Is it ethical to avoid paying tax as an individual? Many would say no. But when a company does it, they lay their blame on the shareholders and the market. So the more outrage about this subject, the better. Our governments can either raise taxes or lower taxes. But they shouldn't let individuals and business get away with pretending to pay taxes when they're not.
Do you mean avoid (by legal means) or evade (by illegal means)? Any government that uses tax incentives to affect citizens' behavior is saying it's ok to avoid taxes. If they promise your taxes will be lower if you do x rather than y, they're counting on your desire to avoid taxes to motivate you to do x.
We all try to avoid paying too much tax, but that's not tax avoidance. Sending your profits to the Bahamas via Holland and Ireland is tax avoidance. I'd be happy to tell everybody and anybody about how I legally reduce my tax bill. Google's PR people would probably rather keep their methods on the down-low, out of the public eye, in spite of their utter legality. So why is that?
One of the healthiest features of the American experiment is a federal system where you have a broad spectrum of options in terms of tax rates versus social services. People (and companies) can, and do, pick legal regimes which optimize for the outcomes they find important. You may have heard people sort of like living in California, especially if they work for political subdivisions of it: that comes at a price -- you'll pay a gobsmacking amount of money in taxes relative to a similarly situated individual in Texas. (I managed to pay California several hundred dollars in taxes last year and I don't even live there. Yay, hotel tax.)
Competition among governments internationally is also healthy, for much the same reason. The market in tax and legal protection encourages governments to not just expropriate all the surplus from their wealth-creating constituents.
But if a corporation has a significant presence here and is consuming an american-educated work force, american highway spending, american police spending, american state dept actions to ensure supply of various things (the oil industry would grind to a halt without the cloak and dagger stuff)..
then they pull an accounting hack and we're supposed to believe 98% of their operation is in the Cayman Islands? We're getting ripped off. You don't like taxes, I get it. How do you like the idea that you're paying higher taxes (or taking on more gov't debt) because other people are bilking the system?
you never hear Singapore, Dubai or Hong Kong being called 'tax havens' (they are), the word is usually associated with 'Dutch Antillies, Bermuda, Jersey, Guernsey' (ie. evil nations who are taking our money)
The question is, why do the loopholes still exist? Why aren't more people angry about them?
EDIT: Downmodded? Seriously, guys, noncontroversial statement. Go talk to an economist. Or a lawyer. Corporations are legally obligated to be sociopathic and maximize profit above all else. It's a feature, not a bug, invisible hand and all that.
"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. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands" — Judge Learned Hand
It is not evil to minimize your tax liability within the rules. If Google were spending millions lobbying to decrease their tax liability, then that might be evil. Minimizing your tax liability is perfectly reasonable. Not doing so would be doing a disservice to shareholders, and is arguable more evil.
They might say that, but their actions -- buying from duty-free stores, contributing to tax-deferred retirement accounts, filing jointly with a spouse, and claiming every possible deduction -- suggest quite the opposite.
There's a world of difference between illegal tax evasion and legal tax avoidance, and all indications point to what Google is doing as being tax avoidance. How many individuals went to the IRS and said "here's how I'm planning on reducing my income taxes; can you see any problem with this"?
The fact is that they pay 2% tax while most US based persons pay at least 10x that rate.
22.2% - overall effective tax rate in US in 2009 (compared to 27.8% in 2008)
2.4% - average overseas tax rate 2007-2009 (that's what they pay to the Rest of the World, where they earn 88% of profit)
And this is Google's fault? If you don't like the outcomes that result from players playing by the rules, perhaps you should direct your ire toward the rulemakers rather than the players.
Pointing out the "unfairness" of their reported tax rate does not directly refute cperciva's comment, but it seemed to stand in opposition to it nonetheless. I inferred that you think Google is at fault, here.
I hate that crap. It's possibly the worst thing about our media.
Mountain-top removal by coal mining company devastates 100 SQ mile ecosystem in West Virginia? Doesn't even make the paper.
Al Gore's electricity bill is high? PAGE ONE BABY. Al Gore's electricity bill is approximately 1 / 100,000,000 or so of the problem. But it makes us feel good to give do-gooders their comeuppance. Serves them right, for trying to improve things and making us feel bad that we don't do more ourselves.
Al Gore has rallied to get the government to start forcing corporations to use carbon credits and buy them from companies that he is invested in. It's not that he is a "do-gooder", it's that he is an unethical hypocrite. These kinds of people need to be pointed out.
You could focus on shaming Al Gore into buying solar panels, or you could focus on some $100 billion energy company where you could actually make a measurable difference. It's about priorities.
The media likes personalities because individuals are a lot more salient than statistics, and offending an individual never alienated an advertising customer.