Perhaps it makes me an evil fascist, but I really don't see the big deal in trying to avoid paying taxes, assuming you're doing so legally. Liberals tend to attach some sort of moral component to how much money you give the government, as in if you try to pay less than what they perceive to be your "fair share" (usually some unreasonably high number) then you must be evil.
As if governments have any sort of decent track record on spending intelligently.
I think it's the general sentiment that companies avoid things like paying taxes by skirting around the rules through means available to them due to their wealth and status. While a smaller company isn't going to have the resources at their disposal to gain such advantages.
I guess it's similar to how it people feel like celebrities and executives can always avoid going to jail for things that a regular person would almost definitely end up in jail for.
Or more succinctly, laws aren't perfect and corporations abuse those imperfections.
I agree it's the sentiment, but I'm not sure how many of those means are only available due to wealth, and how many could be used by many small companies if they knew about them. It's not like creating a company in a tax haven is particularly hard or expensive.
Some of the schemes are pretty complicated. Routing the goods and money and paperwork needs to be done carefully to ensure you're still legal.
Hiring KPMG, Deloitte, Earnst & Young, or PWC isn't cheap.
And we have a really weird system here. These big four firms sent some of their accountants to help the government create tax laws. They then exploited the loopholes in the tax laws they had created.
And we have a really weird system here. These big four firms sent some of their accountants to help the government create tax laws. They then exploited the loopholes in the tax laws they had created.
Said "weird" system actually aligns with their incentives perfectly. Create a system of laws that can be exploited, but only through the advisory services of accounting professionals like themselves. Complexity creates exploitation opportunities, which results in more monetary rewards for themselves.
It's not knowing about them, it's being able to defend them. A gray area loophole is much safer to exploit if you have a large legal team to back up your interpretation.
Are the rules really that static that once you know the trick it will last for years if not decades? Or do you have to pay a staff yearly to keep up with the small changes to stay a little ahead of the tax law to make sure you have all the `i`s doted and all the `t`'s crossed less pay overwhelming fines?
Sure, but by all means the people who write the tax code are more than welcome to close such loopholes, or even better, stop making them.
It's incredibly stupid to complain about a company legally reducing (saying they are avoiding is unfair since that implies illegal actions) their tax liability when you are the one of those responsible for making it possible.
I would say naive, rather than incredibly stupid. One might expect companies that pride themselves on ethics and corporate citizenship to go along with the spirit of the law rather than the letter.
But I agree it's the government's responsibility to fix this.
--edit-- Two more things. Firstly avoiding does not really imply illegal. Evasion tends to be the illegal one.
Secondly, where google are concerned, there does seem to be some doubt over which country various sales activities could actually be said to have happened in, so there may be grounds for an investigation and they may be found to have been in contravention of the law.
Avoidance and evasion are much the same thing. If one implies negativity in this matter then so does the other. Reduction versus evasion is better to me.
If Google broke the law, then sure, punish them for it. At that point one can say they evaded paying their "fair share" of taxes and did not act in good faith.
That's just the accepted legal term. By definition they both can be the same thing. When the law was written they could have just as easily as gone with tax avoidance as tax evasion.
But in the context of the discussion, avoiding taxes is being used in a negative way by implying that the companies are not paying taxes that they should be paying by whatever criteria society dreams up, such as "fair share". I simply object to this characterization since these companies are following the law until a tax court says otherwise.
Countries like Bermuda intentionally write their tax codes to be very attractive to large businesses who are concerned about taxes. If the countries who are missing out on their taxes had a way of preventing companies from doing all their business in Bermuda, they would... unless... large corporations had a strong influence on policy... hmm..
Because its something only rich companies can afford to do---so for the same reason people dislike the 1%, people dislike multibillion$ companies dodging tax responsibilities. The rich should not be exempt from the law.
This is kind of a funny statement. In most cases, the rich are still within the law; they've just figured out where to (legally) spend the right money to circumvent more annoying legislature.
I'm not commenting on ethics at all here, just that our legal system has these "features" built in for people with enough cash to use. The real WTF here is the structure of the tax system and the governmental bodies that try to oversee it.
>> Yes, but pvnick specifically said, "assuming you're doing so legally".
These two things are not incompatible. You could have a law that said "the rich are exempt from tax", for example. A lot of people feel that the system already works that way, even if it's not explicit right now, and ought to be changed.
No but your entire argument is weakened when you use loaded terms like "fascist" or "liberals".
Ultimately paying taxes IS a moral issue since at least some of the money will be used to pay for human services i.e. health, education. And so when companies deliberately avoid paying taxes it does in a small way equate to a reduction in the quality of life for at least some of the population.
When someone drives a car they're polluting, and therefore reducing the quality of life for at least some of the population. Does that mean driving cars is immoral?
Surely something more is needed to make it immoral.
> Surely something more is needed to make it immoral.
Depends what you mean by immoral.
A moral consequentialist might argue that negative externalities (like pollution) are inherently immoral - though that doesn't necessarily mean every activity with negative externalities is necessarily immoral, since its positive consequences might outweigh that.
Sure, but I'm not trying to define an absolute moral rule (I don't think the concept even makes sense), I'm arguing with threeseed on what s/he thinks is immoral.
Your "fair share" of tax is what is detailed in the tax code. It is not a number picked out at random to punish companies for doing well or something. Granted the tax code is unwieldy and complex, but the intent is pretty clearly spelt out. I speak from 3 years experience working and training fulltime in the UK towards accreditation as an accountant.
If you munchkin a string of infinite wishes don't act all surprised when your DM just says no (or if they're a particularly good DM, "yes, but").
If there was a law that said "icebraining gets an effective tax rate of 0%" and you paid no tax, it would be legal but not necessarily fair by a lot of folks definition.
I know this is an absurd example, but I just wanted to point out that "fair share" and "in line with the law" do not necessarily mean the same thing.
That's just because "fair share" is just an abstract concept that means next to nothing. If society wants to determine what "fair share" means they can do so through the tax laws. If a company follows the law then they are in effect paying their "fair share" as defined by society. When society thinks someone is not paying what they should then they have the means to resolve the matter. Whining about it is just grandstanding and accomplishes nothing.
>> If society wants to determine what "fair share" means they can do so through the tax laws.
Well yes, and it turns out that the societal expectation of 'fair share' and the side-effects of the current tax laws are out of whack here.
>>If a company follows the law then they are in effect paying their "fair share" as defined by society.
Well no, they're paying the legal minimum they can get away with under the tax code and international trade agreements as written, not necessarily paying what the society they operate within intended when the laws were drawn up. Paying your 'fair share' would mean playing by the intended rules and the spirit of the laws, not seeing what you can get away with.
>> Whining about it is just grandstanding and accomplishes nothing.
I agree, and the politicians ought to be doing something about this in order to make the current concept of 'fair share' and the implementation more in line. Particularly when it's clear that many actors in society are not really acting in good faith. However in the case of Google here there has been some suggestion that they may not have worked within the law in their sales practices, so an investigation may be needed.
It always strikes me that the societal expectation of 'fair share' tends to exclude booze cruises to France, or getting discounts from workmen in exchange for "cash in hand".
Even savings in an ISA and duty free shopping are technically tax avoidance.
Societal expectations have little bearing on a badly written law. Society can expect anything it wants, but if the laws don't reflect those expectations then society will forever be disappointed. I stipulate that current tax laws do not meet societal expectations and blaming the companies for it is misguided and wasteful. The blame should be aimed at the people who write the tax laws that do not meet societal expectations.
>> they're paying the legal minimum they can get away with under the tax code
Another way to look at that is they're paying the maximum they are required to pay under the tax code.
>> paying what the society they operate within intended when the laws were drawn up
If they are paying the legally required amount then they are indeed paying what is required. If the intention was for them to pay more then that indicates an issue with the tax law, not the practices of the company. If said company finds a way to reduce their tax liability within the law then they are doing nothing wrong. Your language implies they are doing something wrong; be it unethical or illegal. They are not, they are doing what is required by law. If people feel that's not enough then the tax laws need to be reviewed. It is not a company's responsibility to fund society more than what the law says it is required to do. You are implying that companies do have that responsibility based upon the whims of society despite the law.
>> Paying your 'fair share' would mean playing by the intended rules and the spirit of the laws, not seeing what you can get away with.
Again, you are implying they are doing something wrong. If they are breaking the law then that's one thing; if they follow the tax laws then they are not "seeing what they can get away with", they are paying what is required of them. If a tax law is written with a certain intention with an expected "spirit" but the tax law doesn't actually reflect that, then the fault is on the people who wrote the law not the one's who follow it.
>> politicians ought to be doing something about this ... it's clear that many actors in society are not really acting in good faith
You start out fine, but yet again, if the company is following the tax law so that they are not breaking the law, then they are acting in good faith. I fail to see how following the law, despite how complicated and stupid it is, is acting in bad faith.
The equivalent of the DM saying "yes, but" or "no" would be the government changing the law which both companies would more then likely comply with happily.
However if the loop holes exist they have a strong motivation to take advantage of them and not be at a competitive disadvantage to the companies that already take advantage of them.
Avoiding taxes is fine, but the extent that Google (and Amazon, and Starbucks) do it is unacceptable to the British public.
There's a possibility that it's not legal. These companies have huge budgets and staff, and they can hire very expensive accountants (who also have very many staff) and they come up with complex schemes. Some of these are legal, some are borderline. UK tax authorities don't have many staff so forensic investigations of complex probably legal gets less attention than the people who are evading tax.
The outrage isn't that these companies have avoided some tax. Everyone expects it, and they'd be doing it too if they could. The outrage is when Starbucks charges a couple of quid for a coffee and then claim that they make no profit in the UK.
You're right that in the UK there's a weird attitude around very rich companies. It's changing, slowly.
[1] avoiding = legal methods to reduce tax bill; evading = illegal methods to avoid paying tax.
The problem I have, is that common workers pay taxes, but these very profitable companies don't.
I hate taxes, I really do. You can offer free healthcare and education and proper infrastructure without the fucked up taxes some countries take. But it's the unfairness here. The richer you are, the easier it is for you to dodge taxes, while workers are forced to because they don't know all the cool tricks or can afford a lawyer.
Governments needs to be honest with their citizens and detail how the taxes on the corporation are merely embedded taxes that they, the people, are the true payers.
So all that is being done here is taxes collected by Google on behalf the government are not being paid to the government through one tax rule or another.
Do no evil, sorry but the people claiming they are doing evil in regards to taxes need to look in the mirror. The dishonesty in taxation starts at government, everyone else just has different abilities to play the game.
Are you claiming that multinational corporations automatically adjust their country local pricing based on the corporate tax rate in that country?
For a single-country corporation, I can see the argument. Why add a complex corporate tax -- instead make sure to tax only those that extract money from the corporation. The tricky part is ensuring this extraction is properly taxed (i.e. if you as a CEO get a $5 million dollar Ferrari as your corporate car, that is tax-equivalent of getting the money).
Things get awfully complex though when your $10 billion/year in profit corporation happens to have to pay $10 billion in intellectual property fees to the Virgin Islands holding company.
"The government" is not some alien entity; we're governed by the people for the people. We didn't vote to impose taxation for fun; we did so because we hold that society should provide certain things for the people. Avoiding making a fair contribution to the various common services for which tax is used - whether that be defence, social security, education or healthcare - is so obviously evil that I'm seriously struggling to understand your position here. Surely you're not claiming that morality is defined by law and anything legal must be moral (and vice versa)?
The track records of countries without government is not exactly stellar either.
Ability to legally exploit complex loopholes is concentrated among larger, richer entities. Hence you end up with a system that gives an advantage to those that are already large and powerful. Which then tends towards concentration of power and monopoly rather than a fair market.
Google's position seems to be that no matter how much of their business is conducted in the UK, as long as they send any money received through a tax haven, they are not liable for tax for their activities there. That is an absurd interpretation of the tax rules, and the logical endpoint of this thinking would be that no country in the world would receive any corporation tax save one, since all sales could be instantly sent through the lowest tax country, regardless of where they are actually processed, booked, or who they are sold to.
So the debate is whether what Google is doing is legal, or whether they are misrepresenting their position in saying that they don't conduct this business in the UK. Having watched the exchange, I'm inclined to say that Google are dissembling and trying to hide the truth about their activities in the UK in an attempt to pay no tax. Here is the head of Google's North European sales, based in Britain of course, claiming that Google's sales are dealt with in Ireland:
I do think the UK should clarify the tax laws to deal with this and make it clear that where a sale was booked and who deals with the clients is more important than which offshore shell corporation it was shuffled through. At present Google seem to be saying that doesn't matter.
Something similar happend over VAT evasion by Amazon recently, and they have been obliged to start paying VAT, so it's perfectly possible for them to do this and these interviews are part of a long investigation by HMRC. Shell companies are a serious problem for all tax regimes, and it's only going to get worse as globalisation spreads and moving companies becomes easier.
As to your comment on whether governments spend intelligently, there's no discount on taxes (and rightly so) depending on whether you agree with the current government or their spending decisions. Spending priorities is a debate which should be had separately from whether corporations should pay tax at all.
"As if governments have any sort of decent track record on spending intelligently."
Samsung and Hyundai would be prime examples of companies that would not exist if not for direct intelligent investment of significant government money. How else could South Korea compete with China and Japan "next door" if not for a focused effort such as what was done there? It would be quite difficult and I strongly doubt they would be anything like what they are today.
It's just regional perspective, I mean I'm quite happy with our taxation vs services provided (at both personal and corporate level). Free healthcare, 12 months maternity leave for my wife, subsidized daycare, clean water, decent EI just in case, etc, etc. Although it's Canada, so the weather sucks for most of the year.
Multinationals have no choice. Tax avoidance and jurisdictional arbitrage are standard competitive advantages since the 60's when capital controls were evaded by the banks and the 80's with the politically-backed corporate boom.
The problem will never be solved by private companies. It requires political leadership and global cooperation.
That $32 trillion in offshore tax havens ($12 trillion actively managed by international banks) will keep growing otherwise, as governments and society increasingly cannot pay for what they previously spent, let alone the future...
And it's particularly hilarious the UK complaining about it since they are one of the biggest enablers of tax avoidance in the world. Bermuda and the Isle of Man, for instance, make a complete mockery of British politicians who complain about offshoring.
(Speaking as someone who works in financial services in London).
Exactly. You don't see that mentioned very often in the papers, though...
If Google and Amazon are evil, then so are half the "British" banking and insurance companies. It's common practice to channel profits and off to countries like Bermuda to avoid both tax and regulation.
I disagree about having no choice---there is ALWAYS choice for a "Do No Evil" corporation. I do agree that it must be solved by international law, though, as it is kind of silly to expect a corporation to behave any better than how you force it to behave.
They (Google, Amazon, MS, Apple, and every other large multinational company) don't have a choice, their competitors are doing it and stockholders could possibly sue for not preforming standard tax avoidance methods.
A company losing billions just to make a questionable ethical point (which most people don't even care about) isn't really worth it.
The only way to prevent the "double-Irish" and such schemes is for the US government to step in and close the loophole. American taxpayers and business help fund these large companies and get them on their feet, then we allow the company to funnel all of their profits through other nations, that needs to be fixed.
Why doesn't congress step in? Are they being paid not to? Does nobody see a problem with public officials being paid by large corporations and organizations to vote for a law which might be against the best interest of the nation and the majority of it's citizens?
If I headed a big corporation, I would optimize taxes too and at the same time, wish that the laws wouldn't allow me to do that. Why should I be the only stupid one and give my competitors advantge?
I absolutely agree with Warren Buffet on this: he uses the legal loopholes while arguing against them. I think it's the most ethical position. At first, it may seem as hypocrisy, but in fact, it's absolutely understandable and logical.
>I absolutely agree with Warren Buffet on this: he uses the legal loopholes while arguing against them. I think it's the most ethical position. At first, it may seem as hypocrisy, but in fact, it's absolutely understandable and logical.
Unless Buffett is giving away that money for good causes then he is a hypocrite. Actions carry far more weight than words.
None of that means he is giving away as much as took in tax loopholes. I haven't read any official news story that Buffett is doing this. It's also quite possible he's doing so without publicly acknowledging it. However, I doubt it because he's rarely weary of giving a statement or interview even in his advanced age.
So fix the laws to prevent this type of tax avoidance, else all companies will use these tax avoidance schemes, like they are doing right now.
Which begs the question why these 'loopholes' exist in the first place, and why they aren't quickly plugged.
This was rhetorical question, the politicians keep these loopholes in the system at the behest of these massive corporations and rich individuals who bri... lobby them to do so, and then they put on these shows to make it seem as if they are actually trying to prevent it.
Yep. It all comes down to companies promising to donate tens or hundreds of thousands of dollars to public representatives the next year in exchange for votes which harms the United States. It's certainly corruption and almost treason, but congress has probably passed many laws preventing themselves from ever going to jail for bribery, treason, information leaking, insider trading, or any other crime which normal citizens would be prosecuted for.
When you fix the loopholes, you create other ones that are maybe harder to see and more expensive to achieve. So over time fixing loopholes makes the tax system more and more complicated, and hence more expensive to run. And loopholes will continue to be found, but perhaps only be reachable by richer and richer entities.
When the tax law has reached that point, it's time to gut it and start over with a simpler system with fewer or no exceptions based on strange criteria. Then you put in requirements that makes it incredibly difficult to add in exclusions, exceptions, deductions, and the like to the system.
But of course politicians won't do that. How else would they get on TV grandstanding about the evil corporations in our midst? Politicians use the tax loopholes the same as corporations do, just for different reasons.
So tell me UK government, how did you miss for SO long Jersey and Guernsey few km from your coasts? Oh and within EU, the Netherlands and the little trick about reselling trademarks that allows IKEA to be a fing non profit company and pay 0% tax ? Should I go on ? Luxembourg, Switzerland, Liechtenstein ?
If you allow it, deal with it and don't whine like this.
Worse than companies who avoid taxes are the people who see it as admirable that they can get away with it.
It's a problem that needs to be fixed in the culture and governance of a people, not in Google itself, since attempting to assign any civic duty to a multinational is probably laughable. Singling out Google probably doesn't do too much good, except maybe to make people think of "favorite company X"'s role in society.
Worst of all are the "all taxation is theft" Libertarians. Multinational corporations at least don't live in the society they espouse trashing. Ben Franklin also hated the "all taxation is theft" crowd, and believed that failure to pay taxes due is theft from the rest of society:
"The Remissness of our People in Paying Taxes is highly blameable; the Unwillingness to pay them is still more so. I see, in some Resolutions of Town Meetings, a Remonstrance against giving Congress a Power to take, as they call it, the People's Money out of their Pockets, tho' only to pay the Interest and Principal of Debts duly contracted. They seem to mistake the Point. Money, justly due from the People, is their Creditors' Money, and no longer the Money of the People, who, if they withold it, should be compell'd to pay by some Law.
"All Property, indeed, except the Savage's temporary Cabin, his Bow, his Matchcoat, and other little Acquisitions, absolutely necessary for his Subsistence, seems to me to be the Creature of public Convention. Hence the Public has the Right of Regulating Descents, and all other Conveyances of Property, and even of limiting the Quantity and the Uses of it. All the Property that is necessary to a Man, for the Conservation of the Individual and the Propagation of the Species, is his natural Right, which none can justly deprive him of: But all Property superfluous to such purposes is the Property of the Publick, who, by their Laws, have created it, and who may therefore by other Laws dispose of it, whenever the Welfare of the Publick shall demand such Disposition. He that does not like civil Society on these Terms, let him retire and live among Savages. He can have no right to the benefits of Society, who will not pay his Club towards the Support of it.
In today's society huge corporations have shareholders which demand and actually have the right to sue if a company does something which does not maximize profits.
I agree with you that it is morally wrong and the companies are severely hurting the countries and the citizens that helped get them started. It's congress who must step in to pass laws which close the loop holes which cost our government and it's citizens trillions.
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[ 4.7 ms ] story [ 126 ms ] threadAs if governments have any sort of decent track record on spending intelligently.
I guess it's similar to how it people feel like celebrities and executives can always avoid going to jail for things that a regular person would almost definitely end up in jail for.
Or more succinctly, laws aren't perfect and corporations abuse those imperfections.
Hiring KPMG, Deloitte, Earnst & Young, or PWC isn't cheap.
And we have a really weird system here. These big four firms sent some of their accountants to help the government create tax laws. They then exploited the loopholes in the tax laws they had created.
(http://www.guardian.co.uk/business/2013/apr/26/accountancy-f...)
EDIT: Here's some discussion of the PAC report that's more balanced: (http://www.ion.icaew.com/TaxFaculty/26745)
Said "weird" system actually aligns with their incentives perfectly. Create a system of laws that can be exploited, but only through the advisory services of accounting professionals like themselves. Complexity creates exploitation opportunities, which results in more monetary rewards for themselves.
Right, but the weird part is that the government is complicit in this. They have no such incentives.
However, Amazon have this unfair advantage as well as google. IIRC.
Or for small service companies to claim they do not do 'sales' in a country when their business is done there.
It is not just a business address.
It's incredibly stupid to complain about a company legally reducing (saying they are avoiding is unfair since that implies illegal actions) their tax liability when you are the one of those responsible for making it possible.
But I agree it's the government's responsibility to fix this.
--edit-- Two more things. Firstly avoiding does not really imply illegal. Evasion tends to be the illegal one.
Secondly, where google are concerned, there does seem to be some doubt over which country various sales activities could actually be said to have happened in, so there may be grounds for an investigation and they may be found to have been in contravention of the law.
If Google broke the law, then sure, punish them for it. At that point one can say they evaded paying their "fair share" of taxes and did not act in good faith.
But in the context of the discussion, avoiding taxes is being used in a negative way by implying that the companies are not paying taxes that they should be paying by whatever criteria society dreams up, such as "fair share". I simply object to this characterization since these companies are following the law until a tax court says otherwise.
But that's an important point.
Traditionally "Tax evasion" was legal, and "tax avoidance" was normal, acceptable, and purely legal.
The weird accounting practices of some of these big firms are pushing a language change.
"Tax evasion" is clearly illegal.
"Tax planning" is clearly legal and acceptable.
"Tax avoidance" is using probably legal but weird methods to reduce (beyond any sensible amount) the tax burden of a company or very rich individual.
This is kind of a funny statement. In most cases, the rich are still within the law; they've just figured out where to (legally) spend the right money to circumvent more annoying legislature.
I'm not commenting on ethics at all here, just that our legal system has these "features" built in for people with enough cash to use. The real WTF here is the structure of the tax system and the governmental bodies that try to oversee it.
Yes, but pvnick specifically said, "assuming you're doing so legally".
>> Yes, but pvnick specifically said, "assuming you're doing so legally".
These two things are not incompatible. You could have a law that said "the rich are exempt from tax", for example. A lot of people feel that the system already works that way, even if it's not explicit right now, and ought to be changed.
Ultimately paying taxes IS a moral issue since at least some of the money will be used to pay for human services i.e. health, education. And so when companies deliberately avoid paying taxes it does in a small way equate to a reduction in the quality of life for at least some of the population.
Surely something more is needed to make it immoral.
Yes.
Depends what you mean by immoral.
A moral consequentialist might argue that negative externalities (like pollution) are inherently immoral - though that doesn't necessarily mean every activity with negative externalities is necessarily immoral, since its positive consequences might outweigh that.
If you munchkin a string of infinite wishes don't act all surprised when your DM just says no (or if they're a particularly good DM, "yes, but").
If there was a law that said "icebraining gets an effective tax rate of 0%" and you paid no tax, it would be legal but not necessarily fair by a lot of folks definition.
I know this is an absurd example, but I just wanted to point out that "fair share" and "in line with the law" do not necessarily mean the same thing.
Well yes, and it turns out that the societal expectation of 'fair share' and the side-effects of the current tax laws are out of whack here.
>>If a company follows the law then they are in effect paying their "fair share" as defined by society.
Well no, they're paying the legal minimum they can get away with under the tax code and international trade agreements as written, not necessarily paying what the society they operate within intended when the laws were drawn up. Paying your 'fair share' would mean playing by the intended rules and the spirit of the laws, not seeing what you can get away with.
>> Whining about it is just grandstanding and accomplishes nothing.
I agree, and the politicians ought to be doing something about this in order to make the current concept of 'fair share' and the implementation more in line. Particularly when it's clear that many actors in society are not really acting in good faith. However in the case of Google here there has been some suggestion that they may not have worked within the law in their sales practices, so an investigation may be needed.
Even savings in an ISA and duty free shopping are technically tax avoidance.
Societal expectations have little bearing on a badly written law. Society can expect anything it wants, but if the laws don't reflect those expectations then society will forever be disappointed. I stipulate that current tax laws do not meet societal expectations and blaming the companies for it is misguided and wasteful. The blame should be aimed at the people who write the tax laws that do not meet societal expectations.
>> they're paying the legal minimum they can get away with under the tax code
Another way to look at that is they're paying the maximum they are required to pay under the tax code.
>> paying what the society they operate within intended when the laws were drawn up
If they are paying the legally required amount then they are indeed paying what is required. If the intention was for them to pay more then that indicates an issue with the tax law, not the practices of the company. If said company finds a way to reduce their tax liability within the law then they are doing nothing wrong. Your language implies they are doing something wrong; be it unethical or illegal. They are not, they are doing what is required by law. If people feel that's not enough then the tax laws need to be reviewed. It is not a company's responsibility to fund society more than what the law says it is required to do. You are implying that companies do have that responsibility based upon the whims of society despite the law.
>> Paying your 'fair share' would mean playing by the intended rules and the spirit of the laws, not seeing what you can get away with.
Again, you are implying they are doing something wrong. If they are breaking the law then that's one thing; if they follow the tax laws then they are not "seeing what they can get away with", they are paying what is required of them. If a tax law is written with a certain intention with an expected "spirit" but the tax law doesn't actually reflect that, then the fault is on the people who wrote the law not the one's who follow it.
>> politicians ought to be doing something about this ... it's clear that many actors in society are not really acting in good faith
You start out fine, but yet again, if the company is following the tax law so that they are not breaking the law, then they are acting in good faith. I fail to see how following the law, despite how complicated and stupid it is, is acting in bad faith.
It's clear that a company can do no evil in your eyes so long as they don't break the law. What a funny, black and white world you live in.
By playing all sorts of cross-border tricks, one gets the feeling that these companies are doing their best to avoid playing by the regular tax code.
However if the loop holes exist they have a strong motivation to take advantage of them and not be at a competitive disadvantage to the companies that already take advantage of them.
Avoiding taxes is fine, but the extent that Google (and Amazon, and Starbucks) do it is unacceptable to the British public.
There's a possibility that it's not legal. These companies have huge budgets and staff, and they can hire very expensive accountants (who also have very many staff) and they come up with complex schemes. Some of these are legal, some are borderline. UK tax authorities don't have many staff so forensic investigations of complex probably legal gets less attention than the people who are evading tax.
The outrage isn't that these companies have avoided some tax. Everyone expects it, and they'd be doing it too if they could. The outrage is when Starbucks charges a couple of quid for a coffee and then claim that they make no profit in the UK.
You're right that in the UK there's a weird attitude around very rich companies. It's changing, slowly.
[1] avoiding = legal methods to reduce tax bill; evading = illegal methods to avoid paying tax.
I hate taxes, I really do. You can offer free healthcare and education and proper infrastructure without the fucked up taxes some countries take. But it's the unfairness here. The richer you are, the easier it is for you to dodge taxes, while workers are forced to because they don't know all the cool tricks or can afford a lawyer.
So all that is being done here is taxes collected by Google on behalf the government are not being paid to the government through one tax rule or another.
Do no evil, sorry but the people claiming they are doing evil in regards to taxes need to look in the mirror. The dishonesty in taxation starts at government, everyone else just has different abilities to play the game.
For a single-country corporation, I can see the argument. Why add a complex corporate tax -- instead make sure to tax only those that extract money from the corporation. The tricky part is ensuring this extraction is properly taxed (i.e. if you as a CEO get a $5 million dollar Ferrari as your corporate car, that is tax-equivalent of getting the money).
Things get awfully complex though when your $10 billion/year in profit corporation happens to have to pay $10 billion in intellectual property fees to the Virgin Islands holding company.
The track records of countries without government is not exactly stellar either.
So the debate is whether what Google is doing is legal, or whether they are misrepresenting their position in saying that they don't conduct this business in the UK. Having watched the exchange, I'm inclined to say that Google are dissembling and trying to hide the truth about their activities in the UK in an attempt to pay no tax. Here is the head of Google's North European sales, based in Britain of course, claiming that Google's sales are dealt with in Ireland:
http://www.guardian.co.uk/technology/2013/may/16/google-told...
I do think the UK should clarify the tax laws to deal with this and make it clear that where a sale was booked and who deals with the clients is more important than which offshore shell corporation it was shuffled through. At present Google seem to be saying that doesn't matter.
Something similar happend over VAT evasion by Amazon recently, and they have been obliged to start paying VAT, so it's perfectly possible for them to do this and these interviews are part of a long investigation by HMRC. Shell companies are a serious problem for all tax regimes, and it's only going to get worse as globalisation spreads and moving companies becomes easier.
As to your comment on whether governments spend intelligently, there's no discount on taxes (and rightly so) depending on whether you agree with the current government or their spending decisions. Spending priorities is a debate which should be had separately from whether corporations should pay tax at all.
Samsung and Hyundai would be prime examples of companies that would not exist if not for direct intelligent investment of significant government money. How else could South Korea compete with China and Japan "next door" if not for a focused effort such as what was done there? It would be quite difficult and I strongly doubt they would be anything like what they are today.
It's just regional perspective, I mean I'm quite happy with our taxation vs services provided (at both personal and corporate level). Free healthcare, 12 months maternity leave for my wife, subsidized daycare, clean water, decent EI just in case, etc, etc. Although it's Canada, so the weather sucks for most of the year.
The problem will never be solved by private companies. It requires political leadership and global cooperation.
That $32 trillion in offshore tax havens ($12 trillion actively managed by international banks) will keep growing otherwise, as governments and society increasingly cannot pay for what they previously spent, let alone the future...
(Speaking as someone who works in financial services in London).
The UK has by far the largest network of control over tax haven jurisdictions, with the exception of the mighty Delaware.
If Google and Amazon are evil, then so are half the "British" banking and insurance companies. It's common practice to channel profits and off to countries like Bermuda to avoid both tax and regulation.
http://www.channel4.com/news/margaret-hodge-tax-affairs-stem...
A company losing billions just to make a questionable ethical point (which most people don't even care about) isn't really worth it.
The only way to prevent the "double-Irish" and such schemes is for the US government to step in and close the loophole. American taxpayers and business help fund these large companies and get them on their feet, then we allow the company to funnel all of their profits through other nations, that needs to be fixed.
Why doesn't congress step in? Are they being paid not to? Does nobody see a problem with public officials being paid by large corporations and organizations to vote for a law which might be against the best interest of the nation and the majority of it's citizens?
I absolutely agree with Warren Buffet on this: he uses the legal loopholes while arguing against them. I think it's the most ethical position. At first, it may seem as hypocrisy, but in fact, it's absolutely understandable and logical.
Unless Buffett is giving away that money for good causes then he is a hypocrite. Actions carry far more weight than words.
Which begs the question why these 'loopholes' exist in the first place, and why they aren't quickly plugged.
This was rhetorical question, the politicians keep these loopholes in the system at the behest of these massive corporations and rich individuals who bri... lobby them to do so, and then they put on these shows to make it seem as if they are actually trying to prevent it.
But of course politicians won't do that. How else would they get on TV grandstanding about the evil corporations in our midst? Politicians use the tax loopholes the same as corporations do, just for different reasons.
also showing parts of the discussion with Google, Amazon and Starbucks in Parliament.
If you allow it, deal with it and don't whine like this.
It's a problem that needs to be fixed in the culture and governance of a people, not in Google itself, since attempting to assign any civic duty to a multinational is probably laughable. Singling out Google probably doesn't do too much good, except maybe to make people think of "favorite company X"'s role in society.
Worst of all are the "all taxation is theft" Libertarians. Multinational corporations at least don't live in the society they espouse trashing. Ben Franklin also hated the "all taxation is theft" crowd, and believed that failure to pay taxes due is theft from the rest of society:
"The Remissness of our People in Paying Taxes is highly blameable; the Unwillingness to pay them is still more so. I see, in some Resolutions of Town Meetings, a Remonstrance against giving Congress a Power to take, as they call it, the People's Money out of their Pockets, tho' only to pay the Interest and Principal of Debts duly contracted. They seem to mistake the Point. Money, justly due from the People, is their Creditors' Money, and no longer the Money of the People, who, if they withold it, should be compell'd to pay by some Law.
"All Property, indeed, except the Savage's temporary Cabin, his Bow, his Matchcoat, and other little Acquisitions, absolutely necessary for his Subsistence, seems to me to be the Creature of public Convention. Hence the Public has the Right of Regulating Descents, and all other Conveyances of Property, and even of limiting the Quantity and the Uses of it. All the Property that is necessary to a Man, for the Conservation of the Individual and the Propagation of the Species, is his natural Right, which none can justly deprive him of: But all Property superfluous to such purposes is the Property of the Publick, who, by their Laws, have created it, and who may therefore by other Laws dispose of it, whenever the Welfare of the Publick shall demand such Disposition. He that does not like civil Society on these Terms, let him retire and live among Savages. He can have no right to the benefits of Society, who will not pay his Club towards the Support of it.
I agree with you that it is morally wrong and the companies are severely hurting the countries and the citizens that helped get them started. It's congress who must step in to pass laws which close the loop holes which cost our government and it's citizens trillions.
http://www.scribd.com/doc/113892078/Priti-Patel-Letter
http://www.telegraph.co.uk/finance/businesslatestnews/966839...