
Google insider exposes ‘immoral’ tax scam - rpm4321
http://www.thesundaytimes.co.uk/sto/news/uk_news/National/article1261720.ece
======
cynicalkane
Not paying your fair share isn't contrary to the spirit of tax law because
there _is_ no discernible spirit of the tax law. If the tax law says if you do
Foo with shell company Bar through subsidiary Baz, then you get more money,
legislators wrote that there for some reason because they wanted to encourage
or discourage some behavior. I think it is neither reasonable nor moral to
live in a society where corporations are "morally" required to second-guess
the intentions of the writers of 10,000s of pages of tax law.

Judge Learned Hand was the most important judge never to sit on the Supreme
Court. Here's what he has to say:

"Anyone may arrange his affairs so that his taxes shall be as low as possible;
he is not bound to choose that pattern which best pays the treasury. There is
not even a patriotic duty to increase one's taxes... Everyone does it, rich
and poor alike and all do right, for nobody owes any public duty to pay more
than the law demands."

~~~
Nrsolis
It doesn't appear that this is what was happening here. They did the deals in
London and then _claimed_ that they were done in Ireland for tax purposes.

Essentially, they expected that no one would ever check whether a tax nexus
was established in the UK. The fact that the UK didn't have any ability to
check if this was true doesn't mean a law wasn't broken.

~~~
cynicalkane
A paywall mysteriously went up so I can't go re-read the article. But IIRC the
article accused Google of _avoidance_ , not _evasion_. Avoidance is legal and
evasion is not. So the article seems to be saying that closing deals in
Ireland to avoid taxes is legal, or at least likely to be legal.

~~~
DanBC
This is england. We have strict libel / slander / defamation laws.

Saying that Google is avoiding tax is fine. Saying that Google is evading tax
is not fine unless I can prove that they are.

Note that "tax avoidance" used to mean normal "tax planning" - using purely
legal means to reduce your tax bill. Now it feels a bit different. Now it
feels a bit sleazy, a bit of a grey area, a bit borderline. When people say
"tax avoidance" it feels as if the steps taken are right on the borderline, or
are loopholes that just haven't been closed yet.

~~~
Nrsolis
Correct.

Tax avoidance has evolved into a shell game of jurisdiction shopping and
regulatory arbitrage.

In the USA, states got so fed up with companies assigning their trademark and
copyrights to DE subsidiaries they could make tax-free royalty payments to
that they started doing combined reporting to nullify the effect of those
constructions. Even though companies had no offices, employees, or business in
DE, they nonetheless were claiming that their very valuable IP was situated
there.

The net effect is that it's easy to deduct royalty payments in a high tax
state and have them appear in DE, a low-tax state.

Not to be undone by combined reporting, they've (companies) now expanded this
approach to offshore destinations to keep the benefits of transfer pricing.
GOOG does it. AAPL does it. MSFT does it.

[http://www.nytimes.com/2012/04/29/business/apples-tax-
strate...](http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-
aims-at-low-tax-states-and-nations.html?pagewanted=all&_r=0)

------
simonsarris
I generally agree with Ben Franklin here, that taxes are not theft, rather the
opposite, failure to pay taxes due is _theft from the rest of society._ He
hated the "all taxation is theft" libertarians of his own day:

 _"The Remissness of our People in Paying Taxes is highly blameable; the
Unwillingness to pay them is still more so. I see, in some Resolutions of Town
Meetings, a Remonstrance against giving Congress a Power to take, as they call
it, the People's Money out of their Pockets, tho' only to pay the Interest and
Principal of Debts duly contracted. They seem to mistake the Point. Money,
justly due from the People, is their Creditors' Money, and no longer the Money
of the People, who, if they withold it, should be compell'd to pay by some
Law._

 _"All Property, indeed, except the Savage's temporary Cabin, his Bow, his
Matchcoat, and other little Acquisitions, absolutely necessary for his
Subsistence, seems to me to be the Creature of public Convention. Hence the
Public has the Right of Regulating Descents, and all other Conveyances of
Property, and even of limiting the Quantity and the Uses of it. All the
Property that is necessary to a Man, for the Conservation of the Individual
and the Propagation of the Species, is his natural Right, which none can
justly deprive him of: But all Property superfluous to such purposes is the
Property of the Publick, who, by their Laws, have created it, and who may
therefore by other Laws dispose of it, whenever the Welfare of the Publick
shall demand such Disposition. He that does not like civil Society on these
Terms, let him retire and live among Savages. He can have no right to the
benefits of Society, who will not pay his Club towards the Support of it._

That being said I think it's a problem that needs to be fixed in the culture
and governance of a people, not in Google itself, since attempting to assign
any civic duty to a multinational is probably laughable. Singling out Google
probably doesn't do too much good, except maybe to make people think of
"favorite company X"'s role in society.

~~~
rayiner
Releveant to the issue at hand: in the state of nature, pasty nerds like Zuck
and Brin and Page don't rule the world. Their lot in life is to be subservient
to the physically strong, or else be the victim of their strength. Its
society, acting through a government that makes possible the kind of orderly
world in which Google or Facebook are possible.

There are practical reasons to tax more or less. But no moral ones. Without
ordered civilization real wealth creation, beyond the savage subsistance level
Franklin points out, is not possible and by virtue of that fact there are no
moral limits on taxation.

~~~
newbie12
There absolutely are moral limits on taxation. Otherwise we are all just
slaves to the state.

"Property is the fruit of labor...property is desirable...is a positive good
in the world. That some should be rich shows that others may become rich, and
hence is just encouragement to industry and enterprise. Let not him who is
houseless pull down the house of another; but let him labor diligently and
build one for himself, thus by example assuring that his own shall be safe
from violence when built." -- Abraham Lincoln

~~~
rayiner
We're not slaves because we choose the level to tax ourselves at and
presumably we're free to leave whenever we want. Its more like a condo complex
with a ridiculously high HOA fee. You gotta pay it if you live in the
building, but nothing is stopping you from getting on the owners board and
voting yourself a lower fee, or moving to a different building.

~~~
dpatru
Taxes are theft precisely because we don't tax ourselves. In America, taxes
are set by the majority choosing to not tax themselves very much and instead
to tax a rich minority. It's two foxes and a chicken voting on what to have
for dinner.

~~~
rayiner
The minority nonetheless choose to participate in that group vote. Moreover,
they often do so before they become rich, and only complain about the outcome
after they reap the benefits of participating in that society.

------
Steko
_Brittin told the PAC last year that “nobody” in Google’s UK office was
selling advertising on its website. When he asked to give further evidence
last week, he admitted “a lot of the aspects of selling” did take place in
London but the deals were “closed” by staff of Google’s Irish subsidiary.

The distinction is crucial because if deals were finalised by London-based
staff, Google could be deemed to have made profits on the contracts which
would be taxable in Britain, rather than low-tax Ireland. “It uses a concocted
scheme to avoid tax. It’s a smoke-screen to distort where the substance of its
economic activity is really taking place,” Jones told The Sunday Times.

He said he attended meetings where Google’s London sales staff closed deals,
including winning contracts from eBay, the online auction site, Kelkoo, a
price comparison website, and Lloyds TSB. He showed The Sunday Times
contracts, invoices and correspondence between Google and its customers in
Britain. One 2004 contract had the address of Google’s London headquarters
next to the heading. Clients would be sold deals by Google staff in London,
who were in charge of sending out contracts and receiving signed documents
back from clients. In addition, British clients paid money into British bank
accounts for Google services. _

------
throwaway420
I am normally enraged by a number of Google's business practices and am
extremely hostile and critical of them when it comes to their evil and
horrible customer service practices, among others, but this is about the
stupidest criticism of Google that I've ever heard. This isn't even actually a
criticism - EVERY individual and company works to minimize their own tax
burden as much as they can. Google is not evil for not wanting to give even
more of their cash to any government.

If Barney Jones wanted to report on what he viewed as illegal activity, why
would he wait nearly a decade to come out about this? This is incredibly
bizarre and stupid.

------
sjtgraham
I'm quite tired of the populist rhetoric of "morality" vis-à-vis tax that the
UK media and politicos seemingly wheel out every other day. The bottom line is
that taxation is a legal issue, not a moral issue.

Lord Clyde said in Ayrshire Pullman Motor Services v Inland Revenue _"No man
in the country is under the smallest obligation, moral or other, so to arrange
his legal relations to his business or property as to enable the Inland
Revenue to put the largest possible shovel in his stores. The Inland Revenue
is not slow, and quite rightly, to take every advantage which is open to it
under the Taxing Statutes for the purposes of depleting the taxpayer's pocket.
And the taxpayer is in like manner entitled to be astute to prevent, so far as
he honestly can, the depletion of his means by the Inland Revenue"_.

That is the law of the land to this day.

There is a moral obligation to obey the law, but not to pay a penny more in
tax than the law demands. If there is a problem with the law then legislate to
ameliorate the issue, but please spare me this talk of "morality".

------
cromwellian
Internationally, the laws need to be changed. All the major players are using
Ireland, Bahamas, Cayman Islanda, et al, as avoidance schemes. The firms try
to take advantage of every legal loophole, even if in morally grey areas,
because their competitors are also all doing so.

Really, the major OECD players need to get together and figure out a way to
stop the tax loophole arbitrage. Although the tax havens have no incentive to
do so.

~~~
AnthonyMouse
>Really, the major OECD players need to get together and figure out a way to
stop the tax loophole arbitrage.

It's really a domestic political problem. The source of the problem is that
you're attempting to tax something called "profit" in the context of an
international corporation. Profit means revenues minus costs. The problem then
becomes obvious: The corporation's executives will strive to report more of
the international operation's costs in the subsidiary in the higher tax
jurisdiction, and to report more of its revenues in the lower tax
jurisdiction.

So, you say, make them report things accurately. But what does that even mean?
If a company produces a product for internal use in one country and exports it
to another, what is the "accurate" price to be reported as revenue to one
subsidiary and cost to another? Is it the price that the item would cost at
retail, or the price that it would cost if purchased in volume, or the cost of
the raw materials used to produce it, or what?

No matter which you choose, companies will arrange their affairs so that it
benefits them. If the price is set at the actual cost of production then
subsidiaries in high tax jurisdictions will be found selling everything they
produce through subsidiaries in lower tax jurisdictions and eliminating all of
their profits that way (minimize taxable revenues). If the transfer price is
allowed to include a nontrivial amount of profit then subsidiaries in high tax
jurisdictions will be found buying everything they use at a premium through
their foreign sister companies in lower tax jurisdictions and eliminating all
their profits that way (maximize deductions).

The problem is that the entire concept of allocating _profits_ by jurisdiction
in an international supply chain owned entirely by a single entity is just
totally unworkable. The profit belongs to the entire supply chain; in arms
length negotiations the allocation of profit to each component would be
determined by negotiating skill. And no matter what value you place on a
transaction, corporations can rearrange their affairs to take advantage of
that valuation, and it will be profitable for them to do so even if it costs
$95,000,000 to save $100,000,000 in taxes.

The solution is to stop trying to allocate profits and just tax something
else. Which is why it's a domestic political problem: People don't want to
hear that. They want to imagine that corporations can pay their taxes for them
and, as if by magic, this will get everyone else out of having to pay for the
government services they want provided.

It's totally possible to tax international corporations, but you can't do it
by trying to tax corporate profits. If you want to tax a corporation that
makes use of government services and your jurisdiction's people when it
produces value, tax real property or labor. If you want to tax them when they
make money selling to your population, tax sales. If you want to tax
investors, tax investment income.

Corporations aren't humans. If you ever did manage to extract tax revenue
based on corporate profits, it would inevitably come out of the pockets of one
of those groups in any event. Taxes have to be paid by somebody.

~~~
MarkMc
The problem with taxing people instead of profit is that it is easier for a
person to move to a low-tax jurisdiction than is is for a company to move the
place where it adds value.

I'm not convinced that allocating profits by jurisdiction is unworkable. You
ask, "If a company produces a product for internal use in one country and
exports it to another, what is the 'accurate' price to be reported as revenue
to one subsidiary and cost to another?". My answer is, "The price an
independent supplier would have charged for the same quantity". Now I agree
there is _some_ wiggle room here, but only up to a point. If the average
profit margin in the widget industry is 10%, your widget subsidiary might be
able to book a transfer profit of say 20%, but not 200%.

~~~
AnthonyMouse
>The problem with taxing people instead of profit is that it is easier for a
person to move to a low-tax jurisdiction than is is for a company to move the
place where it adds value.

What makes you think that? Here's one example: California has some of the
highest taxes in the U.S, but everyone in Silicon Valley and Hollywood making
big money still lives there. Why don't all of those people leave and move to
Texas or Nevada to take advantage of lower personal income and sales taxes?

It's far easier for the corporation to "move" because the corporation only
exists on paper. It can incorporate and hold its trademarks and copyrights in
Delaware or an offshore subsidiary even though its headquarters is in
California, etc.

> If the average profit margin in the widget industry is 10%, your widget
> subsidiary might be able to book a transfer profit of say 20%, but not 200%.

But they don't need 200%. They only need 20%, which when applied
systematically is enough to erase the 10% profit margin they might have made
in the high tax jurisdiction.

There is also the matter of what an "independent supplier" would actually be
charging. Suppose the international operation decided that it would like to
close all of its offices in the UK and stop doing business there, but continue
selling software licenses in bulk to third party UK distributors who come to
do business with it at its headquarters in Ireland. In that relationship the
international operation _is_ an independent supplier, but they have all the
power. The third party distributors have no other source for licenses, but the
international corporation has a large variety of willing distributors, so it
can force them to sell at razor-thin margins in the UK and claim all the
profits for itself in Ireland. What you see them doing is largely what you
would see if they were independent entities.

~~~
MarkMc
Yes, Hollywood and Silicon Valley executives are tied to California because
that's where the jobs are. But people who rely only on investment income (ie.
retired people and the very rich) can often be found moving jurisdiction to
avoid tax.

A corporation may exist only on paper but the value that it creates comes from
a mixture of social, human and physical capital - and that occurs at a
particular place. Facebook could move its place of incorporation to Delaware
overnight, but the place where it 'adds value' is rooted in California.

Regarding the widget manufacturer: Yes, in some cases a transfer profit of 20%
will be sufficient to wipe out all reported profit in the high-tax
jurisdiction. But how common would that be? If Apple were to able to inflate
the cost of manufacturing an iPhone by 10% there would still be plenty of US
profit left to tax. If Ford could inflate the cost of all the components it
imports from low-tax jurisdictions (not high-tax ones like Japan) by 10% would
it have a significant effect on reported profit?

You are right about the software licences - I made a similar point here:
<https://news.ycombinator.com/item?id=5731680> If the software was developed
in Ireland then the UK shouldn't be able to tax the profit.

~~~
AnthonyMouse
>Yes, Hollywood and Silicon Valley executives are tied to California because
that's where the jobs are.

That's where the jobs are because that's where the employees are and vice
versa. There is a reason you don't see many software companies setting up shop
in Des Monies and trying to attract engineers with the low cost of living.

>Facebook could move its place of incorporation to Delaware overnight, but the
place where it 'adds value' is rooted in California.

That's what I'm saying. You should tax the things that "add value" (employees,
real estate that implies use of local infrastructure, etc.) rather than trying
to tax profit, because profit doesn't have a country.

The problem with the alternative is that just because your country contains
something that "adds value" doesn't mean a corporate entity in your country
can make any profit from it. Suppose your country has great engineers. If the
engineers are the valuable commodity and the market is efficient then they'll
get paid close to the value they provide to the company and leave little as
profit for the corporation. You can have a company which is providing _huge_
value to the economy but is having to pay its employees the lion's share of
that revenue in order to retain them. That company won't have very high profit
margins because if it kept more of the profits for itself its engineers would
quit and join a competitor that pays better.

The only way that doesn't happen is if the company has something its
competitors don't (strong trademarks, trade secrets, some unusually valuable
copyrights or patents, etc.) But then the value of that non-geographically-
dependent asset (which is all that keeps the company from having razor thin
margins) can be whisked off to an entity in a low tax jurisdiction, leaving
the entity within the higher tax jurisdiction in the position of having
extremely small margins again while the profits accumulate in the entity
associated with the movable asset.

>Regarding the widget manufacturer: Yes, in some cases a transfer profit of
20% will be sufficient to wipe out all reported profit in the high-tax
jurisdiction. But how common would that be?

You're asking how common it is for a company to have a less than 10% profit
margin? I would say that covers most companies. The primary exceptions (which
Apples clearly falls into) are the companies that sell products covered by
high value copyrights, patents, trademarks, etc. Which leads to what we've
been discussing with software licenses.

The problem simply is that you can't have significantly higher taxes than the
next country on anything that can be easily removed from your jurisdiction, or
that is exactly what will happen. And the profits of international
corporations fall into that category.

~~~
MarkMc
> You should tax the things that "add value"

Ok we have a misunderstanding about the term, 'add value'. I was using it to
mean profit but you are using it to mean costs. My gut feeling is that taxing
costs instead of profit will lead to warped incentives, but I admit I cannot
think of a good example just now.

> You're asking how common it is for a company to have a less than 10% profit
> margin?

No - I wasn't clear, sorry. I was thinking a company might typically have the
following costs as a percentage of revenue: (a) domestic costs 40%; (b)
imports from high-tax countries 25%; (c) imports from low-tax countries 25%.
Increasing this last figure to 27.5% would not wipe out the company's profit
margin.

> the value of that non-geographically-dependent asset ... can be whisked off
> to an entity in a low tax jurisdiction

A company's advantage over its rivals often geographically dependent. Toyota's
famed culture of lean, just-in-time manufacturing allowed it to become the
biggest carmaker in the world. That culture was a company asset rooted in
Japan that could not be whisked to any tax haven.

As for intellectual property, is there absolutely no way to structure the tax
code so that growth in the value of these assets can be taxed? What about a
simple rule that says IP cannot be transferred across borders within the same
company? That is, the value of a patent is tied to the country in which the
R&D was done. The value of a book's copyright is tied to the country in which
it was written. The value of a software licence is tied to the country in
which the software was developed. Etc.

> The problem simply is that you can't have significantly higher taxes than
> the next country on anything that can be easily removed from your
> jurisdiction, or that is exactly what will happen. And the profits of
> international corporations fall into that category.

If that was the case then the corporation tax for most of the Fortune 500
would be zero. The current system, although imperfect, is still somewhat
functional.

------
quackerhacker
"a devout Christian and father of four," is this suppose to portray an image
of NOW that he is no longer with Google and after working there "between 2002
and 2006," he wants to "do the right thing." PA CHA!

He's obviously doing it with his own intentions, whatever they may be. He
worked there that long and now that he's no longer with them, just wants to be
get PR.

Given my background in regards to Google (it's not positive), I'm not a fanboy
of this "good," employee and am NOT AT ALL in favor of Google.

~~~
hosay123
Perhaps the conviction of seeing it plastered all over the UK headlines in the
past few weeks was too much for him? I'm not sure what being Christian has to
do with it, why you're reacting to that, or why the journo even bothered
mentioning it

------
cjdrake
Using the word "immoral" in this context is just silly. Google is a
corporation, and legally avoiding taxes is the fiduciary responsibility of any
corporation to its shareholders.

Corporate taxes are ridiculous to begin with, because the cost is paid by
either employees or shareholders. Only people can pay taxes.

------
molex333
This is very old news (at least a year or two). This is such common practice
that there is a nickname for it. It is called the double Irish
<http://en.m.wikipedia.org/wiki/Double_Irish_arrangement>

~~~
ISL
What's new is that the British government has decided to care.

See [1], search news for 'google tax', etc.

Edit: The Irish take is interesting [2]. The Cypriot crisis and Apple's
decision to take out a huge loan rather than on-shore some offshore cash both
provide further spice to the present arrangement.

[1] [http://www.guardian.co.uk/technology/2013/may/18/eric-
schmid...](http://www.guardian.co.uk/technology/2013/may/18/eric-schmidt-
google-tax)

[2] [http://www.independent.ie/opinion/analysis/no-wonder-the-
nei...](http://www.independent.ie/opinion/analysis/no-wonder-the-neighbours-
are-upset-over-our-cosy-tax-policies-29276553.html)

------
bifrost
I think the key here is -> "It is able to record the revenues in Ireland
because the UK company is deemed to drum up new business, with sales staff in
Dublin executing all deals."

If the business was initiated in the UK, but executed in France, guess who'd
get the tax money -> France. This doesn't seem particularly swarthy, and
frankly doesn't really warrant an article or any sort of hubbub unless you're
interested in being a Google hater. I'm fine with being a Google hater, I
don't use Google search/ads/gmail/etc because I don't like their privacy
practices/etc...

Anyways, what sort of services are we talking about here? If we're talking
about Google ad network deals, you buy ads and they get displayed all over the
world, you do not pay taxes everywhere the ads were shown.

~~~
DanBC
If someone in England buys a product, in England, from someone in England, and
uses English money, and that product is an ad and that ad is shown to people
in England, then it seems reasonable that English taxes should be paid, even
if the company uses a bizarre scheme to hand off the very last part of the
chain to complete the deal in Ireland.

Google is welcome to move their office to Ireland if Google wants to use the
Irish tax scheme.

~~~
bifrost
Thats the thing; they bought this product from Ireland not from England and
they in fact do have an office in Ireland. Just because someone chatted with
someone else in England about it doesn't make it an "english sale".

~~~
DanBC
> Just because someone chatted with someone else in England about it doesn't
> make it an "english sale".

If almost all of the work was done in England then it's an English sale. The
fact that Google contrives a bizarre situation where their English sales
(between English staff and English customers delivered in England, not
Ireland) have a tiny bit of work done in Ireland should be irrelevant.

I'm not sure how you can call it an Irish sale when the money changing hands
is Sterling not Euro, between banks in England not Ireland, and arranged by
staff and customers in England not Ireland.

~~~
bifrost
> If almost all of the work was done in England then it's an English sale.

Not true at all. If my company (an american one) goes to the UK for a
sales/marketing push, and we make sales, the sale is booked as a US sale. The
currency and banks used to pay for the deal have no standing whatsoever. My
company can even hold a UK bank account, we can accept payment in UKP, it
still doesn't change the fact that the income is booked as a US transaction.
The deciding factor is under what jurisdiction the contract is signed, in this
case its Ireland because thats where Google chose to close the deal (its
clearly stated in the article). It may be vexsome, but this is a direct result
of bad tax policy.

------
marhumph
Barney Jones is a devout Christian, you best listen to this man.

~~~
EliRivers
That's an odd thing to mention. In the UK, being a "devout Christian" is
definitely an odd thing, if not outright vaguely suspicious.

------
tn13
One of the stupidest criticism I have read. Tax evasion and Tax planning are
two different things. And "morality" and "taxation" can not be spelled in same
sentence.

------
pavanky
How is this news now ? Isn't this pretty much what every corporation does to
reduce the tax load ?

~~~
frossie
This is news now because there is a UK parliamentary committee hearing
(analogous though not identical to a US congressional hearing) into corporate
tax avoidance schemes, and Google is being accused of having misled the
parliamentary committee in previous testimony before it:

[http://www.guardian.co.uk/technology/2013/may/16/google-
deni...](http://www.guardian.co.uk/technology/2013/may/16/google-denies-
disguise-operates-tax)

I obviously have no knowledge of the specific matter, but in general it is a
bad thing if MPs start accusing you of having lied to them, and it is not
unusual for whistleblowers to come forward when stuff like that starts to hit
the news.

~~~
j_baker
That's certainly not the way it works in the US. Our politicians routinely
lambast people to score easy political points.

------
patrickdavey
If there's one book I'd recommend on the subject of Tax Havens, Tax Avoidance,
Tax Evasion it's this:

"Treasure Islands, Tax Havens and the men who stole the world" by Nicholas
Shaxson

<http://treasureislands.org/>

Really, an eye opening fascinating read.

------
NolF
The moral argument is a weak one at best. Companies have a responsibility to
their shareholders to maximise profit.

I there is a $500 deductions for drycleaning without receipts, people are
going to claim all $500. It's the same concept at a large organisation.

~~~
aaron695
> $500 deductions for drycleaning without receipts, people are going to claim
> all $500.

This is illegal if you didn't have any drycleaning. You can go to prison(In
theory) if caught.

------
D9u
_We are sorry this service is unavailable as it is currently receiving a high
level of traffic please try again later._

I wish I could read the article myself.

(without reading the article)

One could say that Google is doing its part to avoid financing the war
machine.

~~~
lukethegeek
A FORMER Google executive has blown the whistle on a massive and “immoral” tax
avoidance scheme that has “cheated” British taxpayers out of hundreds of
millions of pounds over the past decade.

Barney Jones, 34, who worked for the internet search giant between 2002 and
2006, has lifted the lid on an elaborate structure which diverts British
profits through Ireland to the Bermuda tax haven.

Although Google’s London sales staff would negotiate and sign contracts with
British customers, and cash was paid into a UK bank account, deals were
technically booked through its Dublin office to minimise its liabilities here.
Jones, a devout Christian and father of four, is ready to hand over a cache of
more than 100,000 emails and documents to HM Revenue & Customs (HMRC),
detailing the “concocted scheme”.

He has already provided testimony to the Commons public accounts committee
(PAC) which led to the combative questioning.. [paywall]

~~~
D9u
Thanks!

Looks like I was way off the mark with my preceding comment.

------
smogzer
It's immoral that governments take poeples money and use it for intents
orthogonal to those original people intents, e.g. war, subsidies to monopolies
such as the oil industry, corruption, etc.

Google on the other hand provides a great services for free and acessible to
everyone. I would prefer my taxes to go to google; and if they would become
government they would be much more efficient than any government out there.

By the way google if you want a toy country to try stuff, try Portugal. This
goverment could use some help and they are some nice people who support the
private initiative.

------
brianobush
As a shareholder, I think taking advantage of tax loopholes is the company's
job. However, If I was British, I might see this in a totally different light.

------
lazyjones
While I also consider these tax avoidance schemes immoral (and borderline
illegal, but who am I to judge ...), I have to disagree with the notion that
everyone (everyone else, because noone's getting the multinationals to behave
anyway) should be paying their taxes in a straightforward manner and avoid all
the little tricks for the Greater Good. I believe I have 2 good reasons:

1) in a democracy, people are ultimately responsible for laws and therefore
for such loopholes. It is their responsibility to close them if they consider
them wrong, not to avoid them out of sheer goodwill - they only put themselves
at a disadvantage and reward those who benefit from loopholes (because these
crooks will be richer in relation).

2) If only a handful of multinations exploit these loopholes, they will not be
fixed. Those corporations can afford to invest millions in lobbying and
bribery to keep their tax privileges. So there is only one appropriate
reaction: everyone must try to benefit from these tax loopholes until it hurts
governments so much that they are forced to act.

------
aaron695
I though companies 'are not people' so I don't see why the word immoral should
be applied to such things. Can't really have it both ways.

~~~
Nursie
Companies are made of people. People should know to act morally.

However as companies are made of people, not people themselves, corporate
personhood is very, very dodgy law. Hope that clears it up for you.

------
DanBC
The whistle blower left Google in 2006.

The whistle blower claims to have many thousands of emails to hand over.

What the heck Google? How did he get to keep these emails?

> Barney Jones, 34, who worked for the internet search giant between 2002 and
> 2006, [...]

> [...] is ready to hand over a cache of more than 100,000 emails and
> documents to HM Revenue & Customs (HMRC), detailing the “concocted scheme”.

~~~
greenyoda
How hard is it to make a copy or a screenshot of an e-mail and smuggle it out
on a thumb drive?

~~~
DanBC
When you work for the accounts department of a security conscious company,
which is chock-a-block full of smart computer-competent people, it should be
pretty darn hard to smuggle out email. Especially 100,000 emails.

~~~
oijaf888
Assuming google uses gmail internally it would be as hard as connecting via
imap and then copying your thunderbird files to a flash drive or taking home
your laptop and copying them then.

------
MarkMc
The profit that Google makes on UK revenue should not be taxed by the United
Kingdom - it should be taxed by the United States. Google's profit is due
almost entirely to its fantastic computer algorithm, which was developed in
the US. Tax should be based on the jurisdiction where the value was added, not
where the sale took place.

Another way to look at it would be to imagine that Google headquarters
auctioned off the rights to run Google UK to the highest bidder. Google
headquarters would have such a strong bargaining position that the successful
UK bidder would end up with very low profit margins.

But what annoys me are the loopholes that allow Google to transfer profit from
the place where the value was created (the United States) to some other low-
tax country.

------
a3n
I wonder, do corporations see themselves as essentially other countries? And
if they do, does that maybe explain the urge to minimize as much as possible,
even down to zero, the payment of taxes to an enemy/competitor?

------
muhuk
Honest question; how is it immoral if it is not illegal and the contracts were
not misleading?

Also why did he wait 7 years if he was so moral? It would kill me by then.

~~~
jordonwii
It isn't. To say it is is just silly.

"Don't hate the player, hate the game."

~~~
shrikant
Why not hate both?

~~~
jordonwii
Because the players can't do anything about it. No matter how much we talk
about morals, if, for example, Google were to not engage in the same tax
avoidance schemes that all of its competitors do, then it'd be costing itself
billions of dollars. Which is a reasonably substantial competitive
disadvantage. That's money that can't go into R&D, maintenance, etc., whereas
the companies that compete with Google do. And for what? A positive PR image?

------
Steko
Ask HN: Do the pro-Google voting rings get paid extra to flag these articles
on Saturdays or do you donate this time?

edit: <http://imgur.com/wvB8lgH>

~~~
DanBC
There are a number of reasons why this article is dropping down the pages, and
"pro-Google flaggers" is only one of them.

1) Automated flame detection drops the submission down the page

2) Political discussion gets flagged. Quite a lot of this thread is about US
taxes.

3) Lack of upvotes. It only got about 70 upvotes.

~~~
Steko
It's certainly not #3: with 3 hours and 70 votes it would easily be ahead of
#4 in the screenshot (4 hours and 66 votes). Instead it's #27.

#2 I don't see why you would flag the topic and not the political comments.
Moreover we see plenty of topics where comments go political that don't get
egregiously flagged down.

#1, I'll plead ignorance on any automated flame detection but I'm very
skeptical that's what we're seeing. I'll stick with Occam's razor: time and
again the articles this happens to are either critical of google, or favorable
to MS or Apple.

~~~
Steko
It's certainly not #3: with 3 hours and 70 votes it would easily be ahead of
#4 in the screenshot (4 hours and 66 votes). Instead it's #27.

#2 I don't see why you would flag the topic and not the political comments.
Moreover we see plenty of topics where comments go political that don't get
egregiously flagged down.

#1, I'll plead ignorance on any automated flame detection but I'm very
skeptical that's what we're seeing. I'll stick with Occam's razor: time and
again the articles this happens to are either critical of google, or favorable
to MS or Apple.

Examples:

<https://news.ycombinator.com/item?id=5716010>

<https://news.ycombinator.com/item?id=5715231>

------
lukethegeek
Part of that article is behind a paywall.. :(

------
kbar13
cool paywall

------
j_baker
I seriously wonder about the credibility of this story. It seems that this is
the only news source that's carrying this.

~~~
desas
Googles UK exec has been questioned by a parliamentary committee after
receiving this evidance, this was reported widely in the UK (I also read an
article in the guardian). The Times just has more info on the leaker.

