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Eric Schmidt on Google's Tax Avoidance Scheme: "It’s called capitalism"

And just what do you think you're gonna do about it?

It has been revealed that Google has been sheltering nearly $10bn of its revenues in Bermuda, which has allowed it to avoid some $2bn in worldwide income taxes since 2011.  Google payed just £6m in corporation tax in the UK after having generated approximate £2.5bn in UK sales last year.  In an interview in New York, Eric Schmidt unabashedly revealed that Google has no intention of paying more to the UK.

Schmidt believes that such schemes as sheltering revenues in tax havens are legitimate and that the company does pay its taxes “in the legally prescribed ways”.

“I am very proud of the structure that we set up. We did it based on the incentives that the governments offered us to operate,” he said.  “It’s called capitalism. We are proudly capitalistic. I’m not confused about this.”

In the UK, the Chancellor has stated that he's committed to “leading the international effort” to prevent international companies transferring profits away from major economies, including Britain, to tax havens."

“We will put more resources into ensuring multi-national companies pay their proper share of taxes,” he said. “With Germany and now France, we have asked the OECD to take this work forward and we will make it an important priority of our G8 Presidency next year.”

There's a lot of tension between multi-national companies and the countries in which those companies operate.  Those individual countries seem to feel that they're entitled to a larger share of corporate tax, while the companies don't necessarily recognize any individual country as having a right to a large chunk of paid corporate tax.

What do you all think?  Does Google seem to have a fair point?  After all, the system does legally allow for this sort of behavior...so who's to blame/should we even blame?

(this article has some pretty clear bias: Belfast Telegraph)

You can read specifically about Google funneling money into Bermuda here: Bloomberg

posted 1 year 4 months ago

UK battling tax havens??

Cayman Islands, British Virgin Islands, Bermuda, Jersey, Guernsey, Isle of Man... list goes on, of British owned territories which are currently tax havens...

If they weren't tax havens they'd be asking for independence... now that's what I call hypocrisy

 

 

posted 1 year 4 months ago

But... but... Google, you are my favorite company! Dont do this to me!

But what i seem to understand from this is that google should pay an equal amount of tax money relative to their earnings in all country's but they didnt. Something new....?

 

I mean i dont know the policy's and rules, but if google made all their revenue go through the bahama's, why would they have to pay the UK?

Or did they just made all the revenue through the UK and then seceretly muffled away the money to the bahamas?

posted 1 year 4 months ago

 I think google would do better things with the money than any individual goverment. The goverments are having all these economy problems that they can't seem to solve. Google is spending all their money on better things like reasearch and projects. These projects have a major impact on the world.

posted 1 year 4 months ago

 I agree-ish. They should pay, some, tax it is only fair. If small time companys have to pay their tax so should the big time companys. But I would love it if Google just came out and said "this is what we should have paid in tax, but we have developed this, and this and done this for society (profit free) with that money instead. All would be forgiven.  

posted 1 year 4 months ago

Sadly, I am not surprised.

There is no such thing as a good corporation. It is an oxymoronic statement. It is not like a small local business run by a friendly couple everyone knows. The very foundation of a corporation is to make profit, and everything else is secondary.

posted 1 year 4 months ago

 Valve is a good corp, Atleast as good as you'll find is there sector. They listen, There offers are sound, There policys aren't there to destroy you.

posted 1 year 4 months ago

 Simple rules of capitalism: If it is not explicitly forbidden according to tax law, ANY loophole will be used to pay less money. Thats just how capitalism works. If they want more taxes, they have to change the laws that allow google to transfer the money to the bahamas. 

posted 1 year 4 months ago

 I wonder if it would ever be possible to have a trade agreement between all of the countries that multinationals opperate, where there would be one tax pool that they would have to pay into. Then each country would be paid from that pool commensurate to the degree the company opperated, produced, or traded in each country.

Herding all of those cats would probably be impossible though.

posted 1 year 4 months ago

 that would have to be negotiated by the UN, and then everybody would just use Taiwan as a tax haven since its not a UN member and its policies have no effect on it

posted 1 year 4 months ago

This may mainly be one of 2 things.

1, google is altso partly scumbag like any other company or

2, google is pointing out to governments that corporations can legally do these things and get away with it.

 

Can be other things to but those are the most likely imo.

posted 1 year 4 months ago

 Maybe this is their plan to fuck everyone over... or at least to fuck apple over. Since they're showing they can do this shit legally the governments might start investigating these companies more right?

What if apple does this too, but more illegal? 

posted 1 year 4 months ago

 Google is just like: "Hey, we want to have profit. We can do more with more money. Instead of underpaying costumers, we'll just legally spit out those laws made by those stupid inefficient goverments."

Way to go Google, if they were really doing illegal stuff they wouldn't come out with it. They're just showing the goverments that their laws aren't good, and the save money while doing that. Google deserves this money more than some goverments around.

posted 1 year 4 months ago

 Corporations have no loyalty to any county what so ever. They have one agenda and one only: and that is to make money. Although not every company follows the rules there are rules in place just because of this fact. We don’t want companies to sell nuclear components to rogue countries because of the end results. Otherwise they would if it turned a profit and kept the shareholders happy. Corporations won’t be happy until we are all earning at most a dollar a day. This way they will be helping their friends the banks to gut our income with interest rates that the mob would have been embarrassed to charge just so we can afford food and shelter. As always it’s the golden rule. He who has the gold makes the rules.

posted 1 year 4 months ago

 I don't blame them at all, and I really don't care. I think being forced to pay tax is ridiculous, it's legal stealing. If everything that taxes pay for actually benifited me then fine, but they don't. If I want a service then I will pay for it, I don't want others to pay for it and I don't want to pay it for others. It's especially bad in the UK, 40% income tax, it's a joke. And then the government are suggesting tax rises. TAX RISES. It's already almost half, and they still want more. I don't want to be forced into funding the killing of "terrorists" in a forreign country or fund benifit cheats, so why should Google?

posted 1 year 4 months ago

Honestly as long as Google is putting the saved money to good use and continue to work toward innovating I'm not bothered by this at all. 

posted 1 year 4 months ago

 In the uk government, there are politicians that steal money. HSBC allowed drug money into their american bank. This is bad. Whn it comes to google. Even though i like them, i think they should pay a little more. But People doing their own taxes do the same thing. But they should pay their fair share of the taxes. But i can see why the government is worried. I forgot which company it was, but they produce a lot of copper, their tax problems are so bad, foreign companies take out money without paying them anything. 

posted 1 year 4 months ago

 I'd love to read/hear/watch that interview. If they didn't break any laws, it doesn't seem like much of a "scheme" to me. They know how to work the flawed system. Whatever their intentions, more power to them for owning up to their actions.

posted 1 year 4 months ago

 The joos don't pay taxes.

posted 1 year 4 months ago

 Best. Argument. Ever.

"Because Capitalism."

posted 1 year 4 months ago

 more power to google if they can do it legally. when's the last time the government of any country other than estonia or the czech republic ever efficient? 

posted 1 year 4 months ago

 hell who wants to pay taxes? if you can get by with not paying it or paying less all the power to ya.

posted 1 year 4 months ago

 exactly. i don't see what the issue is.

posted 1 year 4 months ago

 I find it strange when people become so enraged at companies doing things that benefit corportate profits.

Humans are selfish creatures. They do things out of self-intererst, even at a subconscience level.

Corportations are made of humans and their collective thought process.

Corportations, hence, are selfish creatures. 

 

Does this mean we ought to just stand idoly while X corportation does some Y malicous deed? No, yet we don't need to be so suprised if/when it does happen, nor should we favor one company over the other simply because of the name. Corportations will be replaced sooner, or later; generally because of a increasing chaos at a manageral level that causes the company, as a whole, to act more corrput. These actions then cause people to boycott such company. Why?

"Because capitalism."

posted 1 year 4 months ago

This is happening alot in the UK. 

The fact is that it happens because it can. 

If the UK government wish to put a stop to it they need to put it through parliament and create new tax laws. 

If someone offered me all of my income tax i would take it. 

Why???

Because I dont give a flying fuck about the welfare of the masses etc. I just want nice things for myself.

Why do we expect big corporations to be different to this???

posted 1 year 4 months ago

 I just see this as the countries wanting more money. And Google is thinking " Well, they can't and won't use this money well, so why waste it on them when we can do so much good things." And the countries are like " No, we want the money to give to our poor officials, because they need the money most. We need the money so we can reduce the taxes of rich people. Then when our funds are low, we'll increase taxes for poor people. We worked hard to have you do business here, so we deserve the money"

posted 1 year 4 months ago

The only people businesses owe money to is their shareholders. 

Having said that, it's the Governments (of whichever country) duty to ensure that every company creating profit in their country pay the required Tax.

Every major company in the world pays less taxes then they should, from Cisco to Apple to Google, and the reason is simple, because they can and because their shareholders do not benefit at all by them paying more taxes then necessary.

The tax loophole problem is a worldwide problem, thats why countries like Switzerland exist and are still financially stable. Their existence is sustained by companies and individuals putting money in their country, and in exchange for paying less taxes.

When I lived in the UK a fair share of celebrities used to put Switzerland as their country of residence in order to avoid paying high income tax rates (Lewis Hamilton is an example). 

I do agree with the fact that a company like Google would probably do a better job with the money saved then most governments. Which altogether is actually quite an alarming point to agree on.

posted 1 year 4 months ago

 There not the only one in the UK 

Starbucks is the main

Apple is also underinvestigation but with Google its down to tax with there stax were as Apple,Starbucks its tax on sales of Goods which carrys a bigger Bill

posted 1 year 4 months ago

Mad props to google for doing what every smart person/corporation does and then having the cajones to tell it like it is. Maybe if our governments (namely the UK/US/EU) weren't so fanatically redistributionist, there wouldn't be an incentive for corporations to funnel all of their money into offshore accounts. It's for the same reasons that millions of jobs are leaving our shores for foreign (often third-world) countries. The business climate here as it stands stifles domestic growth and investment. It's basic common sense. Why should a company bother putting such a large percentage of their money back into a system that will only waste it?

The only people who whine about it are the politicians and the handout crowds who aren't getting what they "deserve". Who would you trust with the $2 billion that google hasn't coughed up? A business or a government? For me, the answer is simple. Let people and corporations keep their money - unlike the government, there's a possibility that they may actually put it to good use.

posted 1 year 4 months ago

Be selfish and ask yourself a question. If I'm not a google shareholder which option benefits me more? Google paying taxes in some foreign country or the country I currently live in?

Weird - it almost seems altruistic towards google. I'm paying my taxes but you google don't worry, I'll cover the costs.

So are you really selfish and capitalist?

posted 1 year 4 months ago

 "which option benefits me more?"

 

Herein lies the problem. What in the world makes you think google (or any corporation) is responsible for your benefit? Should google really be responsible for funding a bloated welfare state? If so, where does the buck stop? Why not take more? Google doesn't (and shouldn't) give a damn about anything but their shareholders and making them as much money as possible within the confines of the legal system. And yes, that even means keeping their financial roots in a country that won't tax the ever-loving piss out of them. A business is by nature a selfish entity that seeks to maximize profits and minimize losses.

 

The root of the issue isn't that there's a problem with google when it comes to taxes; it's that there's a problem with our government(s) when it comes to taxes. The bottom line is that our tax system is, quite simply, insane, unsustainable, needlessly complex, and ineffective (in the US at least - I'm not an expert on European economics, but from what I have learned it's even worse over there). Anyone with an ounce of sense is going to see that it's both profitable and just plain good business to take the route that maximizes profits, even if that means taking money away (gasp!) from big brother. If the government was truly concerned, they'd work on fostering a climate where companies like google are free to grow, keep their own money, and by doing so invest domestically. Instead all the politicians seem to do is bitch and moan like a two year old who had his toy taken away.

 

And if you think the tax rates you pay are even remotely near the portion that a company like google has to fork over, you're quite mistaken.

 

If all that makes me a selfish capitalist, then aye, you have accurately pegged me as such good sir. Good day!

posted 1 year 4 months ago

 > Herein lies the problem. What in the world makes you think google (or any corporation) is responsible for your benefit? Should google really be responsible for funding a bloated welfare state?

We can easily reverse the argument. What makes you think that citizens of a state are responsible for the benefit of google? Whether or not taxes are just or necessary or provide any real benefits is beyond the point. We are creating a double standard - with the citizens at the bottom and corporations (like google here) at the top. Benefit was probably a wrong choice of word. We are subsidizing the shareholders.

posted 1 year 4 months ago

 an excellent point. absolutely no one is responsible for giving google any kind of money. people merely do so because google offers products and services that they want. there is no double standard here. with taxes, you are forced to, or at least obligated to relinquish your money unto the inefficient federal machine. with corporations, its merely choice. if you do not like it, do not buy it.