Google's effective tax rate: 2.4% | Hacker News Reader

Google's effective tax rate: 2.4%

bloomberg.com

12 pointsspking21 comments

“Who is it that paid for the underlying concept on which they built these billions of dollars of revenues?” Briloff said. “It was paid for by the United States citizenry.”

"The U.S. National Science Foundation funded the mid-1990s research at Stanford University that helped lead to Google’s creation. Taxpayers also paid for a scholarship for the company’s cofounder, Sergey Brin, while he worked on that research."

Wait, wait. Just because I took a scholarship from you means that you own everything I do? So does that mean if I sponsored some kid with a scholarship and he became successful, he owes me? If we were to use that same faulty logic, doesn't that mean all of the advances in technology are paid for by taxpayer money that go into public education? I was under the impression that scholarships are for advancing technology or helping those in need, rather than using it as an excuse to take credit for my ideas.

Google's generally done well at not being evil. This, however, is being evil. I don't care if everyone does it. By skimping on paying their taxes, Google and other corporations the world over are forcing people to cut education budgets, cut road and infrastructure maintenance budgets and raise rates for individuals who have infinitely less money than Google.

High taxes and the existence of bad laws is no excuse for exploiting the loop holes in those laws. The correct course of action is to pay the taxes, volunteer information on how to close the loop holes and lobby for lower taxes.

They're not "skimping on paying taxes", IMO. They're arranging their affairs in such a [legal] way as to maximize the return to their shareholders, which is the fiduciary duty of a public company.

The global competition in taxation is a good thing, IMO.

Am I exploiting a loop hole by deducting my mortgage interest? Am I exploiting a loop hole by deciding to hold an investment an extra day so as to get long-term capital gains treatment? Am I exploiting a loop hole by buying a computer or washing machine on "state sales tax holiday weekend"?

Maybe you'd argue that I am, but I believe that I'm just reacting rationally to the incentives offered. (There might be a valid government reason to encourage home ownership, long-term investing, or to spur local purchases in the economy. Must I ignore the incentives to act in a way that governments have decided to encourage? If not, why is it different for GOOG?)

"Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands." Judge Learned Hand, 1935

If people don't like it, close the loopholes.

And how would you recommend that the US tell Ireland to change its laws?

The difference between individual incentives and corporate loop holes is that the incentives were put there to encourage certain type of relatively beneficial behavior.

The loopholes were placed there often at the behest of the corporations they benefit. Corporations have far more ability to influence governments than individuals due simply because they have far more money. Money is power. More power, more responsibility. Google has pledged to be responsible. Taking advantage of the irresponsibility of its peers is not responsible.

How about corporate loop holes of the form "We'll give you a tax break [or low interest loan, or other incentive] for the next 10 years if you agree to locate some of your operations here, with the understanding that you'll be employing XX people here over the next 5 years"?

The jurisdiction offering that "loop hole" is encouraging what many people would agree is beneficial behavior (encouraging local employment). The jurisdictions standing to lose that (current or prospective) employer may see it as unwelcome competition, but I'd rather permit jurisdictions to compete freely, such that each local government can tailor its services and governance/taxation as it believes will best serve its consituent population.

Beyond simply believing that such a system is "proper" and "right", I don't think any other system is "stable". Should California be able to dictate that Nevada CANNOT pass a certain type of law or adopt a certain taxation structure? Should they be able to do the same to Ireland? If so, under what theory of law or even theory of basic fairness?

"Don't be evil", if it actually means anything, sets a limit more strict than the legal in terms of what activities are acceptable to perform in order to maximize shareholder value. If they didn't claim a higher standard you'd be right, but they do.

Please explain down vote. This is relevant and straightforward.

Right, we should all be so grateful to Google that they're paying any taxes at all. Thank you, Google, for the 2.4%! Thank you! In return, let's have all the corporate-friendly policies that the government funds be paid for by individual tax payers and smaller, non-international companies. What a great plan! Everyone else can hide behind "fiduciary responsibility" (possibly the smallest fig-leaf there ever was) and a quote from some random judge.

I disagree, if a company can legally avoid paying extremely high taxes then they have a duty to do so. It isn't their job to fix the system that governs them and Google contributes many useful things back to the community through their products. I'd rather they have the money then the governments of the countries they're in, I think they can do more with it.

It is all of our jobs to fix the system that governs us. As long as you live in a democracy, then you are the only ones who can. And the more power (money) you have, the more responsibility you have for that.

Does Google education the people of the world? Build the roads? (In many places) Maintain the health care systems? These are vital. Governments do this and much, much more.

By all of our jobs you mean individual people. Google is a company so yes, I'd agree the people that work for Google are individually responsible for managing and fixing their systems of government but "Google" itself is just a virtual entity.

While Google is not primarily an educator, I'd say Google offers a lot of educational content that, presumably, does educate people. As for roads and health care systems, well they haven't ventured there yet. ;)

Google has corporate personhood and the right of political speech that comes with it. One would hope that the right of political speech also came with a responsibility to improve the system. If there isn't any responsibility attached to political speech beyond increasing profits then I have some serious concerns about what the impact to individual people will be.

Google pays plenty in taxes... in the form of payroll taxes and employing thousands of people. Their "effective" tax rate is significantly higher than 2%+ quoted here. People forget that corporate income tax is the last resort of taxes after all the other shit-ton of money spent operating the business and paying and hiring employees (who themselves pay plenty in taxes) so to say their tax rate is this low is incredibly mis-leading.

It is not evil to setup legal structures that deal with tax minimization and tax efficiency. It's no different than Google starting Adwords as a perfect market to maximize their profits by using an auction-based system.

> High taxes and the existence of bad laws is no excuse for exploiting the loop holes in those laws.

This is not a loop hole. It's called Transfer Pricing. It's perfectly legitimate, and it's done as a matter of course. In fact, I work on software that crunches a lot of these numbers.

International tax rate

They are paying lower US taxes by licensing their search IP to their Irish office at below-market price, but the US is far less impacted than Ireland or other international markets the US serves.

It would surprise me more if Google wasn't doing everything within the law to reduce tax rate. I'd say very few people here would put there hand up to pay taxes they aren't required by law to.

I think that Google will make better use of these financial resources to help the people who live in the US than the US Federal Government will.

Sorry, I got way wrapped up in my point and forgot the facts that are actually driving the discussion.

Duped (related) post, or am I missing something? http://news.ycombinator.com/item?id=1815195

Edit: just pointing out a related post as people may have missed it.

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