Representation without taxation: Tech giants and their loopy business of innovative tax avoidance

Summary:Google, Facebook, Apple, and Amazon use complex accounting methods to greatly reduce their tax bills, while greatly increasing spending on lobbying US and European governments.

Headlines ,such as this one from a Reuters story: "Google paid $55m in UK taxes on $5.5bn sales in 2012" anger many regular tax payers in the US, UK, France, and frankly, everywhere.  These companies use legal loopholes and international transactions to weave a complex web of tax avoidance.

Google Chairman Eric Schmidt flippantly told a UK radio audience earlier this year that their government should change the tax laws to get more taxes from Google, otherwise it will continue with its Irish, Dutch, and Bermuda based shell companies. 

Facebook uses the same arrangements to avoid taxes, and Apple, Amazon, too. They use every loophole available to limit their US taxes, such as keeping billions in profits in offshore accounts.

As they lower their tax payments, they are dramatically increasing how much they spend on lobbying:

Google Now Spends More on Lobbying Than Lockheed Martin - The Wire

Google spent $25 million lobbying Washington during the course of the FTC probe, and it worked - The Next Web

Bobbie Johnson has written a great overview of lobbying in Europe: 

…Google has one of the most complex European lobbying operations among Internet companies. It operates a significant team in Brussels, but also has staff in most other major European capitals — including Berlin, where it opened a new office housing seven lobbyists. Their job? To try and influence the German government over issues like privacy and copyright, where it is far stricter than most other nations.

…Amazon is one of a number of American technology companies that is lobbying Brussels in order to weaken restrictions on data collection. It is not listed in the joint transparency register. And yet it does have a Brussels presence to help try and secure itself a good deal across the single market.

What’s sweeter than representation without taxation?!Those were once revolutionary words when lined up in a different order. “No taxation without representation” ignited the first American Revolution and changed the world. 

Corporations that triple-up on lobbying, as they weasel out of taxes, is adding fuel to a lot of discontent and anger.  Pay taxes — not lobbyists.

Google, Facebook Continue To Flood Washington With Cash For Lobbying Efforts; Consumer Watchdog Calls Record Spending Cynical Bid To Buy Influence - MarketWatch

No one likes paying taxes but there is a grudging agreement that it’s a societal necessity. It's for a common good. Yet corporations hide behind a fiduciary duty to avoid paying for this common good, while at the same time seeking greater influence on government and legislation. They haven’t realized that, “taxation” and “representation” are inexorably linked in the revolutionary psyche of America. More of one without more of the other makes no sense.

Google, Facebook, Apple, Amazon, are massive consumer brands. Yet their unapologetic, loopholed tax strategies, risk extensive brand damage from being on the wrong side of two of peoples' big discontents: low corporate tax payments and rampant corporate lobbying. Free speech is worthless when it's un-taxed money that gets to be heard. 

“No representation without taxation” is a reasonable demand — it could help flush the lobbyists and result in a more equitable world. 

Topics: Tech Industry

About

In May 2004, Tom Foremski became the first journalist to leave a major newspaper, the Financial Times, to make a living as a full-time journalist blogger. He writes the popular news blog Silicon Valley Watcher--reporting on the business of Silicon Valley.Tom arrived in San Francisco in 1984, and has covered US technology markets for leadi... Full Bio

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