
‘Dutch sandwich’ grows as Google shifts €8.8bn to Bermuda - sigzero
http://www.cnbc.com/id/101104483
======
revelation
I would think that on the forum for a startup accelerator, people would be
more finely tuned to what this means for startups. Guess who can not evade
taxes through complicated international arrangements? Startups.

It is overall a terrible thing for the economy. It is an incentive for bigger
companies to get even bigger, and it is horrendous for small companies that
have to pay full taxes and carry the burden of a tremendously complicated tax
system that meanwhile fails spectacularly at taxing their orders of magnitude
bigger competition.

(I guess it tells you a lot about the political system that we are happy to
invade big countries but apparently powerless at regulating small ones that
have specialized as tax havens)

~~~
varelse
It seems like this is the Delaware Corporation of the 21st century. And I see
a YC startup to help the little guy evade taxes completely legally in the
making.

Call it Double Dutch Chocolate (dot com).

~~~
calbear81
I would invest and use a product like this. I've always wondered why I look
for ways to lower my tax bill when I'm doing my taxes instead of getting
proactive guidance throughout the year on my expected tax liability and things
I should do to minimize my tax exposure, etc.

~~~
count
Hire a CPA, it's what they do for a living.

------
alexgandy
Here's a non-paywall version:
[http://www.cnbc.com/id/101104483](http://www.cnbc.com/id/101104483)

~~~
diminish
ahh thanks, wish they put ($) in the title.

~~~
jensenbox
I was pretty annoyed by that as well.

------
davidbrear
Is it illegal? If not, it sounds like a brilliant plan. I'm shocked that
people who work with removing coding bugs on a daily basis are so quick to
assume that a "bug" in the tax code is Google's fault.

~~~
hackinthebochs
So (unethical) hackers are also completely blameless, after all it is in fact
the software itself that allows this unintended access. Are you willing to
endorse that statement?

If not, then Google is to blame for taking advantage of tax loopholes.

~~~
ihsw
Consider the following:

* the software is designed by committee

* in the interest of greater acceptance, the committee solicits opinions of users for how to design the software

* some users need certain features, and the committee members are open to "suggestion"

* committee members have no issue with accepting suggestions without considering their impact

* committee members have no issue with accepting bribes in exchange for guarantees of certain features being implemented

* committee members actively solicit suggestions because they want money

* there are no repercussions for committee members taking bribes and blindly accepting feature requests, as a matter of fact it's official policy that they do so

Yeah, those "hackers" are definitely to blame here. They're playing the game
by the rules and they're winning, and that makes you upset? Personally I'm not
even surprised at all.

~~~
hackinthebochs
An analogous situation would be an NSA member sitting on a committee
developing an encryption standard. The NSA member suggests a change that the
committee members do not fully comprehend the implications of. They accept the
standard and henceforth the NSA can crack the resulting cryptosystem. By your
reasoning the NSA carries no moral fault here.

Man, the mental gymnastics people will go through to justify tax avoidance is
astounding. Those with greater knowledge in an assumed non-adversarial system
have a moral imperative to disseminate that knowledge to the others in the
system. Otherwise taking advantage of the information imbalance and the other
party's implied trust is unethical.

Just because something is legal does not make it right. Those who would
outsource their moral thinking to laws are a sorry lot.

~~~
ihsw
Morals and ethics have no say in determining whether to pay taxes -- if you
pay too much then the government complains, if you don't pay enough then the
government complains. Where exactly does right and wrong fit into this
equation?

There are no mental gymnastics in determining how much taxes you have to pay,
the only thing that matters is how much you pay.

~~~
hackinthebochs
>Morals and ethics have no say in determining whether to pay taxes

Morals/ethics do have a determination whether the concept of tax is ethical or
not, which would then determine the ethics of avoiding said tax. If you take
the position that tax is ethical (as a member of a society...) then it is at
least on the surface unethical to avoid the intended tax rate (shifting
burden, freeloading, etc).

------
was_hellbanned
The solution is simple, but initially shocking to most: corporations should
not pay income tax.

[http://www.npr.org/blogs/money/2012/07/19/157047211/six-
poli...](http://www.npr.org/blogs/money/2012/07/19/157047211/six-policies-
economists-love-and-politicians-hate)

------
3825
Sorry but I don't make much money and I don't know how taxation really works
but if people outside the US paid [CorporationName] and the income is being
taxed outside the US (albeit at closer to 0%) why does [CorporationName] have
to pay taxes in the US?

I think we have to use common sense here. I can see why we want to tax a
corporation if they just set up a shell company and pay royalties to the shell
companies from revenue generated _within the US_ but if the income is earned
outside the US, why do we care? Why do we tax income that was not earned in
the US?

A simple (but very difficult) way to fix it would be to eliminate all tax
incentives, reduce the tax rate, and peg tax to revenue and not to profit.

So if you had revenue of $100 and expenses of $110, you would still pay taxes
on the $100 revenue (at a newly reduced rate). This would encourage people to
try to improve efficiency and profit margin.

After all, I pay income taxes on all my income, not on the savings after I
have spent my money. Why should companies get to pay taxes on "profit" and not
on revenue?

~~~
PeterisP
Taxing revenue instead of income would be an extreme incentive towards
vertically integrated businesses, making all other choices uncompetitive.

For example, if a chocolate bar is sold by overseas manufacturer A to an
importer B then to a wholesaler distributor C then to a small retail shop D
then to you - then if taxes were paid on revenue, then that chocolate bar
would be taxed 4 times, and each step would bump the price up by the tax rate
in addition to the current markup; However, if a manufacturer A would buy all
the elements in the chain and sell it directly to you, then it would pay 4
times less taxes, and it would be impossible for others to compete with that
pricing difference.

~~~
jules
Ideally a company would pay taxes for the services it uses. If you use a
public road, you pay a small tax for using that. Unfortunately not very
practical.

~~~
cmccabe
It's very practical. It's called sales tax. Gasoline sales taxes are supposed
to be used to maintain roads.

In general, taxing income and profit is difficult to do fairly. It requires a
really complex and invasive bureaucracy that scrutinizes everyone and every
business. Sales tax, on the other hand, is easy to do fairly. You already have
to regulate sales to enforce anti-fraud laws, food and drug laws, and other
regulations.

People often say that sales tax is regressive, whereas income tax is
progressive. But in practice, income tax is regressive, really falling only on
the middle class. For example, multi-billionaire Warren Buffet pays a lower
tax rate than his secretary.
[http://money.cnn.com/2013/03/04/news/economy/buffett-
secreta...](http://money.cnn.com/2013/03/04/news/economy/buffett-secretary-
taxes/index.html)

------
graiz
This NYT graphic explains the technique for anyone who has enough money to
make it worthwhile.
[http://www.nytimes.com/interactive/2012/04/28/business/Doubl...](http://www.nytimes.com/interactive/2012/04/28/business/Double-
Irish-With-A-Dutch-Sandwich.html)

------
KMag
The majority of these untaxed profits will end up getting taxed in the U.S. as
wages, bonuses, capital gains, and dividends. The money doesn't disappear into
some bucket of evil somewhere or get funneled out to a tycoon living on a
Yacht in Sealand's territorial waters.

~~~
gaadd33
How does that work given Google doesn't pay dividends and most large
corporations don't bring the money back into the United States?

In fact I believe it makes sense for the US corporation to borrow money and
pay interest on it than to bring money in from offshore divisions. (As Apple
did to pay dividends at shareholders behest)

~~~
KMag
I'm not going to pretend that equity price represents the fair value of the
asset, but none the less, hoards of offshore cash, cash equivalents, and
tradable assets do affect share prices. As the majority of Google shares are
held by US persons, this money does re-enter the US as capital gains. The
taxes may be deferred for a long time, but the money just doesn't disappear
once it enters a tax haven.

Of course, if Larry, Sergey, or Eric at some point have kids or ex-spouses who
are non-US persons, perhaps the majority of these assets won't re-enter the US
in some form.

------
stevekinney
This probably isn't a completely analogous situation, but didn't Tim Cook just
get grilled by Congress over something similar?

~~~
PeterisP
If the Congress doesn't like the practice, then it shouldn't grill Tim Cook
but instead, say, pass laws so that this practice would be forbidden. Isn't
that their job?

~~~
hackinthebochs
Shifting the burden to congress is absurd. Congress is a finite set of people
with finite time to consider tax laws while lawyers for corporations far out
number them in time and effort. Such an adversarial system is inherently in
the favor of corporations. They should be responsible for following the intent
of tax law.

~~~
cmccabe
Yeah, designing clear and well-written laws is a boring waste of time.
Congress has much better things to do than that. We should just punish people
arbitrarily based on "intent" and the shifting political winds.

------
loceng
They should do this as long as everyone else is able to - to put pressures to
have this be stopped overall.

------
grandalf
In other words, the American taxpayer is paying for your free Gmail account
and Gigabytes of storage.

------
tux
Link is not working for me. Keeps redirecting to front-page.

~~~
darth_aardvark
It's a paywall that automatically sends you back.
[http://www.cnbc.com/id/101104483](http://www.cnbc.com/id/101104483) is the
nonpaywall link.

------
bsullivan01
Don't blame them if it's legal. Let the politicians close the loopholes.

But it's amazing how many dark clouds are gathering around Google in the Larry
Page era. One day it may start to rain or pour.

Even TechCrunch bashed them over all deceptive ads search results
[http://techcrunch.com/2013/10/07/verbase/](http://techcrunch.com/2013/10/07/verbase/)

~~~
jmillikin
That article claims that Google regularly returns result pages full of ads,
and shows a screenshot of a search for [what is bitcoin] as evidence:
[http://i.imgur.com/eBtzYic.png](http://i.imgur.com/eBtzYic.png)

Obviously a non-commercial query like this should return few (if any) ads, so
I tried to reproduce the author's results. Here is a screenshot taken of
searching for [what is bitcoin] in a fresh Incognito window:
[http://i.imgur.com/KfY3gvs.png](http://i.imgur.com/KfY3gvs.png) . There are
no ads, and the search results a reasonable.

I thought the vastly different result could maybe be a result of searching on
google.com vs google.co.uk, but changing the domain did not generate any ads
either: [http://i.imgur.com/5gcOvtJ.png](http://i.imgur.com/5gcOvtJ.png)

Does anyone on HN see a page full of ads when they search for [what is
bitcoin]?

~~~
ctz

      > Does anyone on HN see ads when they search for [what is bitcoin]?
    

Yes: [http://i.imgur.com/2iFv7Yf.png](http://i.imgur.com/2iFv7Yf.png)

~~~
giarc
When is this from? I thought the black bar was all but gone.

