How Google shifts profits to Bermuda to shrink taxes by billion$
Summary: Google's worldwide operations pay billions of dollars in IP licence fees to its tiny Bermuda subsidiary. The result is it pays the lowest corporate taxes of any US tech company.
There's a fascinating article by Lisa O'Carroll in the UK Guardian newspaper about corporate taxes and how Google [GOOG] uses Bermuda and Dublin, Ireland to shelter taxes.
Here's how it works:
- Google's HQ is in Dublin, which has the lowest corporate tax rate of 12.5%.
- Google, however, wants an ever lower rate so it charges its European business a massive administrative fee by its Bermuda subsidiary.
And that's how a profit of 5.5 billion Euros turns into just 45 million Euros that is taxable in Dublin.
Lisa O'Carroll explains:
The 2009 Google Ireland Limited accounts show the company turned over a phenomenal €7.9bn in Europe for the year ending 2009 – up from €6.7bn the previous year.
The internet giant made a gross profit of €5.5bn, with an operating profit of €45m after "administrative expenses" of €5.467bn were stripped out.
Administrative expenses largely refer to royalties (or a licence fee) Google pays its Bermuda HQ for the right to operate.
This results in Google paying just 2.4% corporate tax — the lowest of the top five US tech companies according to Bloomberg.
This begs the question of why do countries, cities and states try to attract tech companies such as Google when they don't want to support the local community tax base?
Twitter, for example is trying to get out of paying San Francisco payroll taxes.
Yet the Obama administration believes that innovation from companies like Google and Twitter will help build jobs and provide the wealth to eliminate US deficits. Other governments have similar hopes.
That's a highly optimistic view and one that's not supported by the actions of those companies who seek the best deals they can get, and use every loophole to get out of paying a share of their profits to the communities where they live and work.
Social corporate responsibility is an oxymoron. It is investor responsibility that is the highest goal of corporate management.
It's the fiduciary responsibility of executives to maximize shareholder profits — so why do executives at Google, Twitter, etc, talk about social responsibility when their actions show the opposite?
They should Google "hypocrites" because they seem to lack any understanding of their actions and shut up about "corporate social responsibility." It's embarrassing.
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Talkback
Right...
http://www.nytimes.com/2011/03/25/business/economy/25tax.html?_r=1&ref=business
RE: How Google shifts profits to Bermuda to shrink taxes by billion$
RE: How Google shifts profits to Bermuda to shrink taxes by billion$
RE: How Google shifts profits to Bermuda to shrink taxes by billion$
They help create public sector jobs, and they help fund massive government-backed infrastructure projects that creates private sector jobs.
Most importantly though, companies paying the corporation tax they should be paying means government can collect less tax off me.
CORP tax should be ZERO
There should be a single
RE: How Google shifts profits to Bermuda to shrink taxes by billion$
Consider the opposite: no taxes, but you pay for everything out of your own pocket. The richer you are, the more of your own money you must expend to keep what you have. Feudal lords understood this concept quite well. Few of them were ultimately successful in protecting their assets (and their lives) from the masses.
@noagenda
@uralbas
Actually, frgough@..., it's about 19-20% on defense
It comes out of the 30% of what is known as "discretionary spending". Defense spending is about 4.7% of GDP.
It's actually down from when Regan was in office, at which point it was something like 25%
RE: How Google shifts profits to Bermuda to shrink taxes by billion$
Still, they'd rather dole out more corporate welfare, bailouts, especially to companies THAT offshore jobs in the first place.
And yet only the working class is pointed as being the lazy greedy leeches. Bizarre.
Close the Tax Loopholes; Create More Jobs
Let's bring it closer to home: Do you support our troops? Do you want to them to be adequately protected and paid for their sacrifices --- or to return home to services that will help them acclimate to life in a society that is largely oblivious to the horrors they have endured? If so, don't support multinational-size corporate loopholes.
If that doesn't move you, look at the headlines. The US is about to DEFAULT. If we keep handing out tax breaks like candy because the bully-pundits and their lobbying-firm backers "claim" it will stimulate jobs, we are just kidding ourselves. Did TARP stimulate jobs? In reality, haven't we accumulated more tax loopholes than at any point in US history --- and did it prevent us from going into an economic crisis?
Apparently, the dogma that fewer taxes = more jobs isn't so cut and dried.
Make no mistake: I want taxes off the middle class, small and medium businesses. When we're talking about economies of scale, however --- mega corporations that have international reach --- it's more akin to talking about nations because their revenues rival entire nations.
Closing tax loopholes and addressing the perpetually ignored topic of TRADE DEFICITS might just save us from having our US dollar die out as world reserve currency (which would plunge us into Third World poverty). As long as our T-bills are going down in value --- which foreign nations such as China are heavily invested in --- our digital currency is increasingly debased and our jobs and tax revenues are continually offshored, we will bleed Red Ink. Red Ink --- even if it is governmental Red Ink --- is not good for business, any kind of business. Companies both large and small do not hire and expand in a volatile and highly uncertain economic climate --- a climate they themselves have contributed to by continually finding ways to evade taxes in the countries in which they do business (again, we're talking about Big Business, not the local sort)!
The tax issue has always been a wild card. It's nothing new and certainly not the latest or greatest culprit. Going broke at the federal and state level, on the other hand, could be the death knell.
The states and US government must remain solvent any which, way or how they can. And we voters should be smart enough to care that they do. If not, there will be even fewer jobs and more inflation of food/energy in the months and years to come. In this culmination of a globalized economy we are too dependent upon everyone else and they in turn on us. We've created this fiscally codependent world, and now we have to deal with the consequences of this decades-long romance with globalization (in the absence of equitable free trade agreements).
I hope more people begin to wake up to the reality that each and every one of us, whether we have a "government job" or not are mutually dependent on both private industry and government for better or for worse. There wouldn't be a USA without some degree of cooperation between the private and the public interest. And by that I don't mean fraud, I mean fair play.
If a pundit convinces you to cry for a multinational you've got bigger problems to worry about.
Warren Buffet is on record stating his secretary pays more taxes than he does:
<a href="http://www.timesonline.co.uk/tol/money/tax/article1996735.ece" target="_blank" rel="nofollow">http://www.timesonline.co.uk/tol/money/tax/article1996735.ece</a>
A Swiss banker who "told all" to WikiLeaks has been shut up swiftly to prevent us from understanding the shell game that is international commerce:
<a href="http://www.businessweek.com/ap/financialnews/D9KLHDFO0.htm" target="_blank" rel="nofollow">http://www.businessweek.com/ap/financialnews/D9KLHDFO0.htm</a>
And in the 2007 documentary film "IOUSA", former Comptroller General David Walker warns that ultimately we will not be able to afford to pay our troops:
<a href="http://www.iousathemovie.com/" target="_blank" rel="nofollow">http://www.iousathemovie.com/</a>
And in one final point, a US Accountability Office study in 2008 found that a whopping 2/3 of US corporations pay no federal income taxes whatsoever and 72% of foreign corporations pay nothing to us, either:
<a href="http://www.reuters.com/article/2008/08/12/us-usa-taxes-corporations-idUSN1249465620080812" target="_blank" rel="nofollow">http://www.reuters.com/article/2008/08/12/us-usa-taxes-corporations-idUSN1249465620080812</a>
Bottom line: Contrary to all the urban legends floating around, we're pretty generous to those who receive both our charity overseas and our tax breaks here at home. The people who are getting the shaft are we the voter and/or owner of a SMALL business. Big business is in another category. They hardly belong in a "victim class".
Yes.
RE: How Google shifts profits to Bermuda to shrink taxes by billion$
RE: How Google shifts profits to Bermuda to shrink taxes by billion$
Welcome to the new
RE: How Google shifts profits to Bermuda to shrink taxes by billion$
RE: How Google shifts profits to Bermuda to shrink taxes by billion$
RE: How Google shifts profits to Bermuda to shrink taxes by billion$
RE: How Google shifts profits to Bermuda to shrink taxes by billion$