
Google 2.4% Rate Shows How $60 Billion Lost to Tax Loopholes - Bloomberg - nir
http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-shows-how-60-billion-u-s-revenue-lost-to-tax-loopholes.html
======
TGJ
It's not lost. Since it is legal to begin with then the government cannot lay
claim to it anyways.

~~~
sophacles
Thought experiment time:

Say you have created a site -- one that sells goods and services. You have
written a bunch of code, and leveraged libraries and other components for the
rest. Now, say, if I put certain values into the forms on your site, I get
your services and goods for free or extremely reduced costs. Say that value
looked something like this:

    
    
      sophacles'; insert into discounts (code, percent_off) values ("sophaclesmagic", 100); 
    

for my name, and I put sophaclesmagic as my discount code.

Do you consider this acceptable? Your code allowed it. It's not like I would
be doing anything so crass as stealing, you can't claim I broke rules. I just
did something you allowed.

Or perhaps would you try to get "your lost money" anyway, as the code that
allowed it "wasn't perfect, but obviously not what you intended".

How is this not basically the same thing as the laws?

~~~
hackinthebochs
Exactly. Lawyering around paying your intended tax rate is no different than
hacking a system. You're using the rules of the system to circumvent "intent"
of it. Yet hacking is seen as morally wrong and dodging taxes is perfectly
fine.

Maybe we should just make a law making it illegal to dodge your intended tax
rate, just as there are laws against circumventing the intent of a computer
system.

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siglesias
I can think of worse things that could happen with that tax money than have it
go to an innovative, highly competitive American technology company that pays
huge social dividends.

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richcollins
_“Who is it that paid for the underlying concept on which they built these
billions of dollars of revenues?” Briloff said. “It was paid for by the United
States citizenry.”_

He says that as though they got nothing in return for the time / money they
spent on Google.

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yock
I'm dubious of people who equate paying fewer taxes with the concept of evil,
as if government ever did anything to _earn_ income. There's far too prevalent
a mindset in this country that sees falling tax revenue as a negative, then
further perpetrate the lie by ascribing ownership of these missing tax
revenues to the people. They use personal pronouns like "you," "we," and "our"
when speaking of them.

Follow the money, or the lack thereof. Behind every one of these complaints
lies, somewhere, someone who has some self-serving use for that money.

~~~
natnat
Tax revenue is necessary to maintain a functional government. When the
government doesn't get enough tax revenue to pay for the things it spends
money on, it must either increase taxes on everyone, or borrow money from
other people to finance its programs. Either way, everyone else ends up paying
more in taxes. That's why people treat taxpayer money as "their" money.

The government could choose to spend less money and avoid decreasing the tax
burden on everyone else, but then the services everyone receives would
decrease, and only those who don't pay as much tax would benefit. If we hold
spending constant, someone who doesn't pay their fair share of taxes is
increasing the tax burden on everyone else.

~~~
yock
When your income decreases, you buy less stuff. It's a lesson the government
has never learned. I'm perfectly happy with fewer services.

~~~
natnat
I'm not talking about my income or your income. I'm saying that, when spending
is constant and Google doesn't pay as much in tax, you have to pay more. If
spending decreases and your tax is held constant, you get less back. Either
way, Google wins and you lose.

------
camiller
misleading, the article goes on to say Google paid a 22.2% effective tax rate,
the headlines 2.4% rate was only on a portion of their revenue, not all of it.

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fleitz
_“flying a banner of doing no evil, and then they’re perpetrating evil under
our noses,” said Abraham J. Briloff_

Paying the lowest amount of taxes required by law is certainly not evil. I
wonder how much extra Mr. Briloff sends to the IRS, and I wonder how evil he
considers that to be. If the law makers in the various jurisdictions didn't
intend the tax code to be used in this way it's certainly in their purview to
change it. Since this has not happened one can only assume that GOOG et al are
acting in the manner which the law makers intended.

In my opinion persons such as Briloff who derive their income from schools
which are largely publicly funded to teach people a trade which is largely
only necessary because of the tax code are the people who _should_ be paying
extra because of what the tax code provides for them. (eg. their livelihoods)

If Briloff wants people to pay extra taxes perhaps he should encourage the
gov't to provide services worth in excess of what they cost. Perhaps Mr.
Briloff forgets that governments are instituted amongst men to secure rights
and not to redistribute and destroy wealth.

~~~
hackinthebochs
>Paying the lowest amount of taxes required by law is certainly not evil

Lawyering around your "intended" tax rate is no different than (black hat)
hacking. It's using the rules of a system to circumvent its intent. It's
pretty well accepted that (black hat) hacking is morally wrong. How is one
morally wrong and the other not?

~~~
sophacles
Because government is always bad, and anything they do can only be for the
evil.

------
diziet
Tax avoidance is a perfectly legitimate tactic that every corporation with
accountants and lawyers worth their salt employs. Not to do so would be to
lose a large competitive advantage. The problem, of course, is the complicated
tax code that can be circumvented.

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nitrogen
I have to groan when I hear people talk about "lost" money like this. Whether
it's the RIAA/MPAA or a government analyst, the money is not lost, it is
simply being put to (ostensibly more productive) other uses. Of course, the
governments of the world could choose to stop trying to sway public sentiment
and just close the tax loopholes. Unless they compensate for it in some way by
significantly lowering taxes for startups and small businesses, I wouldn't be
surprised to see general technological innovation significantly hindered.

------
duke_sam
There is some[1] evidence to show that higher corporate tax rates result in
lower wages so it's at least partially equivalent to a higher income tax rate.

[1]
[http://stumblingandmumbling.typepad.com/stumbling_and_mumbli...](http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2010/04/corporate-
tax-incidence-some-evidence.html)

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patrickaljord
This is from October, has already been posted here but I guess the anti-google
frenzy that is happening on HN these days will bring it back to the top. Also
if your read the article, it says Facebook, Microsoft and just about any tech
companies do the same. What's wrong with legally paying as less tax as
possible?

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naner
Companies have massive incentive to use every tax loophole they can find.
Honestly, what did they expect to happen? Another option is for the government
to fix all the loopholes and then watch these companies move out of the US.

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viggity
The title implies that Google alone is "skirting" the $60 Billion, when really
it is all the companies using this strategy combined are responsible for the
"$60 Billion"

------
viggity
Honest question: do you think more wealth/jobs/long term economic growth is
created by Google having that $60 Billion or the government having the $60
Billion?

Second honest question: a corporation is owned by people. People pay taxes.
Why should those people have to pay taxes twice on the same money - once one
it gets to google and once when it gets to them?

~~~
wipt
So far this seems to be the consensus of the comments here: Google is doing
this legally (as are other companies), and that the article is misleading.
Sure, it says that it's legal, but then it turns around and sympathizes for
the US government that can't keep from spending money that it hasn't made (and
has no hopes to make). I know everyone hates Wall Street, but they /do/ know
how to make money - thievery or not.

Reduce costs, increase profit by increasing market by dropping taxes.
Companies are moving away from the states, and law is remaining stagnant for a
evolving market.

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adrianscott
misleading article... most other countries don't tax foreign earnings the way
the u.s. does...

