how Microsoft offshored money to Ireland and paid several hundred million less in taxes (or even shifting its (official for tax purposes) headquarters to Nevada to avoid paying tax in Washington State. Its a big loophole that could fund school for 50 million American kids, but the Republicans and Tea Party folk are good with 5 people who have a 3-5 billion in the bank, getting a new superyacht *and* redo all of the properties in the Hamptons *every year* instead of every 2 years.
Re:oops (Score:2, Insightful)
We have been waiting too long for the government deficit to completely explode. Continue the good work of accelerating the process.
Re:oops (Score:5, Insightful)
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.
Re:oops (Score:5, Insightful)
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)
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.
Corporations aren't evil. They're not anything. (Score:3, Insightful)
Corporations shouldn't be taxed, period. Money that comes OUT of that corporation through stock dividends and wages and bonuses and perks should be taxed. And that should all be taxed as plain old income, not special kinds of income like "capital gains" that has lower rates to compensate for corporate taxes already taken out.
I'm also highly in favor of targeted VATs. For example, the FDA should be entirely funded on a VAT levied on food and drugs. And if people want their food to be safer, then they have to agree to raise the food VAT to pay for it. And if people want to lower taxes by reducing the food VAT, then they have to deal with less safe food. And the FDA would be legally required to have a balanced budget (i.e. they would only get to spend whatever money they got through food and drug VATs). Same goes for all other government spending. For example, the military should be paid for with an X% 'military' income tax, and ONLY the revenue from that tax. If people want to increase military spending, then the only way to do so is to increase the military income tax. I strongly believe that taxes and spending were tightly coupled like this, most people wouldn't have a problem with taxes, and that it could be a path to balanced budgets in this country. But today, nobody wants to pay taxes because it all goes into a huge slush fund with no apparent accountability on how those funds are spent. Why would any sane person want to spend more on taxes in the current system?