

To reduce its tax burden, Google expands use of the “Double Irish” - lancewiggs
http://arstechnica.com/business/2013/10/to-reduce-its-tax-burden-google-expands-use-of-the-double-irish/

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ucha
I wouldn't blame Google (or any multinational corporation) as much as I blame
our legislators who failed to prohibit this kind of tax evasion schemes.

~~~
pcurve
Legislators are beholden to rich benefactors. Look what happened to estate tax
exemption during Bush era. It went from $675k to $3.5million.
[http://wills.about.com/od/understandingestatetaxes/a/estatet...](http://wills.about.com/od/understandingestatetaxes/a/estatetaxchart.htm)

And rather than letting Bush law expire, Obama boosted the exemption to over
$5 million.

This was a huge boon to wealthy class, and most people didn't even notice this
crappy legislation from going into effect.

~~~
icelancer
>Legislators are beholden to rich benefactors.

I think that is ucha's subpoint, if not the main point. We cannot effectively
police this kind of stuff.

------
koenigdavidmj
I bought a car a couple counties away from where I live for the lower sales
tax rate than my home county. How is this ethically any different than that
(other than the scale)?

~~~
chiaro
Well I'd argue that the ethical difference is fundamentally the scale. How
many lives could be changed if they paid taxes according to their social
contract? Poverty, crappy healthcare and soaring incarceration are all
problems that need money to alleviate.

~~~
tomfakes
They have a fiduciary duty to do this to make more money for their
shareholders. They have no enforceable social contract to provide taxes more
than what they can legally pay. They can be sued by their shareholders for
_not_ using these schemes

Not saying this is right, but this is the way the law works right now.

~~~
chiaro
I'm referring to the tacit social contract between the state and its citizens,
in this case, the idea that the state supports the entrepreneur in the
beginning, so that later the entrepreneur can support the state, if they can.

I'm probably butchering the term, so:
[http://en.wikipedia.org/wiki/Social_contract](http://en.wikipedia.org/wiki/Social_contract)

~~~
tomfakes
I mis-understood who the 'their' was in your comment. I agree with you on this
point.

There is an argument that allowing companies these tax breaks brings jobs to
your country instead of somewhere else, and this brings prosperity. Certainly
Ireland worked this way in the 90s to get their tech scene started. Locally,
cities do this too - X year tax breaks to put your factory here instead of
there is a common thing.

Is the social contract satisfied by just the generation of good paying jobs
where there were none previously?

------
Pxtl
As all gamers know: the best way to fix a badly-broken rule is to exploit it
relentlessly.

~~~
falcolas
And get banned by the developers when they get around to fixing the problem.
Getting stomped by the IRS when the close this loophole probably isn't high on
Google's priority list...

------
itchitawa
Is this really a problem? Isn't corporate tax rate one of the ways countries
compete for businesses to be registered with them and pay them tax? I'm sure
any government efforts to reduce this will just make it harder for everyone to
run companies from other countries.

~~~
georgemcbay
Try moving large sums of money (even money earned abroad) around like this to
avoid taxes as a private US citizen and you're likely to get 10-20 years of
mostly distraction free time to ponder the question of whether this is or
isn't a problem.

~~~
jamesaguilar
As long as you don't break any laws while doin it, I don't see why.

------
tensafefrogs
I've always been curious about the pressure of shareholders in situations like
this. Google is a publicly shared company, right? So if they don't maximize
the shareholder's value, don't they open themselves up to lawsuits by
shareholders?

So even if they wanted to "do the right thing" and pay some taxes on this
money, they couldn't, else their board would get voted out by large
shareholders who are only in it for the money.

~~~
jamesaguilar
Not commenting about google specifically, but please observe that many
companies donate to charity, and, extrapolating from this observation, resist
the urge to trot out the "legally obligated to maximize profits" thing in the
future.

------
Arcticus
Google by law has to take advantage of these "loop holes". They are a publicly
traded and thus by law have the obligation to maximize their shareholder
returns. So taking advantage of these tax loop holes they are fulfilling that
duty. Doesn't excuse it but it does prevent Google from just saying no we
won't do it.

~~~
21echoes
the "shareholder value theory" is a myth:
[http://blogs.law.harvard.edu/corpgov/2012/06/26/the-
sharehol...](http://blogs.law.harvard.edu/corpgov/2012/06/26/the-shareholder-
value-myth/)

[http://www.nytimes.com/2012/08/11/opinion/nocera-down-
with-s...](http://www.nytimes.com/2012/08/11/opinion/nocera-down-with-
shareholder-value.html)

there is no "law" that makes Google obligated to do this.

------
RafiqM
I'm Irish. They provide 2000 jobs here in Dublin, and that has the potential
to double even in the next few years.

The fact of them being here is a direct reason Facebook, LinkedIn, and a load
of other companies are also here.

They're indirectly responsible for, I would guess, about 10,000 jobs.

I couldn't care less if they don't pay 12.5% corporation tax - they've
provided massive social value even without it.

------
javert
Good for them. The government shouldn't be taking their money.

~~~
alphakappa
And how do you propose that government finds money to pay for roads, bridges,
dams, police, firefighters, national security, national parks, environmental
protection, regulatory standards etc?

~~~
JoshTriplett
> roads, bridges, dams, police, firefighters, national security, national
> parks, environmental protection, regulatory standards

Congratulations, you've enumerated most of the uncontroversial activities of
government, which take up a few percent of the budget, and several of which
are paid for in whole or in part by use fees.

~~~
chiaro
>few percent of the budget

>national security

[http://en.wikipedia.org/wiki/File:U.S._Federal_Spending_-
_FY...](http://en.wikipedia.org/wiki/File:U.S._Federal_Spending_-_FY_2011.png)

~~~
jamesaguilar
To be fair, if it was only actually used for defense, it really would be only
a few percent. And then to be extra fair, "old people and the poor should not
die of starvation or easily preventable diseases just because they haven't
saved," is also not very controversial, and takes up more than a few
percentage points of our governments budget.

------
patrickdavey
May I recommend the book "Treasure Islands" by Nicholas Shaxson.
[http://treasureislands.org/](http://treasureislands.org/)

A brilliant read if one that might make you slightly angry about the system!

------
jgalt212
Fine they don't pay taxes on the earnings, but they can't really use that
money either--it must remain permanently abroad. Part of the reason AAPL did
that $17 Billion bond issue (largest ever until the Verizon $49B deal) even
thought they have like 8 quadrillion dollars in the bank is they cannot use
those permanently abroad monies to pay dividends to shareholders.

So, in short, what is good is tax-free money if you cannot use it? Are these
companies all hoping that one day their will be a tax holiday and they can re-
repatriate the funds?

~~~
valleyer
Presumably companies like Apple and Google spend a decent amount of money
abroad (e.g., manufacturing phones). Can't they use it for that?

~~~
judk
They already do. This debate is about the profits

