Google Double Dutch

Sounds like a sex act, doesn't it? In a way, it is. Business Week has a HOWTO on not paying U.S. corporate taxes, courtesy of Google. shell game

Next time you hear about how we need to lower taxes to make America more competitive, think of this story. International tax law must be a lucrative career. Grand Puppeteer of global money flows, all to play nation states and their corresponding corporate tax codes against each other. The game is to not pay taxes anywhere.

To reduce its overseas tax bill, Google uses a complicated legal structure that has saved it $3.1 billion since 2007 and boosted last year's overall earnings by 26 percent. While many multinationals use similar structures, Google has managed to lower its overseas tax rate more than its peers in the technology sector. Its rate since 2007 has been 2.4 percent.

All perfectly legal, Business Week explains how Google profits end up in Bermuda, and shows how multinational corporations pit national tax codes against each other.

Google's profits travel to the island's white sands via a convoluted route known to tax lawyers as the "Double Irish" and the "Dutch Sandwich." In Google's case, it generally works like this: When a company in Europe, the Middle East, or Africa purchases a search ad through Google, it sends the money to Google Ireland. The Irish government taxes corporate profits at 12.5 percent, but Google mostly escapes that tax because its earnings don't stay in the Dublin office, which reported a pretax profit of less than 1 percent of revenues in 2008.

Irish law makes it difficult for Google to send the money directly to Bermuda without incurring a large tax hit, so the payment makes a brief detour through the Netherlands, since Ireland doesn't tax certain payments to companies in other European Union states. Once the money is in the Netherlands, Google can take advantage of generous Dutch tax laws. Its subsidiary there, Google Netherlands Holdings, is just a shell (it has no employees) and passes on about 99.8 percent of what it collects to Bermuda.

Any business or small business playing by the rules in the United States has a distinct disadvantage by this global shell game on corporate profits.

One-third of corporate profits goes to tax havens. Below is a great interview on corporate tax havens and it's connection to derivatives, which explains why you cannot get legislation to stop this through our corporate controlled Congress.

 

 

Click here to read the rest of the article.

Below is Jack Blum, of the Tax Justice Network, explaining transfer pricing, which is the mechanism by which the uber-rich and multinational corporations avoid paying taxes. Did you know every copyright for every movie was moved offshore? I bet you didn't. Remember, the more boring and more complex a topic is, odds are that's where the ripoff is hidden.

 

 

I propose a new phrase, Too Big To Pay. In addition to Too Big To Fail, we need policies, an international system, to stop multinational corporations from playing nation-states against each other. The only ones winning here are multinational corporations, not countries and governments. People? A foregone conclusion they are getting the shaft.

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Comments

should I create a facebook page, do a "like" button?

I don't use facebook but it's seemingly everywhere. Do you think it would be useful add those "like" and "recommend" facebook links and so on? I will if you're telling me there is a whole world on there concerned about real economy policy versus this "corporate directed diversion" battle going on this election and on TV.

Don't forget our "buttons", namely the arrows on the upper left corner to promote a post to the front page. ;)

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The Economic Populist is on FaceBook

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The thing already freaked me out on privacy.

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