Google, Inc. wants to keep the money it earns. In 2011, the company shifted about $9.8 billion in revenues into a Bermuda shell company in order to avoid about $2 billion in worldwide taxes.
Google employs more than 53,000 people and annually pays $1.5 billion in taxes worldwide. Those employees spend money and pay taxes. An untold number of ancillary businesses — that also pay taxes and employ thousands more people who also pay taxes — exist because of Google.
But that is not good enough. Countries around the world are angry because they want more of Google’s money. An article in Bloomberg Businessweek states: “The increase in Google’s revenues routed to Bermuda, disclosed in a Nov. 21 filing by a subsidiary in the Netherlands, could fuel the outrage spreading across Europe and in the U.S. over corporate tax dodging. Governments in France, the U.K., Italy and Australia are probing Google’s tax avoidance as they seek to boost revenue during economic doldrums.”
The French tax authority raided Google’s Paris offices in June 2011 and removed computer files as part of its examination into Google’s “tax avoidance” practices. The agency proposed increasing Google’s income taxes by about $1.3 billion.
Google said it complies with all tax rules. The same article states: “‘We also employ over 2,000 people, help hundreds of thousands of businesses to grow online, and invest millions supporting new tech businesses in East London,’ the Mountain View, California-based company said in a statement.”
Google is not alone. Large corporations the world over pay armies of accountants and lawyers to find the best ways to keep the money they earn. So why are countries going after Google and not all the other companies? Google must have made someone very angry.
Many in the class envy crowd will be outraged to learn that Google used “loopholes” in order to keep $2 billion of its own money. They will say that Google should pay its “fair share.”
No one can explain what a “fair share” is, how it is determined or who has the moral authority to declare what it is. People just know there is one and that “the evil rich” should pay it.
Next spring, those same people will go to their tax preparer — if they pay taxes — and expect him or her to use all available “loopholes” in order to receive the largest refund possible. They don’t mind paying their “fair share” or even know what it is, but they believe it is as little as possible.
Right now, President Barack Obama and Weeper of the House John Boehner are negotiating your loopholes away. Your loopholes include charitable contribution credits, childcare credits, child credits, education expense credits and mortgage deductions. They are not discussing cutting out corporate or farm welfare or reducing the military budget or individual welfare reform or reducing the size of government — at least in any meaningful way. In fact, Obama is proposing more spending for his cronies and favored industries (including more failed “green” technologies) and higher taxes to pay for it.
Governments always want more money. Governments never cut spending. They are a gang of thieves. They will plunder until there is nothing left. We are nearing that time.