New Google Mantra: Pay Less Taxes
from the if-the-tax-bill-fits dept
theodp writes “Forbes reports that Google has joined the ranks of Microsoft, Dell, Intel and others who are reducing their tax rates dramatically by crediting profits to new Irish operations. Ireland offers a tax exemption on patent income and a rock-bottom corporate tax rate of 12.5%, compared to 35% in the US. Google’s expansion in Ireland “is not tax-related,” insisted a Google exec, although a recent Google SEC filing stated “our effective tax rate will decrease to approximately 30% in 2005 from 39% in 2004, primarily because we expect that our Irish subsidiary will recognize proportionately more of our earnings.” Heck, even Steve Ballmer finds it disingenuous to pretend it’s not about the taxes!” We covered Microsoft’s use of the Irish tax dodge last month. Still, is there anything really wrong with this? It’s natural arbitrage. In a global economy, business goes to the most business friendly regions.
Comments on “New Google Mantra: Pay Less Taxes”
No Subject Given
While I agree with your sentiments Mike, Mr. Bush preaches that it’s practically criminal for US companies to give what should be American jobs to any other country.
No Subject Given
” is there anything really wrong with this?”
Nothing wrong with the richest corporations in america dodging taxes as long as that same tax dodge is available to everyone else. Oh, but wait, only the super rich can take advantage of this, so um yeah, there is something wrong with this.
Or do you think every company can setup shop in ireland while doing business (mostly) in america?
corporate tax havens
“Still, is there anything really wrong with this?”
Let’s see — is there anything wrong with a company separating its assets from its operations so as to avoid paying taxes that help finance the state and federal services and resources that are vital to its employees and its corporate operations?
Yes, yes there is.
Re: corporate tax havens
This is just a new global business model. We simply need to adapt to the changes and offer a more business friendly climate.
No Subject Given
How is this any different from small businesses incorporating in states like Delaware rather than in the state that they operate in?
No Subject Given
If a corporation is sending money to the most friendly nations they have to be sure the money is fed back through their business. It may be cheaper in the short term, but is Ireland [business friendly nation] capable of giving back all the money they’ve given to them? At least if the taxes were paid in the US there is a better chance the money would stay in the “circle”.
ireland for taxes
probably depends on how they do it, if its european income being taxed in europe (albeit, in the cheapest place in europe, ala choosing the best state in the US), then I don’t see anything wrong with it.
Pseudo Patriots
Stop being pseudo patriots and listen to reason. Irelan seems to be doing just OK with the lower taxes so why should great US demand over 30% corporate taxes?
It’s just ability to choose your provider, it’s not illegal. If you ISP sucks and charges you a lot, you’ll move to another ISP. In a global economy, the country where you check your profits are just another choice to make.
US will have to compete with the rest of the world if it wants the business to check their income there. So sooner or later things will even out.
Speak english!
What kind of gibberish is “Pay Less Taxes”?
Do you mean “pay-less taxes”, or “pay less tax”, or “pay fewer taxes”?
Re: Speak english!
Well if you are going to point fingers about gibberish…
What is a “pay-less” tax — a tax you don’t pay? And “pay fewer taxes” is irrelevant — the number of separate assessments do not necessarilly lead to a higher total assessment; I think what you want to say is “pay a lower amount of total tax”.
The *real* problem is...
The Irish taxes are not too low. The US taxes are too high. If you are in business, you are going to choose the mode of business that minimizes expenses and maximizes profit. If you are in the internet domination business, then it makes sense to operate in a country that doesn’t have insane tax rates — especially if your business model allows you to move quickly, as Google’s does. The rest of Europe has been complaining for years about the “unfair” low rate of Irish taxes, but Ireland is more productive and more prosperous than the rest of Europe — and there is a definite causal relationship there.
race to the bottom
In a global economy, business goes to the most business friendly regions
While I agree with this statement, this does seem to imply a race to the bottom for any regulations dealing with business. is this what we want?
Re: race to the bottom
“race to the bottom”, you must be irish! or maybe it’s just a coincendence that this is the buzz phrase in Irish politics at the moment, especially regarding labour relations.
btw, i am irish and currently working very close to google HQ.
having researched our foreign direct investment policy before, the low taxes are a huge attraction to many american corporates. however, it would be naive to assume this is the only reason as there are other EU countries offering similarily low incentives. other selling points are that we have a reasonable standard of education, speak your language passably, work hard and irish culture is easy for yanks to get into to.
a good chunk of the american corporates need to be near the EU market for the simple reason of time difference and access to the people who speak the myriad of european languages. check out the jobs on http://www.google.ie/jobs/ for those languages!
now, i wonder if anyone could list the ways america makes use of it’s strategic power to benefit from globalisation in an unfair manner;)
no sour grapes but just pointing out that ireland is merely boxing clever while america is used to being the heavyweight champion of the world