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Tax Accounting Evil at Google?

CowboyNeal posted more than 7 years ago | from the passing-the-bucks dept.

Google 261

theodp writes "In its annual report, Google said it's done no tax-accounting evil, but the search giant acknowledged that both the IRS and SEC are taking a look at the way in which it accounts for income tax. Google is one of a number of U.S. companies that have come under fire for allegedly practicing 'profit laundering', i.e., moving book profits offshore to evade millions and even billions in taxes to the country where it really operates. In past SEC filings, Google has credited its Irish subsidiary for reducing its effective tax rate."

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Google Farts (0, Funny)

Anonymous Coward | more than 7 years ago | (#18218654)

Slashdot smells it! More at ten!

Re:Google Farts (1)

Tablizer (95088) | more than 7 years ago | (#18218844)

Slashdot smells it! More at ten!

But this time they farted in the wrong country.

Google no differnt than the rest (3, Insightful)

Reverse Gear (891207) | more than 7 years ago | (#18218666)

If Google had not done this then they would be pretty much the single exception from all other multinational companies.

Here in Denmark we have this huge shipping company Mærsk or A.P. Møller as it also known.
They have lots of other activities also, the company has always been somehow very attached to Denmark and many Danes are proud that Mærsk is a Danish company.
The thing is that the government here in Denmark have been proposing to change how the taxing system works for companies. The general idea is to lower the tax rate but to remove many of the things that companies can withdraw from their incomes when taxes are to be calculated, in part to prevent what Google is being accused of doing here, namely putting all their income in countries where they have lot's of losses and expenses also.
Mærsk have been threatening the Danish government that if these tax changes are done as proposed then they may be forced to move many of their activities to other countries. I see no evil in this, companies have to look at the bottom line and for most businesses generating income for their shareholders or who ever gets the money in the end.

I would not consider Google to be evil if they did something similar to this, they would just be acting like pretty much any other multinational company does these days.
I feel pretty sure the Irish doesn't see Googles way of doing their accounting as evil ;)

If something has to be done about this, it can't be done at the national level, I guess that is also what some of these movements like Attack (spelled?) and other have been talking about. I doubt there is ever going to be any real changes in this any time soon, there are far to big interests at stake for countries and big companies.

Re:Google no differnt than the rest (1, Funny)

Anonymous Coward | more than 7 years ago | (#18218806)

Meanwhile, we, the Dutch, are pretty proud of IKEA being a Dutch company. Well, for tax purposes. So, we welcome Maersk!

Re:Google no differnt than the rest (1, Interesting)

Anonymous Coward | more than 7 years ago | (#18218822)

The US has this strange rule where profit earned by subsidiaries in other countries must pay income tax to the US, even if those subsidiaries have no US presence or customers. As a consequence of this many US companies have their offical headquarters in Bermuda, which has either no or much lower corporate income tax.

Re:Google no differnt than the rest (0)

Anonymous Coward | more than 7 years ago | (#18219126)

So in other words, Google is engaging in tax avoidance which is not illegal and certainly not illegal?

Great. We can stop the witch hunt, now.

Re:Google no differnt than the rest (2, Insightful)

iPaul (559200) | more than 7 years ago | (#18218830)

You hit the fundamental problem with tax systems on the head. Their complicated nature and rules allows the system to be gamed (or, in a sense, bugs to be exploited). Perhaps this is not by intent, just like complexity in code makes bugs harder to find. Under US law it is perfectly legal to interprit and use the tax law to your advantage. (If the IRS differs - they *might* let you know if you're one of the precious few that get audited.) In fact, if you don't exploit the law you're not doing all you can to protect your shareholders' interests and therefore violating your fiduciary obligation to the shareholders. (There's a debate about weather or not this narrow definition of interests of the shareholders is actually in the best interests of the shareholders or the public at large - but let's put that aside for now).

On a side note: I'm tired of companies and individuals of claiming that they'll go "somewhere else" if there's a tax hike in their country. In the US we have a very low tax rate over-all, so I'm not exactly sure where these companies or individuals would go. In addition, people in the NYC area pay a sum total of Federal, State and County taxes that are higher than almost anywhere else in the US, yet they have not all moved out of the NY area to go live in Alaska or Texas (where there is no state income tax). In fact, if a company like Maersk says "Gee - the taxes are so high we'll move elsewhere," say - fine, splash it all over the papers and raise taxes. I'll bet you Maersk will not move one inch.

Re:Google no differnt than the rest (1)

Firethorn (177587) | more than 7 years ago | (#18219072)

There are benefits to living in NY* and NYC that aren't enjoyed elsewhere. For one, there's not enough jobs in Florida/Alaska. For another, there aren't the services. I bemoan the lack of a good chinese restraunt in my area, for example. Still, my property taxes are only $120/year. It's a trade-off.

The biggest problem for the people in NY is that they can't take their job with them. Corporations, not being individuals, can be in multiple locations at once. Moving where they pay taxes from one location to another is mostly a matter of bookkeeping.

Personally, I believe that the best answer in many of these cases are to stop trying to tax people's incomes, but to tax their spending with a sales tax. It's easy to administer and audit, very visible. There's very little way to avoid it without not spending money. It avoids the double taxation that is corporate income tax. First they tax the corp's income, then they tax the dividends paid to the owners of the stock.

*Note: I'm not a NY resident, though a set of my grandparents are. On the whole I think that it's a net negative for them, but they've always lived there, and aren't about to move out of their town, much less the state. The set of grandparents that DID move out of NY ended up in Florida.

Yeah, that's a horrible idea. (3, Insightful)

encoderer (1060616) | more than 7 years ago | (#18219690)

Forgoing the income tax for a sales tax is a pretty bad idea.

First, the income tax is progressive. This would be impossible to achieve with sales tax. The only people that would benefit from a "flat" tax (sales or income) are those at the highest tax brackets. In order to replace the income lost from dropping taxes on the top 5%, taxes would have to be raised on the bottom 50%.

Second, a sales tax puts a disproportionate burden on the lowest income families. Those with low incomes--even up to $50k/yr for a single man--spend a very large proportion of their income. The lower your income, the higher percentage of it is spent. People making minimum wage are spending 100% of their pay checks.

Those making $1MM a year, on the other hand, may spend only a small fraction of their income.

And you can say that you would simply not charge sales tax on the things that poor people are spending their money on -- food, shelter and utilities -- but doing so would drastically reduce tax receipts. It would be impossible to exempt those things and the suggestion that it is possible is just used by proponents to try to sell their plan.

Furthermore, this is about Google. Corporations pay a pitifully small percentage of taxes in America. The percentage of taxes paid by corporations has dropped dramatically since the 1950's. Your notion that double taxation is a serious problem is just plain wrong. The tax code currently incentivizes businesses to invest in capital expenditures, R&D, etc.

In summary, the only people that want a sales tax are those that don't understand it's implications and those that could pay less taxes by shifting the tax burden more on the lower & middle classes.

The notion that there is tax injustice because the top minority of Americans pays the majority of taxes is absurd. The people at the top of the food chain reap the highest rewards of our society. Without our national infrastructure, they wouldn't be able to make and horde millions or billions of dollars. They SHOULD pay a tax burden that more closely resembles their share of the US pie, not necessarily their share of the US Population.

Re:Google no differnt than the rest (1)

phantomlord (38815) | more than 7 years ago | (#18219096)

NYC is the financial capital of the world or maybe it was [] . The rest of the state has already been decimated as key companies like Kodak and Xerox move out of state and wither away. NYC's politicians already sucked the rest of the state dry and its only a matter of time before they go down the tube with us. Companies aren't just outsourcing to other countries, many are just moving to other states. Up here in Rochester, the University of Rochester is now our biggest employer and the government is the only sector with any type of job growth.

Re:Google no differnt than the rest (1)

iPaul (559200) | more than 7 years ago | (#18219278)

The point being is that the taxes in NYC outweight the money to be made in NYC. Until the advent of digital cameras, I believe Kodak did very well in upstate NY. Both Kodak and Xerox benefitted from (what I understand) are good schools and a local University. I don't think NY taxes had anything to do with the advent of digital photography (and buggy-whipping of film), or the lack of business accumen at Xerox.

I think that we need to partake in the global economy but we can't just tell a city like Rochester, or Flint "tough luck" when the employers move out, and the profitability of the company is more important than the lives of 10's of thousands, if not millions of people. I think we need to start asking ourselves what a company like Xerox owes a community when it pulls out. Or, maybe, what the business community owes US citizens as a whole for the freedom to move around as businesses choose, possibly destroying entire cities. I don't think it has to be a choice between taking care of people or doing what's best for companies. I think you can do both at the same time. Financials []

Re:Google no differnt than the rest (2)

phantomlord (38815) | more than 7 years ago | (#18219396)

The decline started happening long before "digital" was on anyone's radar outside of the field. Back around 1996, Kodak shipped my grandpa's job as a film cutter out of the country. Kodak and Xerox aren't the only companies who started bailing on Rochester long before the dotcom era but they're the most prolific two. As it is today, the towns and counties around here are giving multiyear tax breaks to companies willing to hire as few as a dozen people. The local paper recently ran a story bragging about how one local business is expanding by 17 people over the next two years. Things are pretty sad when that's your business highlight for the day.

I've had a good half dozen business startup ideas and have taken a couple through to the point where I have to decide whether its worth getting financing or scrapping the idea. Between the people who left for greener pastures as the technology and manufacturing jobs evaporated (leaving mostly government, retail and service type jobs) and the tax situation (the state has a $55 billion debt and is now proposing the largest budget in its history, Monroe County has a $73 million deficit to make up for this year, the state is talking about taking steps into socialized medicine, etc), none of them have a reasonable chance of turning profitable. The only chance western NY has to survive is to cut its losses now and become a new state, eliminating Albany and NYC since they're too different socio-economically to keep the state as one. Either way, its only a matter of time before NYC ends up falling into the mess it created for the rest of the state. They've got a lot of inertia to break but it will happen, probably within the next 15 years.

As for the local universities (UofR and RIT), the vast majority of people come to get their piece of paper and then leave. Upstate NY is actively losing its educated population and has been for about 20 years now. I wouldn't fault the business for leaving an area the government has made hostile for them to stay in when they have better opportunities. I blame the government for forcing them out by over-milking their cash cows.

Re:Google no differnt than the rest (2, Insightful)

iPaul (559200) | more than 7 years ago | (#18219694)

What you're describing is not unusual. When times are good no one looks at the books much all sorts of crud gets through (and that is definitely part of the problem). However, when communities loose large employers their deficits and budgets go up, and it is usually driven by much higher levels of spending for social services. Food stamps, CHIPS, unemployment insurance, emergency fuel services, state portions of medicare/medicaide, unreimbursed medical at state/county hospitals, etc. All of these are driven by need, which is created by chronic unemployment, not necessarily malfeasance or incompetance. In some states these social programs are paltry and barely serve any real needs. When they loose 10,000 jobs 9,900 people fall back below the poverty line with so support, no health insurance, bankruptcy and little or no hope. In some states these programs are very generous and attempt to really put people back on their feet, again. A lot of people like to blame their state and county governments (and as I said before they are not without waste) but those are exactly the governments we have the *most* control over.

The Rochester area sounds like it was faced both by a change in technology and the effect of globalization. If the state of NY had slashed taxes paid by Kodak, I don't see how it would have materially changed the outcome. US workers are still paid 100's of times more than some of their Asian counter-parts. States like South Carolina are loosing jobs to overseas factories not because of South Carolina's high taxes and generous benefits (they have neither), but because the same t-shirt can be produced overseas cheaper. I'm sure Rochester could give Kodak a 99 year tax holiday but still wouldn't be attractive compared to sub-contracting all film cutting, spooling and packaging to a factory overseas where your health benefits are a cab ride home if you cut off a finger.

And as someone who has owned businesses or been in business for himself for about half my working life, state and local taxes have never entered into my calculation of weather or not something was profitable. If it makes money, I pay taxes and that's a fact of life. If it doesn't make money, I don't have to pay taxes. But, if I can't get past the cost of county business license, state incorporation fee, a couple of hours with an attorney or accountant, then it probably wasn't a good idea to begin with.

Re:Google no differnt than the rest (1)

RevMike (632002) | more than 7 years ago | (#18219556)

I'm tired of companies and individuals of claiming that they'll go "somewhere else" if there's a tax hike in their country. In the US we have a very low tax rate over-all, so I'm not exactly sure where these companies or individuals would go.

There is more to this than it may seem. Under US tax law, a US company can be taxed on all its operations, both those in the US and those outside. Many other countries, however, only tax a multinational on its domestic operations. Why should a company like Ford or GM have to pay taxes twice - to the US and the local jurisdiction - on its operations in Europe and Asia while Daimler Chrysler only has to pay taxes once to the local jurisdiction?

Any multinational with significant operations outside the US would be silly to not create a foreign holding company and a US subsidiary.

Re:Google no differnt than the rest (1)

AnonymousCactus (810364) | more than 7 years ago | (#18218856)

Just because someone else does it, doesn't make it right.

I would expect Google to seek out the country where they would pay the highest taxes and funnel all of their money there. Governments know better how to manage our money than we do.

Scratch that. Just funnel it all to the U.S. because the U.S. knows better than the rest of the world how to handle the world's money.

Re:Google no differnt than the rest (0)

yada21 (1042762) | more than 7 years ago | (#18218946)

the U.S. knows better than the rest of the world how to handle the world's money.
They should do - they printed most of it. When I say printed, I mean only printed.

The problem is that Google claims to be different (2, Insightful)

HarryCaul (25943) | more than 7 years ago | (#18218930)

That's part of their schtick. They aren't like other corporations, or so they say.

Turns out when money is on the line, oh yes they are just like other corporations.

So if they're like everybody else, why do they deserve geek community support?

Re:The problem is that Google claims to be differe (1)

Reverse Gear (891207) | more than 7 years ago | (#18219016)

I am sorry but since when did the "geek community" (if such a thing even exists as a movement or whatever) suddenly get a political or moral side?
The reason why Google should have the geeks support is because they support the geeks with great jobs and great innovative software and code.

Re:The problem is that Google claims to be differe (1)

Atzanteol (99067) | more than 7 years ago | (#18219040)

So if they're like everybody else, why do they deserve geek community support?

Do you even realize what you just said? Christ, if this is how the "geek community" behaves then count me out... You can go support your nearest hippy organization, I'll support whom I want.

"Evil" here assumes an anticapitalist viewpoint. (1)

phunctor (964194) | more than 7 years ago | (#18219240)

in which the State already owns everything anyway, but allows you to pretend otherwise because that makes you work harder. If you have the bad taste to try to keep what you have created (because you "own" it, it's "yours", or some other mean-spirited excuse), the narrative of selfishness and greed gets trundled out. All standard stuff so far. But...

Ireland has been indulging in "harmful tax competition". That's why it makes sense to locate profitable activities in Ireland. And why Ireland has had exemplary economic growth.

The ability of states to confiscate wealth from particular businesses depends strongly on the relocatability of the business, as Maersk has offered to demonstrate. Google is another case in point.


Tough Situation (0)

Anonymous Coward | more than 7 years ago | (#18218694)

This is an interesting problem. On the one hand, public companies like google are required to maximize profit for their shareholders, so this sort of behavior is encouraged by our society. On the other hand, a company like Google is incredibly indebted to the US government for providing the infrastructure, well-trained and educated employees, corporate environment, etc. that makes their business possible. For them to withhold so much money seems a bit unfair and shortsighted.

definitions (3, Insightful)

TheSHAD0W (258774) | more than 7 years ago | (#18218704)

Why exactly do you define avoiding taxes as "evil"?

Unlawful, certainly. But evil?

Re:definitions (4, Insightful)

Planesdragon (210349) | more than 7 years ago | (#18218730)

Why exactly do you define avoiding taxes as "evil"?

Because the taxes that cash-rich google doesn't pay are paid for by the rest of us.

Re:definitions (5, Insightful)

chill (34294) | more than 7 years ago | (#18218750)

If you think, for one minute, that if Google paid every last dime it could in taxes without trying to structure business to avoid them, that YOUR taxes would go down, you're on crack.

Re:definitions (5, Insightful)

iPaul (559200) | more than 7 years ago | (#18218940)

Maybe in the short run you're correct, but in the long run I'm afraind you're wrong. Sure, over the next couple of years it won't affect your tax rate. However, there are essentially three parts to government spending. The first is interest on the debt - which we have to pay or else we'll never be able to borrow a dime again without paying ridiculous interest rates. A lot of people think this is something we could default on since they believe the fiction that "it's money we owe ourselves." However, we borrow a significant chunk from overseas - so not paying it is actually off the table. The second are obligations that are a matter of law - like social security. If we wanted to reduce our social security obligations we have to pass a law stating that you and I won't get our promised benefits. That's hard to do politically. Finally, there are discretionary items, like the military. We do have some wiggle room there, but not a tonn.

Okay, all of this is paid for by incoming taxes. If the taxes aren't sufficient to cover the expenses, then we borrow, adding to the debt. So, the amount we pay in interest on the debt goes up, further reducing the ability we have to make decisions about how much money to spend on which program. Eventually, if there's no fiscal discipline and companies are allowed to avoid paying taxes, the rest of us will have to pitch in more money. So, in the short run, you're right in that your taxes are not a function of Google's taxes. However, in the long run, the more companies game the system to avoid paying taxes, the more likely we will have to raise taxes on individuals in order to meet payment on the debt and obligatory expenditures. In addition, these companies benefit from operating in the US. They are protected by our military, when their CEO has a heart attack the ambulance comes an picks him up, and the police stop the "G-8 protesters" from throwing trashcans through their plate glass windows. They use the same public services we all use, shouldn't they pay their fair share?

Not just businesses (1)

Jeff Molby (906283) | more than 7 years ago | (#18219000)

You're exactly right, but it's worth pointing out that the problem is not just with businesses. Everyone that reports less than their full earnings (especially tipped employees or those paid "under the table") is taking advantage of those of us who do. /Yes, I think the size and role of the government need to be slashed, tax evasion isn't the answer

Re:definitions (2)

chill (34294) | more than 7 years ago | (#18219286)

Other options to consider rather than raising personal income tax:

1. Simplify the tax code and close loopholes like the ones that allow Google and other mega-corps to move things around and minimize taxes.

2. Spend less.

History shows that taxes rarely, if ever, go down as a net. Once a politician has your money, they don't give it back. They get addicted to the spending and when the time comes, lo and behold there are more "necessities" that can't be cut from the budget. Necessities that were lived without only a few short years ago. The fiscal discipline you talk about needs to apply equally to the gov't as to the corporations paying taxes.

You argue with accounting logic, and I'm arguing with political logic. :-)

In short, the gov't would find a way to spend the extra, regardless, then continue to tax you and everyone else even more.

Re:definitions (1)

Jeff Molby (906283) | more than 7 years ago | (#18219338)

Of course they would still spend the extra, but in doing so, I would get more value for my contribution. I'd rather have the cash back, but I'll take what I can get.

Re:definitions (1)

zippthorne (748122) | more than 7 years ago | (#18219444)

Unless they spend the extra on harassing you. Then you'd wish for a little less value...

Re:definitions (1)

iPaul (559200) | more than 7 years ago | (#18219438)

I agree. I think the best thing we could do in this country is simplify the tax code. Think about the money that we spend in complying with it. That, in itself, is a hidden tax. I actually think that a Repubican controlled legislature and a Democratic president is the best combination to try to keep government in check. I think that division of power and opinion is the big reason we ran surpluses in the late 1990's. (There's nothing wrong with a surplus - it serves to brake the economy just like raising interest rates but at least you get some debt paid off).

I see where people say politicians become addicted to spending, but it really is we that become addicted to spending. The bridge to nowhere, in Alaska, I'm sure has its staunch defenders. What I may call a waste of Federal tax dollars, might be the most important and far-sighted government program by others. Frankly, it's us, we the people, who've come to expect a government that keeps taxes low, but gives us a much higher level of service. In fact, I think that's the basic problem of American culture - the credit card mentality, paid for by borrowing against your home, has ruined our ability to make real choices. For the most part, the Pols in Washington are buying our votes - but we're the ones selling.

Re:definitions (1)

JVert (578547) | more than 7 years ago | (#18219784)

So by your logic google is saving the government by avoiding taxes?

Re:definitions (1)

FuMoDi (1071014) | more than 7 years ago | (#18219468)

if Google paid every last dime it could...that YOUR taxes would go down
It's not a dime for dime correlation but it is true. The GAO must balance the ledger somehow and the federal debt is always a campaign trail talking point.

Re:definitions (1)

KDR_11k (778916) | more than 7 years ago | (#18219474)

Of course but at least it'd give the govt a bit more money so it doesn't have to cut budgets for e.g. education that much more.

Re:definitions (1)

Subbynet (905560) | more than 7 years ago | (#18219756)

If everyone starting doing this the country would be in deep trouble, and to stand ANY chance of your taxes going down, everyone (and business) needs to pay.

There is no excuse for this at all. Not even from the al-mighty Google.

2 logical fallacies and one red herring (2, Insightful)

argoff (142580) | more than 7 years ago | (#18219056)

Because the taxes that cash-rich google doesn't pay are paid for by the rest of us.

This is a double logical fallacy, and a red herring. First, you are presuming that the government isn't already trying to get the maximum amount of taxes from us anyhow. Second, you are presuming that the government would actually spend that money to our benefit. Finally, "cash rich", is a red herring. The government never has taxed net-worth and never will, they tax income. That means that the business man who busts his ass to create 20 jobs and earn a million bucks will get his balls ripped off while the person sitting on a 10 billion dollar stockpile of cash will never notice at all no matter how high the tax rate is. People whose battle cry is "tax the rich" are stupid, and are killing opportunities for themselves more than anyone else.

Re:2 logical fallacies and one red herring (1)

DogDude (805747) | more than 7 years ago | (#18219204)

The government never has taxed net-worth and never will, they tax income. That means that the business man who busts his ass to create 20 jobs and earn a million bucks will get his balls ripped off while the person sitting on a 10 billion dollar stockpile of cash will never notice at all no matter how high the tax rate is.

I'm getting my balls ripped off. Why? I started my small company on a shoestring 5 years ago, and have invested every cent that I don't spend on food and a rat-hole apartment back in my business (created 10 full time jobs with health insurance in the meantime). I still get taxed on all of that re-investment. What does that mean? It means that literally I pay out more in "income" taxes than I actually take home and spend (I pay about 4 times more in taxes than I actually pay myself). I (and people like me) get raped for re-investing in our businesses.
Before I ran into this problem, I always wondered why some small businesses (and large) simply don't re-invest back in the businesses. You know the kind of place... if it's retail, then they don't even change the lightbulbs, or re-paint the building... ever. Now I understand why. If you're gonna get taxed anyway, it makes more sense from a comfort standpoint to spend the profits on a stupid HDTV than it does on lightbulbs for the business.

The current tax system is broken.

Re:2 logical fallacies and one red herring (1)

maxume (22995) | more than 7 years ago | (#18219568)

Plus, you have to pay your accountant to both figure your taxes and your business taxes.

The issue business taxes address, primarily that you could hide income by purchasing a really nice boat 'for business purposes' (which would work just fine if you owned the business outright and had exclusive access) and then using it to have fun, seem like they should addressable in other ways. (Am I missing something about business taxes? I don't think so, most people that do stuff want to pay themselves, just tax that.) Mostly, by prosecuting personal income tax evasion and making you declare the boat as income(the hypothetical guy you, not you).

I guess the problem is that most peoples favorite person to pay taxes is anybody, as long as it isn't them.

Re:definitions (1)

mc6809e (214243) | more than 7 years ago | (#18219144)

"Why exactly do you define avoiding taxes as 'evil'?"

Because the taxes that cash-rich google doesn't pay are paid for by the rest of us.

That's like being mad at your neighbors for installing a security system that causes your house to be burgled instead of theirs.

Re:definitions (1)

maxume (22995) | more than 7 years ago | (#18219480)

So how many people are nodding their heads and saying 'yep, that guys a jerk' right now?

(people are amazingly, depressingly good at ignoring hard work and foresight when deciding that someone else has something that they should have instead)

Re:definitions (2, Insightful)

Threni (635302) | more than 7 years ago | (#18218734)

> Unlawful, certainly. But evil?

Perhaps evil is a contentious word, but if you approve of the uses to which at least some tax money is put - education, welfare, trading standards, hospitals, public transport etc then by deliberately evading that simply to make a bigger profit could be argued to be immoral. On the other hand, not paying taxes to some governments could be seen as the only moral thing to do, given their poor track record of sponsoring terrorism, for instance.

Re:definitions (5, Interesting)

Original Replica (908688) | more than 7 years ago | (#18218808)

While I doubt that this is a case of Civil Disobedience, you are correct it's not evil. But it's so much fun to label any non-wonderful Google practice as "evil" because of their "do no evil" ideal.

Re:definitions (1)

Bloke down the pub (861787) | more than 7 years ago | (#18218972)

Grandparent said avoiding. You said evading. Those words are not synonyms.

Re:definitions (1)

Threni (635302) | more than 7 years ago | (#18219188)

> Grandparent said avoiding. You said evading. Those words are not synonyms.

Yes they are:

synonym: a word having the same or nearly the same meaning as another in the language, as joyful, elated, glad.

evaded: to avoid doing or fulfilling: to evade an obligation.

Re:definitions (1)

KDR_11k (778916) | more than 7 years ago | (#18219714)

You use an English dictionary whereas what we need here is a legal dictionary. Tax evasion is a felony whereas tax avoiding here refers to using methods to reduce the tax you have to pay. The main difference is that the latter is legal.

Re:definitions (1)

TheSHAD0W (258774) | more than 7 years ago | (#18219750)

I suppose that means it's not evil if I steal your wallet, but give all the money in it to the Salvation Army?

Taxation is theft. Even if the government is dedicated to giving that money towards good causes, they're still taking it from you at the point of a gun.

Re:definitions (1)

Threni (635302) | more than 7 years ago | (#18219788)

> Taxation is theft. Even if the government is dedicated to giving that money towards good causes,
> they're still taking it from you at the point of a gun.

Taxation is the result of an informed decision by a willing electorate who've decided that society is better with taxation. You have a better idea, I take it?

Re:definitions (2, Insightful)

Zadaz (950521) | more than 7 years ago | (#18218738)

Avoiding taxes is perfectly lawful. It's what tax shelters are all about, and why good accountants get big bucks.

As far as I can tell, what the government calls "Profit laundering" is perfectly legal. It's no different than my corporation paying out year end bonuses so we don't have to report a profit. (It's not my fault if the bonus getters want to reinvest that in the company.)

If the US wants to keep its tax revenue they're going to have to be more competitive. The only thing that's keeping many large American companies from moving offshore is social pressure. If the government keeps ratcheting up the pressure they'll go anyway.

Re:definitions (1)

Da Fokka (94074) | more than 7 years ago | (#18218744)

It depends. Just check the Evil bit [] .

Re:definitions (0)

Anonymous Coward | more than 7 years ago | (#18218792)

Yes, evil. Taxes pay for services that we all use. If a corporation is cheating on their taxes to the tune of millions or billions of dollars, they are stealing money from everyone. How large is Google's ecological footprint? What does it take to keep them in business? We all have to pay our taxes, and not all of us are multi-billion dollar corporations.

Re:definitions (1)

drgonzo59 (747139) | more than 7 years ago | (#18218942)

This all started with Google's claim of "do not evil". Sure, it sounds nice, except that we don't clearly know what "evil" means. In this context it seems to mean that "making a legal profit" is "evil". So in that respect Google is "evil". Except that I don't agree with this particular definition of "evil". In other words, my "evil" is not necessarily your "evil". Because I am sure the Irish don't mind at all having Google report all the profit in their country. So what is "evil" for us, all of the sudden is "good" for the people "across the pond".

It would have been much better from the PR point of view for Google to not make such "moral" claims. Every company is doing the same accounting trick but they never used such words as "evil" and "good" in their company's mission statement and therefore they don't suffer from this kind of criticism and controversy.

Usually it is very smart to manipulate such vague moral terms for one's benefit. Here is the algorithm: Step 1: Claim that "I will do no evil" . Step 2: As you go along, redifine what "evil" means" to match your actions. Step 3: Go to Step 1. Pretty easy algorithm -- nice and sweet.

It is true though... If you ask many of the serial killers or cruel dictators how they rate themselves, they would probably say that they are basically "good people". Of course, they have heavily modified what "good" means. These are extreme examples but this algorithm is essentially the same and it is used often by governments, individuals, religions, and _yes_ companies too.

Proper Definitions (1)

dotoole (881696) | more than 7 years ago | (#18219018)

Repeat after me: Tax AVOIDANCE is not illegal. This is the entirely legal process of minimizing the amount of tax you pay.

Tax EVASION on the other hand - IS illegal. Ie: not paying the tax you owe.

Please try and use the correct terminology. It's almost annoying as the creationist crowd who use theory when they mean hypothesis.

Re:definitions (1)

jlarocco (851450) | more than 7 years ago | (#18219038)

Well, please enlighten us, what is "evil"?

Google's motto is (was?) "Do No Evil". Which most people took to mean they would actively try not to behave like every other giant, rich, corporation.

So far, every time Google has done something questionable, like censoring Chinese search results, or evading taxes (legally or not), the Google fanboys of Slashdot have been quick to point out that Google isn't being evil, they're simply behaving like every other company. Google isn't out sacrificing virgins to Baal, but neither are any other companies. So, please, for the benefit of all the non-fanboys, what exactly does "Do No Evil" mean? What is "evil" for a corporation?

My impression is that "Do No Evil" was good PR. It doesn't really mean anything in "real life."

Re:definitions (1)

Atzanteol (99067) | more than 7 years ago | (#18219198)

Which most people took to mean they would actively try not to behave like every other giant, rich, corporation.

Which is retarded. Seriously. Most corporations aren't *evil*. Avoiding taxes (not evading) is not *evil*. We all do it. I drive to NH to purchase some items due to no sales tax, I claim what I can on my income taxes to keep more of my money. Am I evil? Now, if Google is funneling money to African guerrillas to mine diamonds, then you'd have a point...

The definition of "evil" on Slashdot is so vague that we're all pretty much damned at this point for earning an income. "Do no evil" does not mean "Do things Slashdotters like."

Re:definitions (1)

jrockway (229604) | more than 7 years ago | (#18219322)

> "Do no evil" does not mean "Do things Slashdotters like."

Hey, I like it when big companies tell the government to fuck off. Eventually, the government will run out of money, and they'll be forced to cut back on bullshit like "The Department of Homeland Security", "The War On Drugs", and "Operation Liberate Iraq OMG commie terrists". Less income will force the government to downsize, and the effects on society as a whole will be wonderful.


Re:definitions (1)

porkThreeWays (895269) | more than 7 years ago | (#18219052)

Pfft. imo google is less evil because of this because it's sticking it to the man. That's like getting mad at them because they found a way to play/hide their DS under their desk while watching the phones or found a way into their boss' private bathroom.

Re:definitions (1)

1mck (861167) | more than 7 years ago | (#18219274)

Sort of off topic, but interesting nonetheless:
In the US it isn't unlawful to not pay federal income tax...look into it. When I saw this film, I was blown away: Aaron Russo's Freedom To Fascism ---> []

Evil? (0)

Stormwatch (703920) | more than 7 years ago | (#18218718)

Trying to work around the government leeches... evil?

Actually we should be thanking Google. (1, Insightful)

argoff (142580) | more than 7 years ago | (#18218918)

Agreed, it's not like the government earned this money. It's not like the government took personal risks to invest it, build infrastructure, and provided extremely popular search services for everyone to use freely. And would we even want them to? What if Google was a Bahamas startup and not a Silicon Valley startup, would we all now be happy that those "evil" Silicon Valley "tax cheats" don't exist anymore? Even if Google did "cheat", it's not as if that took anything from you or I. The government is already trying to tax the maximum from us anyhow! The government is already wasting 75% of the money on non-productive activities anyhow.! My faith in Google to use that money to do something beneficial to society is far more than my faith in the governments abilities.

Re:Actually we should be thanking Google. (2, Insightful)

nonetheless (600533) | more than 7 years ago | (#18219276)

I'm open to correction, but my guess is that the bulk of Google's people, physical facilities, and customer base is located in the U.S. That means Google enjoys a considerable set of benefits provided by local, state, and federal governments. Police protect it from being robbed; firefighters protect it from burning down; various agencies pave roads, provide power, etc., etc. Those governments also provide an educated workforce and help secure a style of living that tempts folks to come and stay in the areas surrounding Google. Those are likely among the reasons why Google *isn't* HQ'd in the Bahamas as you suggest.

If the bulk of their work is being done here, they should pay for those benefits. The linked Merck article provides an egregious example: all activities done in the U.S., but parent transfered IP as a sham to a foreign subsidiary, to whom the parent paid massive "royalties," zeroing its taxable revenue. That doesn't sound quite as bad as what Google's doing (their Irish sub actually has employees), but it sounds as though the SEC feels that Google isn't paying in proportion to the work that gets done here.

Re:Actually we should be thanking Google. (1)

argoff (142580) | more than 7 years ago | (#18219432)

Funny thing is, none of those services you mentioned are paid for with income taxes, and all of those services - we are forced to pay for even when the government does a shoddy job - which they do. Especially in California. The bottom line is that people don't "owe" government for the opportunities they have, those happen in spite of government, not because of it.

Re:Actually we should be thanking Google. (1)

maxume (22995) | more than 7 years ago | (#18219704)

So tax the shareholders and employees personal income. That takes care of 'enjoying the advantages of living in the US' just fine, without creating another layer of regulation that it makes business sense to avoid as much as is possible without breaking the law. Corporations exist to generate income for shareholders; expect them to work within the law to maximize that income.

No no ofcourse not (1)

JackMeyhoff (1070484) | more than 7 years ago | (#18218746)

Neither is Dell, nor Apple, nor any of the other umpteen investigations the SEC does continiously.

Problem with multinational companies? (1)

D4rkforce (1028858) | more than 7 years ago | (#18218756)

Is this really a problem with multinational companies being 'evil'? While businesses today are indeed multinational, might this not even be a legitimate(but not necessarily ethical) way to make more profit?

The world has grown together in an economical sense, yet the nations exist in much the same way the existed for a long time.

Re:Problem with multinational companies? (1)

Original Replica (908688) | more than 7 years ago | (#18218924)

Is this really a problem with multinational companies being 'evil'?

Multinationals are prone to "evil". Moving your production facilities overseas is evil if you ask the small town that was built around your industry. Buying huge quanities of a product at a required huge volume discount is evil if you as your competition or you supplier. Undercutting small business is evil if you ask small business. Having an annual income higher than the GDP of many small countries is a money/power behemoth that begs for abuse. It's possible to have a "good" multinational, but that's got to be at least as tough to pull off as a government that "does no evil". We have yet to see that in history.

Re:Problem with multinational companies? (1)

MrShaggy (683273) | more than 7 years ago | (#18219408)

I think what companies should do is re-train their employees, if they are moving out. If a steel-company thats been in your town for 40 years then decides to close, laying off thousands, they should at least help cover the cost of re-training their un-skilled or semi-skilled workforce. If someone is a mill-write, or an electronics engineer, they wouldn't be to hard pressed to find a work. At least help for a welding course, or something along those lines.

Re:Problem with multinational companies? (1)

cdrguru (88047) | more than 7 years ago | (#18219758)

Retrain? As what? Computer programmers? Graphic artists? Musicians? High-energy particle physics scientists?

The issue is that when the factory moves out, the low-skill jobs are gone. People that could work in a knowledge industry or one that required above-average skills already did that when they left college. The high-school graduates that could work in a factory and make decent money did what they could do.

You cannot take a 30-year-old factory worker that knows how to operate industrial machinery and train them to be a scientist. People are not interchangable widgits. They have their own limitations and mostly are working at the limit of their capabilities. You don't find math PhD's in factory jobs, at least not for very long.

What we are doing in the US - and Europe - is removing the low-skill jobs from the economy and at least in the US not replacing them with anything at all.

Hold the phones!! (1)

lantastik (877247) | more than 7 years ago | (#18218758)

Do you mean to tell me that Google is doing what every other multinational company in the world is doing? Shut them down!! I simply will not stand for these utterly common business practices.

FairTax! (3, Interesting)

XanC (644172) | more than 7 years ago | (#18218768)

Support the FairTax [] , bring corporate headquarters back to the US and end this ridiculous waste of everyone's time.

Re:FairTax! (1)

Reality Master 101 (179095) | more than 7 years ago | (#18219034)

Support the FairTax, bring corporate headquarters back to the US and end this ridiculous waste of everyone's time.

I'm cautiously in favor of replacing the income tax with a national sales tax (though, it's not the overwhelmingly RAH RAH GREAT IDEA!! that proponents sell), but it'll never, ever happen. Because: 1) You would shut down a huge number of businesses (e.g., tax accountants), 2) they'd have to fire a large number of Federal Employees, 3) it's not progressive, therefore a huge segment of society will be against it, and 4) the biggest source of power in the Federal Government is the tax code.

Re:FairTax! (1, Informative)

Anonymous Coward | more than 7 years ago | (#18219170)

Wrong on all 4 counts.

- Tax accountants are behind it in droves both individually and as national associations. They are anxious to spend their time on more useful pursuits of their abilities.

- Firing federal employees is a GoodThing(tm) and is a check mark in favor of a flat tax.

- It *is* progressive.... you are forgetting the prebate. The Fair Tax removes the tax burden completely on lower income people, and the burden is progressively increased on everyone else as a percentage of money spent. Someone who spends $34K a year for a family of 4 will only pay about 2% of that money as federal taxes under the Fair Tax. Someone who spends $200K a year will pay over 20% of that money for federal taxes. The essential difference is that the tax is based on money SPENT (taxing consumption) instead of money EARNED (taxing production).

- The tax code is the biggest source of power to LOBBYISTS, not the government. The K-Street lobbyists are the ones really against the Fair Tax.

Re:FairTax! (1)

AK Marc (707885) | more than 7 years ago | (#18219622)

You are a coward.

National CPA associations are not behind it.

It is not progressive. It is flat. Period. A token prebate does not change that. What is the marginal rate on someone under proverty level? What is the marginal rate on someone at poverty level? What is the marginal rate on someone that makes $10,000,000,000 per year? They are all the same because it is a flat tax.

It is not progressive. It is regressive enough to be supported by conservatives, and it can be confused with progressive (like you kept claiming) to confuse the liberals. But the simple fact is that the marginal rate is completely flat.

Re:FairTax! (1)

XanC (644172) | more than 7 years ago | (#18219206)

I agree with the sibling AC, and also wish to point out that the FairTax is the only plan which completely removes all tax obligation from the poor.

Even when their income tax rate is zero, there's plenty extra they're having to pay for everything because of the income tax on everything else. When it's a sales tax, after their prebate, they have paid $0 in tax.

Re:FairTax! (2, Insightful)

karmatic (776420) | more than 7 years ago | (#18219786)

When it's a sales tax, after their prebate, they have paid $0 in tax.

While this is true, the FairTax goes a step further (as far as progressive taxing goes) - if you are below the poverty line (or if your spending on new items is below the poverty line), you actually end up with cash in your pocket from the FairTax.

Personally, I'm not in favor of most government-ran welfare, as it can often provide incentives to _not_ work. Doing better financially typically results in less eligibility for financial programs (student aid, welfare, etc). In addition, many tax plans provide disincentives for working harder due to diminishing returns. As an example of this, I had a subcontractor that wouldn't pick up extra projects in the current tax year because the added tax liability made it not worthwhile (he was not in the US).

The FairTax program avoids both of these issues - you get the exact same prebate, whether you're an unemployed college student, or a multi-billionaire. While it may seem silly, it means a lot less to the billionare, and they both come out of his taxes anyway. You'll end up paying more than the prebate the first Hummer you buy. In addition, there is no longer any incentive whatsoever not to work - your taxes scale linearly with spending, and you are not penalized for making money.

For those who say "but the rich don't have to spend their money" - why are they rich? If they are rich (and not spending like crazy and getting taxed), it's probably because they use sense or discretion with regards to wealth. If that's the case, they aren't hiding it under a mattress somewhere - it's invested, or saved in a bank. Money that sits there doesn't keep up with inflation, and you're being effectively taxed anyway.

So what happens when you leave your money just sitting in the bank? Banks make money by loaning money to people, and charging interest. Suppose they loan the money to a new "homeowner" (I use the term lightly - those who never build equity or suck it out are just renting from the bank)? The homeowner buys a home. Ok, the money's been taxed.

So, the money gets loaned to an evil, tax-avoiding company - what happens next? Well, the company needs facilities and equipment. Buy it in the US? It gets taxed. Buy it overseas? It probably still gets taxed. Next, they need employees, who (of course) want money for their troubles. Under the FairTax, this income isn't taxed... yet. Have to make that mortgage payment (the loan was already taxed in advance, so no "new" tax revenue here; however, the money used for the loan will be taxed again the next time it's loaned out - it still gets taxed). Ok, the kids need new books and shoes for school - more taxes. The family has to eat - more taxes.

The FairTax is a radically simplified system that is largely revenue neutral, avoids the I.R.S and all the invasive, unconstitutional stuff that goes with it, lowers the tax burden on the poor (achieving revenue neutrality and lowering the tax burden on the poor is largely made possible by avoiding the overhead associated with the I.R.S), and based on spending (which is done in public), rather than earning (which is often done in private). For those who dislike illegal aliens, the aliens get no prebate, and pay the same taxes as everyone else - resulting in a higher tax burden for illegal aliens than any citizen). What's not to like?

Re:FairTax! (1)

WindBourne (631190) | more than 7 years ago | (#18219156)

20 years ago, it made sense. If you move to a sales tax approach (basically a vat like EU uses), then you must also tax the net. Otherwise, you will encourage all major sales outlets to move offshore as well.

Re:FairTax! (1)

nomadic (141991) | more than 7 years ago | (#18219418)

Support the FairTax, bring corporate headquarters back to the US and end this ridiculous waste of everyone's time.

...because when it comes to a 13 trillion dollar economy and the well-being of 300 million people, let's gamble on instituting dramatic systematic changes that look good on paper to a few people but have never been proven in real life.

Re:FairTax! (1)

AK Marc (707885) | more than 7 years ago | (#18219698)

I'm not a fan of regressive taxes, so I can't really support the unFair Tax. I've tried to talk to people at unFair Tax (back when I thought it could be a good idea), and they all come across as insane people. A simple question about why the poverty level and not 50% of it or 200% of it, and I was accused of trying to sabotage unFair Tax. If they can't even discuss how they came to the numbers and what the economic effect of different choices are, then it's obvious that they have no idea what the real world effect would be.

Talking about a waste of time and money, just think about changing our taxing system completely, then finding out that the new system doesn't work.

This is perfectly normal (4, Insightful)

jorghis (1000092) | more than 7 years ago | (#18218782)

The government isnt evil for collecting taxes as above posters are claiming.

Google isnt evil for using a perfectly legal accounting system that works within the bounds of the law to pay as little taxes as they can.

Everyone takes as many deductions as they are legally allowed on their tax returns. Would we think that people claiming an exemption for having a kid are 'evil'? Really not much difference.

Re:This is perfectly normal (1)

Firethorn (177587) | more than 7 years ago | (#18219160)

I remember an issue like this coming up somewhere, I think it was California. So they set up a system where you could pay *extra* taxes if you felt that you weren't paying enough.

The year's take for that system was under $1k. $23 keeps coming into my head.

*Everybody* pays the minimum tax they can. The only cases where they don't is some people will only take some of their more questionable deductions as a form of insurance. That way they have something to fight back with in case an audit happens and disallows some of their deductions.

Of course, the whole system's screwy. I mean, the various tax preparers and IRS agents can't agree on the return of a 'typical' family with 2 kids, 2 jobs, a mortgage and some savings.

Re:This is perfectly normal (1)

FuMoDi (1071014) | more than 7 years ago | (#18219510)

as many deductions as they are legally allowed
If you have extra money then you can buy more. The game is to trade charitable contributions and non-taxable investments for tax returns which are equal to or greater than those contributions and investments. The concept is known, crudely, as money laundering and it isn't profitable in the near to mid term until one can afford a combination of initial investments and contributions totalling hundreds of thousands of dollars.

Yeah, Google is evil (0)

Henry V .009 (518000) | more than 7 years ago | (#18218854)

I pay my taxes. I'm just a regular guy, and it's kind of hard to set up an "off-shore" subsidiary to avoid paying my taxes. When Google cheats on theirs by finding legal loopholes, millions of people like me pay for it. So yeah, fuck you, Google. I want my money back.

On the other hand every other company either does this or wishes they could. It may seem hopeless. But all I can say is that Judge Lynch never fails.

Re:Yeah, Google is evil (1)

daeg (828071) | more than 7 years ago | (#18218960)

Don't just blame Google, blame your legislators for setting up such a ridiculous taxation system, too.

Does the EU have such vast abuses of the VAT system?

Re:Yeah, Google is evil (1)

Atzanteol (99067) | more than 7 years ago | (#18218996)

So you don't itemize your tax return? You don't claim kids/mortgage/etc.? Or are you 'cheating' on your taxes as well?

Re:Yeah, Google is evil (0)

Anonymous Coward | more than 7 years ago | (#18219024)

You can't avoid all taxes by setting up an offshore subsidiary. There are only certain circumstances where this saves on taxes.

Country A has 20% corp income tax
Country B has 10% corp income tax
Country C has no corp income tax

PayCo is based in country A and has subsidiaries in countries B and C. Any income earned by PoorCo or any of its subsidiaries is payed to country A so it pays %20 on all income.

SaveCo is based in country C and has subsidiaries in countries A and B. Any income earned by the subsidiaries in A and B are only payed to the countries they are located in. The parent company in country C pays no corp income tax.

It should be noted that country C will very likly have little economy and thus income derived only from that country will be very small. However income earned from country B won't be taxed twice.

Re:Yeah, Google is evil (1)

otterpop81 (784896) | more than 7 years ago | (#18219342)

This is why you should support the Fair Tax. The Fair Tax eliminates taxation of income, and instead creates a national retail sales tax. Under the Fair Tax, corporations would pay no taxes at all, and _all_ federal tax would be collected at the point of retail sale.

This sounds a little crazy at first, but currently corporations don't _really_ pay taxes at all; they only _collect_ taxes. This is because corporations pass _everything_ on to the consumer in one way or another. Think about it for a minute. If corporate taxes go up, a large corporation like say, Wal-Mart, has one of three options. 1: Raise prices, 2: Keep the prices the same and lose profit, 3: Keep the prices the same and cut quality of service or quality of products. Option 1 obviously hits the consumer. Option 2 hits the owners of the corporation. Who are these owners? Shareholders. Who are these shareholders? Well, that's anyone with a 401K or any other kind of retirement plan. Thus, option 2 is hitting the general public. Option 3 obviously hits the consumers as well. Since corporations have 3 options to consider when dealing with taxes, and they all end up trickling down to the consumer, one has to start to wonder why not just tax the consumer directly and be done with it? What happens if we take away corporate taxes? Prices for consumables will go down because the cost to produce them will go down. Everything you buy has an embedded tax component to it. Basically it's the tax that was paid by every company which handled the product along the way (e.g.: raw materials, wholesale of components, assembly into new product, wholesale to retailer, etc). If the taxes on these "intermediate" companies go away, the retail price of the item is going to go down. Some don't believe this, but I do. Why? Free market forces _must_ drive this cost down. That's the principle our entire economy is based on. If one company tries to hold out and keep their prices up and keep the extra profit for themselves, one (or many) of their competitors will lower their prices to grab extra market share (Economics 101). Because of the lowered prices, the new tax which would be levied at the register would make the item cost (after the Fair Tax is added) roughly the same as it did under an income tax system.

So what's the difference? The difference is that there would be NO INCOME TAX. You would take home 100% of your paycheck, and items for retail sale would cost roughly the same. That's huge. Never mind the savings caused by corporations no longer requiring teams of accountants to find and exercise loopholes in the current income tax laws (How much do you think it cost Google in accounting time to move some of their stuff overseas?).

The other major benefit of the Fair Tax is that with tax only collected at the time of retail sale, consumers know _exactly_ how much tax they are paying. Under the current system, tax is paid at so many places along the way (each corporation who handles every product paying income tax) that people have absolutely no idea how much tax they are paying. Since people don't really know, the government can quietly raise taxes on corporations, making the price of goods go up, and making the people none the wiser. People will probably just assume corporate greed or inflation. Under the Fair Tax, and people seeing exactly what they're paying in taxes, it becomes much harder for the government to raise the rate. As proof of this, does anyone live in a state with a retail _state_ sales tax? I do, and I know how much public opposition there is anytime anyone wants to raise the rate.

Anyway, I could go on and on about the Fair Tax. (Some may argue that I already have.) When talking to people about the Fair Tax for the first time, the first impression they seem to get is that there must be some hidden gotcha in there somewhere, and they are very skeptical about it. I would suggest one read the book (Title: The FairTax Book: Saying Goodbye to the Income Tax and the IRS. (No sponsored link here :) )). As I say this, I'm reminded that some accuse the authors of just writing the book to cause a stir and make money. This however, is not true as all the profits from this book go to charity.

Approach the Fair Tax with an open mind, and you may just find it to be the answer to many of our tax problems.

Re:Yeah, Google is evil (1)

Henry V .009 (518000) | more than 7 years ago | (#18219604)

I just submitted a post suggesting the lynching of the rich, and you reply to suggest a regressive tax system? I hope you're a billionaire trying to con foolish Slashdoters, because the alternative is just too stupid to contemplate.

Fair Tax (1)

cdrguru (88047) | more than 7 years ago | (#18219664)

The problem is today the suppliers aren't paying US taxes. The US does virtually zero manufacturing and the manufacturing is done by foreign subsidiaries. No tax there.

You then pay most of your income to the foreign subsidiaries as cost of goods. Not much tax there.

Anyone not in this game isn't very big and is paying taxes out the wazoo. Therefore, their costs are higher than someone with a foreign subsidiary and when Wal-Mart comes calling their prices are too high.

Yes, there are some boutique shops that have are supplying a need but nearly all manufacturing has been moved outside the US for obvious reasons. This leads to global dependencies that mean the standard of living in the US and Europe is in the hands of Far East countries and there are fewer and fewer low-skill industrial jobs for people. If you aren't a "knowledge worker" you can clean floors or flip burgers but that's about it. Does everyone have the ability to be a "knowledge worker?" No. This creates a major social problem that some would fix with a permanent welfare (or dole) class.

Fair tax would change almost nothing in this entire situation, because fundamentally the tax is already being paid by middle and upper class folks. Sure, the so-called rich can afford to pay people to find ways to avoid paying 50-60% of their income as taxes. The one problem with Fair Tax proposals is it would certainly change what the lower and lower-middle classes are paying. Since these folks pay nothing or almost nothing today, it would be a big shock to them to be paying anything. And that is why Fair Tax will never pass, unless there is a very, very unfair exclusion for lower income people.

Why this isn't evil. (3, Interesting)

955301 (209856) | more than 7 years ago | (#18218920)

Currently the US foreign policy is driven by warmongering and profiteering. The US military has been outsourced to corporate mercenaries and little regard is given to the well-being of the actual force.

We're about to start a navel and air war with Iran, we're ignoring Darfur, we're disregarding our own people in their time of need (Katrina) and we're supporting countries on questionable moral ground.

If anything qualifies as evil, all that does. So if Google is avoiding paying taxes to a government which executes such evil behavior I'd say they're living up to their mantra.

navel and air war with Iran (3, Funny)

phunctor (964194) | more than 7 years ago | (#18219336)

Innie or outie? -- phunctor

Seems a little contrary. (2, Informative)

kodyjoe (973095) | more than 7 years ago | (#18218938)

Google's employees and founders have been unflinchingly supportive of Democrat candidates and policies. Those candidates and policies generally favor higher tax rates and oppose tax cuts "for the rich", and favor greater government spending on social programs. But now they're going out of their way to launder their money to avoid those same taxes. Is it evil? No. Taxes are evil. Is it hypocritical? Yep. You get to say all the right things to your pinko NoCal, silicon valley buddies, while avoiding the punitive policies you want to impose of everybody else and pocketing some extra cash for yourself. Lovely.

Re:Seems a little contrary. (1)

iPaul (559200) | more than 7 years ago | (#18219074)

I think part of it has to do with the "business culture" we've created in this country. Google hires accountants and lawyers who've worked at other successful companies where this is "how it's done." I think the reason we aren't more appalled at behavior like this is we've come to believe what's "good for business is good for America." Yet, we forget why we allow public incorporation in the first place. We create a better business climate because the country as a whole benefits from good wages, employment, and sufficient taxes to pay for schools, military, police, etc. (People forget but until about the 19th century it was almost a requirement for just about any business of any size to be part owned by the rulers, subject to numerious and arbitrary taxes, and generally owned by one family. This was a huge impediment to wealth creation for the countries/communities as a whole.) So what happens when Google and the people profitting off Google are able to avoid contributing back to the common good? Are we at the point where the "business culture" has become self serving? Have we lost the notion that Google is part of a social contract - even if implicit - that allows it to use our courts, patent office, and state department to enforce its intellectual property hear and abroad? That paying for these things is in Google's interest?

When being raped, it is best to save something. (4, Funny)

mtraskos35826 (880419) | more than 7 years ago | (#18218974)

Maybe if Google didn't have to pay 40% of its profits in taxes, they wouldn't have to spend millions on accountants to move money. We have all seen the fantastic things that Google has done with the money they have, just think of what they could have done (4D Google earth, Google desktop that doesn't take up 1GB, chocolate pudding that tastes as good as Bill Cosby thought it should taste... who knows?) if the government didn't rape them for being successful.
If anything, we should be proud that Google doesn't put money into the vast wasteland of government spending.
- Seconds per year ~ Pi * 10^7

International companies considered harmful (1)

iamacat (583406) | more than 7 years ago | (#18219048)

There should be a US law that a company should either operate fully inside US or fully outside. If they are not paying US taxes, they shouldn't be taking advantage of US public infrastructure, US education system, US legal and security protection... Countries pass a set of laws that only work together as a whole. A given company should be forced to live with the full set just like a common citizen, rather then cherry picking what they want. If you pay lower taxes, you can not expect as much services from the government, or perhaps some utilities are nationalized. If Apple wants to take advantage of lax labor laws in China, Steve Jobs should also be willing to stand against the wall and get shot if he is (correctly) convicted of non-socialist activities.

Remember the difference (4, Informative)

gmcraff (61718) | more than 7 years ago | (#18219084)

As told to me by my ex-IRS tax accountant:

TAX AVOIDANCE is a patriotic thing to do. It does no good to give the government money in excess of what it needs to do its job, and what it has been lawfully authorized to collect.

TAX EVASION is illegal. That's what they got Al Capone on when then couldn't nail him for any other crimes.

CFO of the week? (1)

goarilla (908067) | more than 7 years ago | (#18219304)

this just seems like good business practice to me and c'mon who wouldn't try to evade taxes anyway :D

Aha!!! (0, Flamebait)

Duncan3 (10537) | more than 7 years ago | (#18219344)

This finally explains why Google needs 5000+ PhD's to finish an email application in a lightning fast 3? years. They have them all working on tax avoidance for all the money they pimping out our eyeballs to advertisers.

Seriously, that does explain a lot.

Axis (3, Funny)

offlerthecrocgod (563497) | more than 7 years ago | (#18219366)

Now that Ireland has joined the Axis of Evil they can soon expect to be liberated by the US. Yumm, Taco Bell here I come.

you fail It! (-1, Offtopic)

Anonymous Coward | more than 7 years ago | (#18219388)

Widespread doesn't mean correct (1, Insightful)

Anonymous Coward | more than 7 years ago | (#18219614)

It may be a widespread practice, but it's exploitation none the less. Lets face it, 'regular' people earn these companies every penny of profit. How do they repay us? Cutting our benefits and moving all their earnings offshore to 'legally' cheat on taxes. Thanks for being so willing to contribute back to the country that made you richer than God. There's potholes on my street and none on the one in front of Google headquarters...

U.S. Tax Code (4, Interesting)

Talisman (39902) | more than 7 years ago | (#18219684)

I know a few tax lawyers. The tax laws of the U.S. have grown so complex over the decades that it has become literally impossible for one person to know them all. Tax law firms have lawyers dedicated to specific portions of the tax code.

When you have a set of rules as ridiculously long as the U.S. tax codes, it basically makes it impossible to comply 100%, because no matter what you do, there will be a segment SOMEWHERE in that massive wall of text that you unintentionally violate.

The novelty about the deeply complicated tax laws is that loopholes abound - it may be the specific reason the government maintains its complexity.

Google trying to minimize its tax burden is just good business. That they seem to have done it in a way that is suspect doesn't mean they intentionally broke a law, it probably means they did it so well that the IRS isn't sure it's legal or not.

But again, with tax codes as complex as ours, it will probably fall into the realm of ambiguity so that it can either be legal OR illegal, which is yet another governmental advantage of highly complicated tax laws.
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