Google CEO Grilled Over Using a $20 Billion Tax Shelter in 2017 (bbc.com) 160
The BBC put some tough questions to Google CEO Sundar Pichai:
in 2017, Google moved more than $20 billion to Bermuda through a Dutch shell company, as part of a strategy called "Double Irish, Dutch Sandwich". I put this to Pichai, who said that Google no longer uses this scheme, is one of the world's biggest taxpayers, and complies with tax laws in every country in which it operates. I responded that his answer revealed exactly the problem: this isn't just a legal issue, it's a moral one. Poor people generally don't employ accountants in order to minimise their tax bills; large-scale tax avoidance is something that the richest people in the world do, and — I suggested to him — may weaken the collective sacrifice.
When I invited Pichai to commit there and then to Google pulling out of all tax havens immediately, he didn't take up the offer...
It is true that the company generates most of its research and revenues in the U.S., which is where it pays most of its tax. Moreover, it has paid effective tax of 20% over the past decade, which is more than many companies.
In the longer podcast interview, Pichai says he also believes that in the future technologies may start reaching even further into our lives. And he calls artificial intelligence "the most profound technology that humanity will ever develop and work on...
"If you think about fire or electricity or the internet, it's like that. But I think even more profound...."
When I invited Pichai to commit there and then to Google pulling out of all tax havens immediately, he didn't take up the offer...
It is true that the company generates most of its research and revenues in the U.S., which is where it pays most of its tax. Moreover, it has paid effective tax of 20% over the past decade, which is more than many companies.
In the longer podcast interview, Pichai says he also believes that in the future technologies may start reaching even further into our lives. And he calls artificial intelligence "the most profound technology that humanity will ever develop and work on...
"If you think about fire or electricity or the internet, it's like that. But I think even more profound...."
Companies have no reason to be moral (Score:5, Insightful)
It is up to the different countries to change their tax laws to prevent offshore tax shelters. Too bad all the U.S. politicians work for the big companies that financed their campaigns, so you wont see it changing here anytime soon.
Re:Companies have no reason to be moral (Score:5, Informative)
The shareholder value myth. [cornell.edu]
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Excellent. Thank for the link. I've thought for a long time, as have many on /. making that point, that concentrating on only the next quarter's financial results is short-sighted. Cue MBA jokes.
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This document is complete gobbledygook, fuzzy thinking nonsense. First it defines shareholder value is maximising share price.. Then it says that maximising share price hasn't worked because share prices have gone down. Then it claims we don't even know what share price is, since the values fluctuate. Must I point out the internal contradictions in making such claims?
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Wow, that publication is...asinine.
âoeShareholders are suffering their worst investment returns since the Great Depression; the population of publicly-listed companies has declined by 40%."
This was published in 2013. Yes, if you're measuring economic performance RIGHT AFTER A CRASH it's going to look terrible.
The decreasing number of publicly held companies (repeated as a metric in that paper) is more a commentary about how companies are a) better able to raise private venture cap instead of going pu
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Destroying the society the shareholders live in by failing to pay taxes everyone else does and to basically be nothing but a parasite upon the infrastructure paid for by others to the detriment of everyone including those investors.
Clearly the psychopathy is among the executive team who consider their society is nothing but something to be preyed upon and sucked dry, investors to be fed on as well, the corporation a bloated parasite that cheats against the rest of society to bleed dry it's infrastructure to
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Second, nobody is saying they aren't paying taxes, they're being accused of not paying more than the law says they owe. Which is neither a crime nor an immoral act. The accusation is immoral, as it is based upon a lie and insincere about the goals.
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"Shareholders first" is a sucky strategy. A better one is:
1) Customers first
2) Employees second
3) Shareholders third
As an example of why that works: when IBM did that, they were the biggest company around. When they stopped doing that, they became irrelevant.
Re:Companies have no reason to be moral (Score:4, Insightful)
The only reason to put customers "first" is because you REALLY put shareholders first, and you think putting customers first will benefit shareholders who you REALLY put first. Putting shareholders first does NOT mean telling your customers to get fucked.
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when IBM did that, they were the biggest company around. When they stopped doing that, they became irrelevant.
IBM engaged in predatory pricing and monopolistic practices for decades. They are an odd choice to use for a company that "put customers first".
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I think the real question is over what term is everyone's happiness evaluated. Just because something makes shareholders overjoyed in the next quarter doesn't mean it's what will make them happiest over the next decade.
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exactly! Too many people complaining about people using loopholes, when the problem is the loophole itself. (most of the complainers would use the loophole themselves if they could) If you don't like how people are following the law, work to get the law changed! (and pressure the legislators to not pass bad laws in the first place - they're usually easier to stop than to repeal)
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It's not easy to change the law because it's not easy to assign to particular countries the value add that should be taxed. I've long advocated that if Google makes 10% of sales in a country, they should pay tax on 10% of their global profit in that country. This will piss off the United States though, and could lead to double taxation as countries vie for their slice of the pie.
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I've long advocated that if Google [or any a multinational] makes 10% of sales in a country, they should pay tax on 10% of their global profit in that country.
A similar scheme is one pillar of an OECD plan that 130 countries [oecd.org] have agreed to, and the G20 just endorsed [reuters.com]. The biggest remaining stumbling block seems to be whether Biden can get it through Congress [reuters.com].
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That figure's also open to manipulation, though. Things may have changed, but years ago one aspect of the whole Google tax avoidance affair was that they had a large sales team in London which in practice sold lots of advertising, but they paid no tax in in UK by the simple mechanism of claiming that that team was really pre-sales and that the actual, taxable, sale was handled by a much smaller team in Dublin.
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Also, a lot of businesses cut deals with local governments, things like "no tax for 15 years if you build a facility here and employ at least 500 people".
Then 10 years in there's a public outcry about how they aren't paying any local taxes. Well...duh. You gave them that deal!
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There's a word for that. It's "Foxconned"
Re:Companies have no reason to be moral (Score:4, Insightful)
If you want companies to behave differently wrt taxation then change the tax laws.
Voters can't do that. Why, if one of them wins the lottery tomorrow, or magically find themselves owning a billion dollar company, they'd have to pay 300% of it in taxes!
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they'd have to pay 300% of it in taxes!
Not if they hire a good accountant.
Re:Companies have no reason to be moral (Score:5, Insightful)
"If you want companies to behave differently wrt taxation then change the tax laws."
You mean those tax laws that the companies lobbied for? Those laws?
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Did it never occur to you that if tax policy was in fact so subservient to the will of big corporations then we wouldn't have corporate taxes at all?
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Ya, but ... (Score:5, Insightful)
Poor people generally don't employ accountants in order to minimize their tax bills; ...
To be fair, "poor people" generally (a) don't have a lot of money and/or income -- hence the "poor" part -- and (b) as a result, don't have big tax bills, so it's a bad (stupid) example.
Re:Ya, but ... (Score:5, Insightful)
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But if you took 90% of Bezo's wealth, it would make the poor people's life significantly worse. Think about it, if you took 90% of wealthy people's money, what would it be? Stocks and shares mostly. And what would you do with them? If the government kept them, then the government would own Amazon, and they'd fuck it up completely, thus screwing poor people whose online purchases would be fucked. If they government sold all the stock, there would be nobody to buy it because (a) you smashed the wealthy people
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I think many people picture Bezos' type to be like Scrooge McDuck, swimming in his piles of gold in a vault. Many fail to understand, it seems, that all that "wealth" Bezos has is invested in the company of Amazon, which employs people, owns buildings, computers, etc. If you try to extract that wealth, you will find that it doesn't actually exist, and you will destroy the wealth in trying to extract it, and destroy the economy in trying to redistribute the wealth of the wealthiest.
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I think you may have missed the GP's point. If you are poor and don't pay a lot of tax then it's not financially worthwhile to get an accountant to minimise your tax. If you are rich it is.
No one pays to employ an accountant. An accountant pays for himself.
The rich and the poor both pay the taxes they are legally obliged to, the difference is the poor have fairly simple tax affairs which do not take advantage of the legal loopholes which exist.
You can employ the world's best accountant and that poor person
Grilled cheese (Score:2)
Sundar Pichai got a grilling with his smug, cheesy smile. Does that make a grilled cheese?
BTW, you do know that Google, among thousands of others, lobbies to change tax laws & policy decisions in their favour, don't you? What they're effectively doing is making tax evasion "legal" & even then they play it really close to the line. Oh, & until they were named & shamed for it, they were enthusiastic participants in ALEC: https://www.huffpost.com/entry... [huffpost.com]
All corporations lie. Pathologically. N
Re:Grilled cheese (Score:5, Insightful)
All corporations lie. Pathologically. No matter what they say in public, they're never gonna change. .
No. People lie, with the legal protection of a corporation. If you want to say that Pichai is a lying scumbag, then go ahead. Saying that corporations lie, is an annoying euphemism.
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Re: Grilled cheese (Score:2)
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And what's the alternative? A powerful government? What do you think a powerful government would do? It too will act with the same evilness as any corporation. Government is like a corporation too, one that owns an army and a police force. A powerful government can also control media and put people it doesn't like in prison. Government is the ultimate monopoly corporation. Sure google might be able to do that (do you know of any cases) .. but compare that to the millions of people that government throws in
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Avoiding taxes isn't immoral, you dolt journalist (Score:5, Insightful)
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Agreed. I'd have liked him to ask the "journalist", "How much should google have paid?".
I'd like to hear that answer myself. They follow all applicable laws, and probably pay even on top of that for the look of the thing. That's never enough for some folks though.
I'm starting to understand why "Envy" was considered one of the deadly sins.
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I'd also like to know why it's morally wrong to hire accountants just because some people, who don't need them, can't afford them and if this applies to any other service industries.
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Their success isn't preventing your own success, so why does it matter at all?
Give me specifics.
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Their success isn't preventing your own success, so why does it matter at all?
Give me specifics.
Go and create a new search engine. Let's see if Google's success and market dominance in search will let you be (as) successful.
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Your ignorance doesn't count as evidence.
There are plenty of alternatives to google. Just because you don't know them, or why their offerings differ enough for them TO BE successful, isn't a point in your favor.
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There is ZERO moral requirement to pay taxes if they can be avoided through legal "tax avoidance".
Just because they are a company doesn't mean that "moral" and "legal" are the same thing. There are laws that require public companies essentially to maximise profits but those laws don't magically make doing so moral.
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There is no such thing as "morality", or at least it's different for everybody, which is effectively the same thing.
Re:Avoiding taxes isn't immoral, you dolt journali (Score:5, Insightful)
Are you trolling or do you actually believe that something being legal automatically makes it morally right?
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That is this "moral" thing, that doesn't exist? If it's not in the law, from whence can I learn of it?
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That "moral" thing has to do with what is the right or wrong thing to do. It has nothing to do with legislation.
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The GP said that car is red, you asked if the GP truly believes all cars are read. Your statement makes no logical sense.
Just because there's no moral obligation to pay taxes beyond which are codified in law doesn't mean our human morality is defined exclusively by the law.
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Make no mistake, the allegation that it is immoral to only pay what the law requires is not actually a sincere argument about morality. Rather, it is an immoral attempt to intentionally deceive the public for the purpose of advocating for a rejected tax policy. In other words, it is the interviewer, not Google, that is be
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Are you trolling or do you actually believe that something being legal automatically makes it morally right?
According to who's moral framework? Mine or yours? Or do you actually believe that your moral framework is the only one?
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That some people want some corporations to pay more does not create a moral obligation. I would go so
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Using public services while at the same time trying your best to not pay for them is not immoral?
Ok, we have very different ideas of what's moral and what' not.
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Everyone agreed? C'mon, we both know it ain't so.
Um (Score:3, Insightful)
Poor people generally don't employ accountants in order to minimise their tax bills
Right; they use Turbotax. Which works pretty well, actually. At getting them the legal tax breaks that they qualify for.
If you don't like the legal tax avoidance that Google does, then work with your elected representatives and make it be not legal. But you won't do that, any more than you will ban cigarettes. You will just preen and complain.
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Poor people don't even pay tax, so the point is moot.
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Poor people don't even pay tax, so the point is moot.
In the US, they certainly pay sales and gas tax, not to mention a myriad of other consumption taxes. Plenty of ways to tax people.
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The main difference isn't that at all.
The actual main differences are:
a) poor people don't have a dinner meeting with high-ranking officials in which they can suggest "improvements" to the tax code.
b) people (poor or not) can't split themselves into multiple entities and then claim that their head is sitting in a small box on some tiny island and therefore the rest of the body doesn't need to pay taxes wherever it resides.
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a) poor people don't have a dinner meeting with high-ranking officials in which they can suggest "improvements" to the tax code.
True; high ranking officials just decide send them money spontaneously through the tax code (like with EITC) without even meeting with them.
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b) people (poor or not) can't split themselves into multiple entities and then claim that their head is sitting in a small box on some tiny island and therefore the rest of the body doesn't need to pay taxes wherever it resides.
You could open up a corporation, and pay yourself a salary from that, and have the corp own all your assets like house and car.
Good (Score:2)
Let's face it Google would do a lot less bad than the government. What would google spend it on? Finding out what kind of chicks I like? Showing me more ads for .. umm well not that I need those. Meanwhile, the government can spend it on war and physically destroying people.
I have shares (Score:4, Insightful)
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Are you as adamant about them taking every opportunity to earn more money by not banning people from YouTube?
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Why would they make more money by not banning people from Youtube? They ban people from Youtube to make it a more pleasant environment more closely aligned with whatever policies Youtube aligns with as their strategy views those policies as a way to *increase* revenue.
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Well, then you at least have a slim chance to break even on their tax dodging.
Because someone has to foot the bill. And if it ain't them, well, someone else has to cough up the dough.
Hidden taxes on us all (Score:4, Insightful)
Why are we still pretending to believe that corporate taxes aren't passed on to workers and consumers? They're another form of hidden tax on us all. The corporation doesn't have a massive stash of cash under its imaginary mattress but, people would howl if they noticed they were being taxed directly.
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Why are we still pretending to believe that corporate taxes aren't passed on to workers and consumers? They're another form of hidden tax on us all. The corporation doesn't have a massive stash of cash under its imaginary mattress but, people would howl if they noticed they were being taxed directly.
I can believe that taxes and other corporate expenses are generally passed onto consumers. However, the big question is whether tax savings are also generally passed onto consumers. I don't know, but my guess is that basically 0% of tax savings go to consumers. Rather, the money is used to pad quarterly reports so that stock prices go up. That is, corporate tax savings do not benefit the general public in any direct way.
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That is, corporate tax savings do not benefit the general public in any direct way.
Companies care about net profit. It doesn't matter to them if they lower costs or increase revenue. I.e. increase taxes, they will increase prices.
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Re: Hidden taxes on us all (Score:2)
No, that's just theory - a lonely reminder that the price of a product should mostly be oriented along how much it costs to make it. But the price is mostly how much the customer is willing to pay for it instead - it may well be tens of $$ for something that costs merely cents to make and distribute.
Now if the maker company was forced to pay 30% taxes the product price would still stay the same. I know this because if the company could get away with making the product 30% more expensive, they'd already have
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The cost of a product determines only one single aspect: Whether it gets made. If the cost rises to the point where profit ceases to exist, the production ceases as well.
The price of a product is dictated by the maximum possible total profit. That's it. Cost only plays a surprisingly small role in that equation. Especially by high price "luxury" items. Do you really think your iPhone would get any cheaper if Apple somehow managed to cut cost by 10%?
Re: Hidden taxes on us all (Score:2)
If the cost rises to the point where profit ceases to exist, the production ceases as well.
Well, that's true, but besides the point. Any business model that doesn't cover costs, including taxes, should and eventually will fail. (Also, this is just a theoretical statement, because taxea are paid per profit - so a conpany that fails because of taxes will also fail without taxes, taxes being 0 on break-even.)
The price of a product is dictated by the maximum possible total profit.
True, but inaccurate. This leads to exactly the kind of thinking error that you just made: assuming that it's the profit that's the constant in the game. It's not: the price of the product is th
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True, but inaccurate. This leads to exactly the kind of thinking error that you just made: assuming that it's the profit that's the constant in the game. It's not: the price of the product is the ultimate constant, because that's what the customer is willing to pay
Never heard of price elasticity of demand? Setting the correct price for an item, based on its demand curve, to maximize profits is Microeconomics 101. There is no hard price wall "all customers are willing to pay $X but not $X+1" - the number of units sold decreases as the price rises.
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it may well be tens of $$ for something that costs merely cents to make and distribute
There are some, very rare, examples of that. But competition dictates that the vast majority of goods and services are priced at a point the producers can make a reasonable return on their investment, otherwise they leave the market. Raising taxes doesn't usually change the competitive positions between producers; same as when fuel costs go up, all airlines raise their ticket prices.
Re: Hidden taxes on us all (Score:2)
very rare, examples
I was alluding to the fact that those examples are not that rare.
Large companies that employ tax evasion schemes tend to also be quasi-monopolic, essentially having zero competition that could regulate prices. This goes in any case for Google and the other dozen-or-so tech giants.
Because it isn't the case (Score:2)
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Yes, it does. In its 2020 financial filing, GOOG had 26.465 billion USD in cash (plus 110.229 billion USD in short-term investments). That's a "massive stash" by anyone's standards.
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The gimmick with corporate taxes probably isn't about extracting more money from them, but in structuring corporate taxes in a way that influences how corporations use and spend their profits.
If a company has $100 in profits and only invests $10 in R&D and the rest ends up in executive pockets or used to prop up share prices (buy backs, etc), the idea is to impose taxes which cause them to spend some of that money avoiding taxes by investing it into R&D, wage increases or other spending with broader
A flat tax (Score:2)
Would take care of many issues, but then the politicians would mostly be out of a job by listing their bargaining chip.
revenue (Score:2)
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It's the same shit Pedowood pulls, the coke fiends make million after million on a movie and the box office is tenfold, and they write someone a check for $_PROFIT and claim the movie made no money at all and was a box office failure.
No one pays for an accountant (Score:2)
If an accountant can't pay for himself out of the money they return for you then you're not in a good enough position to need an accountant. Claiming that poor people don't employ accountants to minimise tax is just a declaration that poor people don't pay enough tax to justify an accountant minimising it.
That is not a moral question, that is just basic cost/benefit analysis.
who wouldn't (Score:2)
tell me someone who would not use loopholes in the tax laws if it was available to them? You would be a fool not too. As long as it is within the law, more power to them. If the powers to be don't like it, just change the laws and close the loopholes.
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Tax or lease patents (Score:2)
We give companies patents for 20 years for little ongoing cost outside of them enforcing them through civil litigation, and even then we supply an expensive judicial system free of charge for them to enforce them.
Why not charge a lease fee for patents or even figure out the value of a patent in their portfolio and charge a tax on it? Companies could decide if a patent was worth the cost to begin with and those that were probably represent truly useful and legitimate uses of patents.
It seems like it would c
Tax dodger (Score:2)
Google shareholder here. Why does Google pay 20% tax when I pay 43% on average? Am I richer than Google (hint: no)? It's time for the OECD to set a minimum corporate tax rate of 50%. No excuses, no buts, no write offs.
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Guess who lobbied to have those laws passed? Hint: it wasn't the voters.
I feel fully justified with bitching about a rigged game. I hate the players as much as the game itself because they are the ones who ruined the game. I don't think I've ever seen a major US corporation compete on a level playing field in my life, and I'm old enough to remember Vietnam. They should be fucking ashamed of themselves, but they're proud instead. I guess its impossible to have any shame when you've sold out.
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Companies enjoy many benefits of existing in a society with a government. Infrastructure, safety, and the ability to utilize a stable currency are just a couple of examples. And even if a corporation doesn’t get a vote, the employees do (okay, in Google’s case many do not, but many do).
It doesn’t matter whether any individual or company approves every item their tax money is spent on. I’m sure no one does. We don’t live in a society because we think it’s perfect, we live
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It would be interesting if people had a specific tax burden as now, but each taxpayer got to select how his slice of the revenue got spent. Probably unworkable but it would be fun to see the outcome.
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You got that wrong. Companies don't have to vote to get the laws they want, they simply write them and pay for them. That's much more efficient.
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Here's something for you to consider: If Google finds a way to lower their taxes, take a wild guess who gets to foot the bill.
Hint: It's someone who can't afford a 1000 bucks a minute lawyer.
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Do you think you will from Google doing so?
The politician has at least a nominal obligation to pretend he gives a fuck about me. Google doesn't even have to pretend.
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At least in theory, the interests of the company and of the shareholders should be aligned, but such matters can be incredibly complex. There will be many interests, often conflicting or contradicting, competing for prioritization. The same sort of political wrangling you get in any large organization.
Does the BBC hate accountants or something? (Score:2)
Besides, who cares? Are accountants only to be employed if everyone can afford their services? What an absurd proposition! Why should there be a moral penalty for using a service someone else can't afford? How could there be, since the service economy would collapse immediately and bring incredible suffering to hundreds of millions of innocent people?
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Poor people generally don't employ accountants in order to minimise their tax bills;
I would also point out that this matters little, as the bottom 47% don't even pay income tax (at least in the US), so of course they don't need accountants. Those who do, can easily afford an accountant, but it is a personal choice if you go with one or not.