You can compare it to entrepreneur from a wealthy family
He can take risks, knowing that if he fail, it won't be to the ground
Damage to their brand worth billions
Cambridge analytica scandal costed FB a lot more then the fine
It cost them in their users trust
and that's the worst kind of punishment a large brand such as facebook can get
I guess there is a parallel with actual people. Personal reputation matters, but surely we need to be a bit more harsh when punishing certain behaviour.
It would have sent a strong message to other CEOs. Don’t fuck with people’s data.
But that seldom happens. It’s US, the rich rule the country.
I think, despite the title, this isn’t actually a criminal case. It’s Google taking advantage of that Irish tax loophole.
Every time a fine or an agreement is made, their stock goes up and the execs throw a party.
So it's like me doing something illegal and profiting $100k, but then getting fined $50k. I'd be stupid not to do it again. And again. And again.
At a minimum, the fine should be 2x the amount gained.
- Making it more profitable for the company to just leave your market completely, underservicing everyone there immediately
- Creating an actual monopoly with costlier and poorer service when the policed company exits the market (either from leaving or being dissolved - the latter not applying to Google in this case)
- Creating an incentive to actually challenge the authority in court. Exponentially raising the cost for enforcement and not guaranteeing any favorable outcome.
- And as a corollary to the court, the challenge of authority can result in all the enforcement tools being declared invalid, including the charter for the enforcement agency itself! Resulting in a big public sector layoff and void in enforcement capability.
Google haven't done anything illegal. The so called "loophole" in the law is actually the way the law was explicitly designed to work. If France pushed this too far Google might win and France would be left with nothing
The people cheering for France here are really just cheering for the end of the rule of law. Google pays little tax in France because it's not a French company, not because of "loopholes".
There is no European tech company that's going to compete with Google. They could ban Google entirely and the result would be Baidu etc. coming in and doing the exact same things.
Any would-be competitor to Google is going to want to plow most/all of their revenue back into growth for years, perhaps over a decade. VC funded companies normally lose money so they can grow faster.
Once you're making money, yeah that's kind of a big sucking hole you want to deal with. But that's a political issue that other EU members states have with Ireland (and Luxembourg, and the Netherlands).
Certainly, tax is not the reason there are no Google competitors from France.
Yes, don't enter the EU market if you want to dodge taxes. More countries should be enforcing this..
Fines are a deterrent and punitive measure. They punish you for doing something and make you hesitate to do it again. If these 2 goals aren't reached than the fine isn't really effective.
If they were a warning then you'd expect the second offense to be punished by some action that can make the fine feel like "just" a warning. What's that action? How effective is a string of endless warnings that are never followed up with real action?
One way would be to implement a series of exponentially growing fines. This would make them less "cost of doing business" and more "massive liability".
Look at what happened to Panama papers or Bermuda Papers or even what Snowden had said.
"Little people pay taxes" was a line I read in Panama Papers book, one which I'll never forget
1. Half the show is about the AG of SDNY throwing white collar criminals in jail.
2. It is fiction.
A bunch of the super rich deal in wealth rather than income. Remember reading about tech execs with $1 annual paychecks? They earn their money differently and pay taxes differently.
I wish there was more online showing this in a simple form.
This is a technically true but extremely disingenuous and misleading argument, which is probably why I hear talking heads on Fox use it all the time.
Imagine the world consisted of a flat income tax, one multi-trillionaire and 8 billion people living on a dollar a day. That person would probably be paying the vast majority of income taxes, yet this is clearly not an equitable system and it would be absurd to suggest that person is somehow being wronged.
Note also that if the incomes of top earners increase while everyone else's remains stagnant (which is what has been happening since the 1970's), then mathematically the share of total income tax paid by them must increase. Again, it is ridiculous to claim that this is evidence that they are being treated unfairly. Not increasing the top marginal tax rate in this case would be a regressive tax pretty much by definition.
There are many different forms of taxes. Income is the one we tend to look at. There are other methods to pay taxes. Most income taxes is paid by the wealthy but I'm not sure about the super wealthy. They end up with other forms of taxes such as what Zuckerberg was reported as paying several years ago (billions in more than one year).
There's a difference between looking at the overall tax picture and a small segment of it. In many cases the details of the high level and breakdowns are not easily available for people to read.
nvidea grows greedy and hires shady accountants to commit tax fraud, enabling nvidea to keep more after-tax money.
next year, nvidea has more money to dump into R&D -- they build a better product, and charge more for it. market responds, nvidea grows richer, ATM suffers losses.
nvidea keeps stealing money. has more for R&D, and more for marketing. nvidea buying sponsored reviews. keep building reliable products. more money for support staff.
ATM operating with a smaller budget every year. still improving, but not growing.
nvidea has even more money for R&D. more money for aggressive marketing. more money for sponsoring studios. "our art was built with nvidea products, and is best enjoyed using nvidea products".
the practice of stealing money to further growth to eclipse the competition by any means is hella old.
By the same logic, does developing a more efficient manufacturing process (eg assembly line) count as "anti-competitive"?
Edit: I thought it was common knowledge innocent parties settle lawsuits routinely. Is that not the case in Europe?
But then again, maybe you're right and Google would have paid their lawyers more than $1B fighting this, so it was cheaper for them to settle.
I think one of us might be pretty naive...
You can go and kill your competition and that would also be competitive - but we don't really want that kind of behaviour so we have rules against this. When you're breaking and undermining those rules you are being anti-competitive - you are subverting market competition.
Part of the governments job is to ensure that they react to potential loopholes faster, decreasing the competitive advantage that a non-conforming organization may have. A harsher punishment may even put some companies out of business, impacting unemployment rates, supply chains, medium-long term government revenue and the services they provide.
How would you go about increasing the punishment while considering the possibility that the corporation inadvertently did that? Would you punish larger companies more harshly? How would that impact the market place?
You increase the punishment because they inadvertently did it. Then maybe you'll get an incentive structure that prevents it next time.
Never thought about it that way, thanks for the insight!
Governments are charging for providing an environment in which you can have a business in the first place.
Good luck running a business in a place without police, laws, basic infrastructure like roads etc.
And if you don't want to pay taxes in some place, you're free to not do business there.
Doesn't fit the definition of theft very well now, does it?
Looking far into the future, in a post-scarcity civilization taxes are obviously unnecessary. So, while not a theft, it's not insane to wish for taxes to be gone in one's country.
Which is only possible because they either have lucrative (taxed) tourism industries, are rich in oil, or are Monaco (sorry but you're not getting in), Nauru (enjoy your stay while you can), Somalia (need I say more), or the Sahwari Republic (good luck).
So you either have places where governments are lucky to have found some other way to make money, or dysfunctional countries.
At the end of the day governments need to get currency somehow to provide the basics.
You can have a government without taxation. Fund it through voluntary contributions. It would be much smaller, which is another plus.
Yes. Move yourself out of the country somewhere else (and in the case of the US give up your citizenship). My go to recommendation here is Somalia for the "taxation is theft" crowd
At some point, it's just easier to get taxes and let the authorities to determine where that money should be distributed to best serve the society that elected them. And if you don't like the way they redistribute that wealth then you're free to vote for someone else or get yourself elected to do things differently.
Basically the Internet.
Or the banking systems and laws that make it possible for you to receive money via the internet in the first place.
If some customer in country X doesn't pay you for your services, you fully expect the government of that country to have systems in place that allow you to go after what you're owed.
But even darknet drug markets rely on a lot of infrastructure provided by countries/governments at the end of the day.
https://en.wikipedia.org/wiki/DARPA#Past_or_transitioned_pro... -> https://en.wikipedia.org/wiki/ARPANET
https://en.wikipedia.org/wiki/CERN -> https://en.wikipedia.org/wiki/World_Wide_Web
The internet was built with public money and only extended with private money.
I'm not a finance expert, but why can't there be just one tax for everything like VAT? If I buy a coffee for 1 euro I pay 20 cents VAT, if a billionaire buys a yacht for 100 mil he pays 20 mil VAT. To me that seems fair. I'm just thinking out loud here, but it seems that there are so many taxes and different stages instead of one, just so most of people wouldn't realize of how much tax they are actually paying.
Hey I didn't say that taxation was perfect :) it clearly isn't, especially nowdays when it seems that middle income class needs to carry burden of whole the country while top earners laugh all the way to their panama bank.
"We need fire departments and they would cost 30% more if only 70% of people carried fire insurance" is fine until you spend 50,000% of that amount on War in Iraq and buying votes of retirees / drug companies with unsustainably large benefits increases.
In the end you end up in the same place for the services that are actually worth having (like fire departments), because they're worth having so the majority of people buy into them and you still get economies of scale, but you get the option to decline other wasteful services that cost more than they're worth. And that puts useful pressure on individual services to be worth more than they cost.
The poor don't get out of paying it by having nominally low personal tax rates, because all the other taxes still apply to everyone. When you tax a business and it raises prices or can't give employees higher wages, that comes out of the pockets of the poor the same as everyone else, which is what makes them so poor to begin with. Remove $500 in spending of which $250 were real services, then pay $250 for the real services yourself, and the result is a $250 surplus -- which can go to the poor as much as anyone. They are, after all, the largest beneficiaries of lower unemployment (resulting in more jobs with better wages) and lower prices (because they spend more of their income).
The difference was very noticeable.
In the high taxed state, when I woke up at 7am after a heavy snowfall (read 6-10" of snow) my roads were plowed curb to curb. School buses were always running on time, the roads were clear and you were expected to be in the office.
In the low tax states, when I woke up at 7am after a heavy snowfall (read 6-10" of snow) the roads weren't plowed until late afternoon. Schools were routinely closed and you had no option but to work from home. The streets were hard to navigate since the plows just plowed around the parked cars, turning a two way street into a one way street. It was common to see cars plowed in for the Winter because the snow was plowed up over their windows. The city I lived in routinely ran out of money to pay the plow drivers so at times, the streets didn't get plowed at all later in the Winter months.
A lot of times, people reject the benefits of taxes and just see it as a money grab by the local and state governments. Once you experience the difference first hand, you can't have an appreciation of the amount of good taxes provide your local and state governments. I don't mind paying higher taxes because I know it does benefit everybody in a myriad of ways, not just the pleasant experience of having your streets plowed in a timely manner.
Just curious, if you don't mind sharing, which state is that?
Edit: Come to think of it, using the government's services without paying tax is theft.
Companies can't even have a decent financial system without government.
Not to mention that society can't function without systems to organise on a large scale. We've long passed the era of small settlements, when millions of people come together they need to be supported in many ways otherwise chaos ensues.
Why don't we just jail executives responsible if they consistently fail to abide by the law?
(1) We do jail executives, all the time.
(2) The reason maybe you think we don’t jail enough executives is because it’s hard to prove they did anything wrong. The criminal standard for proof is very high: beyond a reasonable doubt. When it comes to “blue collar” crimes, that’s pretty easy to meet. You wouldn’t believe the amount of evidence that exists in a typical drug crime! The defendant tried to sell drugs to an undercover cop; they found more drugs and an illegal firearm in the car; they searched his phones and got extensive evidence of drug transactions. (That is also why so many such crimes result in guilty pleas.)
But here the government didn’t win a case. It settled. You settle because there is risk you won’t win at trial. If you have to get accounting experts on the stand to argue about whether the thing that happened is illegal or not, good luck proving that beyond a reasonable doubt. (I don’t know what the standard is in France I don’t expect it’s much different.) Additionally, this is a tax case. It’s a “you put this number under section 3.3(b) instead of 3.3(c).” To secure a criminal conviction in a tax case, you need to prove beyond a reasonable doubt that the defendant’s interpretation of the law was not different from the government’s but that no reasonable person would have interpreted it the way the defendant did. Tax positions are carefully vetted and at a large organization like Google you’ll never take a tax position that isn’t at least plausible.
Stepping back, the problem is that you’re taking the government’s position at face value. At least in the US, the government prosecutes many cases that are, at best, based on aggressive or creative interpretations of the law. Of course the government says “Google defrauded the tax office.” Of course they have to say that. But dig into some high-profile white collar prosecutions. In the US they’re generally a matter of public record. They often are far from clear cut.
Also, the vast majority of "executives" never see the inside of a cell, even pre-trial. They might be in a holding pen for a few hours, but they always make bail and if the judge/prosecution is particularly concerned, the suspect gets additional conditions such as some kind of monitoring/curfew. A great example is Paul Manafort.
From https://www.spectator.co.uk/2014/04/why-did-we-ever-spell-ja..., "The Guardian long persisted with gaol too but changed to jail in the 1980s, like the other English papers."
In Australia there's a move away from prison/jail/gaol and towards 'corrective/correctional/detention facility / centre' presumably to make the places sound more aligned with their political or social intent.
However each of the Australian state's active legislation still refers to them as gaols.
You're right about the high standard of proof required for tax cases, and the difficulties of prosecuting complex white collar frauds, but I'm not sure that we have to set the mens rea bat as high as we do. Plenty of other crimes can be prosecuted on "known or ought to have known" rather than having to prove intent.
Second: Cases like this often arise from different interpretation of laws that are all at least plausible. Companies may tend to be somewhat too optimistic in their interpretations, but it's rare, at least at that size, that they actively try to commit tax fraud.
Third: It is the company that profits from the offense, so it's only fitting to apply any sanctions to it.
Fourth: Making this criminal law would raise the required standards of evidence to a level where few of these cases could ever be prosecuted.
This line of thinking becomes a shield for executives, letting them push subordinates into corners where they'll have very strong incentives to do illegal things. And they will benefit from these illegal actions, while being responsible of nothing as they won't know enough on any subject.
This feels like a moral hazard paradise to me.
That's besides the point. If you want to operate in a certain country, you need to - as a business - familiarize yourself with their laws.
The CEO is ultimately responsible for ensuring the company abides the law. If the CEO doesn't know enough about French taxation, that's not an excuse not to follow the rules: the CEO should then delegate the task to someone they trust, but ultimately it's their responsibility.
That's usually the case for most crimes, which is why we have detectives investigate them.
How do you find a murderer in a large city? You Investigate!
Same goes for corporate crimes. Investigate!
Granted, this is going to require significant changes politically in many countries, but among the general public across the spectrum, the hope that the wealth held by large corporations will trickle down to them through market mechanisms has long since worn quite thin.
> The settlement comprises a fine of 500 million euros and additional taxes of 465 million euros
500M EUR -> $550M. The distinction between fines and taxes presumably matters for accounting?
so what :)
To be clear I think France has every right to do this and Google can decide to close up shop there if they want, nobody is forcing Google to operate in an unfriendly environment.
Hopefully this kind of fine will void the tax shenanigans Google uses to offshore their profits to Ireland as well as its reduced tax rate there.
Make money in France, pay taxes there. Doesn’t seem like to much to ask.
Maybe EU companies don't dodge taxes as much as US companies? Maybe there is a larger concentration of wealth in US corporate entities? Lots of sane reasons, no need to rush to wild conspiracy theories...
>To be clear I think France has every right to do this and Google can decide to close up shop there if they want, nobody is forcing Google to operate in an unfriendly environment.
Well, nobody is forcing Google to dodge taxes either...