How Google reduces its tax bill by US$3.1Billion

[TarJak]

http://www.businessweek.com/technology/google-tax-cut/google-terminal.html

http://www.smh.com.au/technology/technology-news/googles-31-billion-tax-haven-loophole-20101022-16wf8.html

[Bilge_Rat]

Not surprising, every multinational from every country switches part of its profits to low tax or no tax jurisdictions.

Canada and the USA, to name the two jurisdictions I am most familiar with, have increasingly complex provisions in their tax codes to limit or prevent this type of planning, but there is only so much you can do.

With the increasing mobility and internationalisation of capital and the financial markets, it is impossible to prevent this kind of profit shift as long as tax havens continue to exist around the world.

It also has the unfortunate effect of putting pressure on all governments to lower tax rates on corporate income to stay competitive and to increasingly shift the tax burden to working-class and middle-class taxpayers who are not mobile.

[tater]

The US needs a far lower corporate tax rate that has virtually no dodges. instead of what we have (high rate, many dodges).

[mookiemookie]

It also has the unfortunate effect of putting pressure on all governments to lower tax rates on corporate income to stay competitive and to increasingly shift the tax burden to working-class and middle-class taxpayers who are not mobile.

You're absolutely right.

http://www.progressivestates.org/sync/images/dispatch/CorporateIncomeTaxReceiptsChart.jpg

You're witnessing a multigenerational theft and transfer of wealth on a massive scale. While people argue about the puppet show called politics, and thinking that one side is going to offer anything different than the other, the real forces at work are laughing all the way to the bank about how they've played people for such stooges.

An excerpt from Matt Taibbi's new book Griftopia:

Here’s yet another diabolic cycle for ordinary Americans, engineered by the grifter class. A Pennsylvanian like Robert Lukens sees his business decline thanks to soaring oil prices that have been jacked up by a handful of banks that paid off a few politicians to hand them the right to manipulate the market. Lukens has no say in this; he pays what he has to pay. Some of that money of his goes into the pockets of the banks that disenfranchise him politically, and the rest of it goes increasingly into the pockets of Middle Eastern oil companies. And since he’s making less money now, Lukens is paying less in taxes to the state of Pennsylvania, leaving the state in a budget shortfall. Next thing you know, Governor Ed Rendell is traveling to the Middle East, trying to sell the Pennsylvania Turnpike to the same oil states who’ve been pocketing Bob Lukens’s gas dollars. It’s an almost frictionless machine for stripping wealth out of the heart of the country, one that perfectly encapsulates where we are as a nation.

[SteamWake]

I heard a story the other day that if the Iphone was manufactured, produced, shipped and packed in the US it would cost $3,000.00 US

Instead all that labor is done overseas which is why they can be sold for $300.00 US.

The biggest difference? Unions are cut out of the picture.

[tater]

Tax has not been shifted to the "working class" or "middle class." The middle class is the middle quintile of taxpayers, and they pay squat. I suppose if you count union "working class" people who make absurdly high salaries, then yeah (like the toll booth worker in NJ who pulls down over 300 grand a year http://www.myfoxny.com/dpp/traffic/traffic_news/audit-excessive-perks-for-nj-turnpike-employees-20101019-apx ). Otherwise, those groups effectively pay no income taxes, and certainly no where near a "fair share" (a "fair share" is the per capita cost of government, so a worker in a family of 4 needs to pay 4 shares to be even pulling his weight (roughly 50 grand per year these days for a family of 4)).

Right now the US corporate rate is very high. As a result, they do everything possible to avoid paying it. A lower rate, with no loopholes would be far better, and collect more revenue. It's more fair, too (unlike the current system where certain businesses get breaks that others don't enjoy). This is true of personal income tax as well.

[mookiemookie]

Tax has not been shifted to the "working class" or "middle class." The middle class is the middle quintile of taxpayers, and they pay squat. I suppose if you count union "working class" people who make absurdly high salaries, then yeah (like the toll booth worker in NJ who pulls down over 300 grand a year http://www.myfoxny.com/dpp/traffic/traffic_news/audit-excessive-perks-for-nj-turnpike-employees-20101019-apx ). Otherwise, those groups effectively pay no income taxes, and certainly no where near a "fair share" (a "fair share" is the per capita cost of government, so a worker in a family of 4 needs to pay 4 shares to be even pulling his weight (roughly 50 grand per year these days for a family of 4)).


The upper class pays the more and more in taxes not because of any sort of "soak the rich" policy - top marginal tax rates have decreased over the years - but because of the simple fact that their earnings have increased exponentially over the years which everyone else's have languished. To say that the middle class needs to pay more, while the rich get richer and then get tax breaks on top of that - well I give a big middle finger to that policy.

[SteamWake]

So what did google do with all that money they legally saved by dodging taxes??

High Tech Industry Gives More Money to Democrats

Sixty-six percent of contributions from the computers and Internet industry were to Democrats

http://politics.usnews.com/news/articles/2010/07/02/high-tech-industry-gives-more-money-to-democrats.html

Nothing really supprising there but an interisting read.

Chucky Shumer :haha:

[gimpy117]

Tax dodging should be illegal. Want to lower everybody's taxes/ keep them where they are or fight the budget deficit? than make the corporations pay what they should, rather than moving their money to some account where there is no business tax.

I say If a company can be proven to be "officially based overseas"...but obviously is not, then they should have to pay U.S taxes

oh and mookie...i totally agree with you post, good point +1

[tater]

The upper class pays the more and more in taxes not because of any sort of "soak the rich" policy - top marginal tax rates have decreased over the years - but because of the simple fact that their earnings have increased exponentially over the years which everyone else's have languished. To say that the middle class needs to pay more, while the rich get richer and then get tax breaks on top of that - well I give a big middle finger to that policy.

Marginal rates are meaningless. As is the corporate rate. The US corp rate is way higher than other western countries. It's not the rate, it's amount COLLECTED that matters. That's the real tax rate. The "rich" have been paying more for a number of reasons, including crap like the AMT having their COLLECTED rate actually higher. As for their incomes increasing, so what? There is not a finite amount of money, it's not like money they have is taken from someone else.

There is a tax rate on the 2d 20%, too, but guess what, as a group they pay NOTHING.

So look at what is collected, not what the claimed marginal rate is.

As for the middle class paying more, no they don't need to pay more. Government needs to be slashed to a 1950 level % of GDP (then your graph might have some meaning). Heck, maybe a pre-ww2 level of GDP. Cut spending FIRST. Get the patient in hemostasis—why push for more transfusions when no one is putting any pressure on the artery that is squirting?

[tater]

Tax dodging should be illegal. Want to lower everybody's taxes/ keep them where they are or fight the budget deficit? than make the corporations pay what they should, rather than moving their money to some account where there is no business tax.

I say If a company can be proven to be "officially based overseas"...but obviously is not, then they should have to pay U.S taxes

oh and mookie...i totally agree with you post, good point +1

LOL.

Tax dodging illegal. That's rich.

The entire point of the tax code is to be complex to allow special interests to get tax dodges. There is no reason at all for the income tax code to take more than a handful of pages—except that congress critters of both parties want to pay back their constituents—the big money people who pay them off (businesses and unions, etc)). It takes a few million right now I think.

Cut spending to some reasonable % of GDP.

Dump income tax in favor of a flat tax or something similarly easy. One lower rate, no dodges, period.

Ditto corporate taxes. Pick a low, competitive rate, then make no exceptions, no dodges. It could be 7.2%, and they'd have tripled what they got out of google, for example.

[mookiemookie]

There is a tax rate on the 2d 20%, too, but guess what, as a group they pay NOTHING.

Bull. If you look at total taxes collected (federal income, state income, local income, property, excise taxes, sales tax and other ad valorem taxes) that's a bit hard to swallow. Since I would wager more of the 2nd 20%'s income is spent on things subject to sales tax, I bet they're taxed more than anyone else.

[tater]

Bull. If you look at total taxes collected (federal income, state income, local income, property, excise taxes, sales tax and other ad valorem taxes) that's a bit hard to swallow. Since I would wager more of the 2nd 20%'s income is spent on things subject to sales tax, I bet they're taxed more than anyone else.

We're talking about income tax.

Even including other federal taxes (FICA) the bottom 40% basically pays nothing—the bottom 20% pays negative taxes. You can add in state income taxes if you like.

Sales taxes are 6-7%. IN many states food, and other "essential" items (clothes under some nominal cost like $75, etc) are not taxed. Property tax? Again, on the average house, not much.

[mookiemookie]

We're talking about income tax.

So what? That's not the only tax that people pay in real life. You can't just ignore reality because it doesn't fit into your narrative. Taxes paid are taxes paid. Money in, money out.

Here's some hard numbers: http://www.nytimes.com/2010/04/14/business/economy/14leonhardt.html?_r=1&partner=rss&emc=rss

Focusing on the statistical middle class — the middle 20 percent of households, as ranked by income — underlines this point. Households in this group made $35,400 to $52,100 in 2006, the last year for which the Congressional Budget Office has released data. That would describe a household with one full-time worker earning about $17 to $25 an hour. Such hourly pay is typical for firefighters, preschool teachers, computer support specialists, farmers, members of the clergy, mail carriers, secretaries and truck drivers, according to the Bureau of Labor Statistics.

Taking into account both taxes and tax credits, the average household in this group paid a total income tax rate of just 3 percent. A good number of people, in fact, paid no net income taxes. They are among the alleged free riders.

But the picture starts to change when you look not just at income taxes but at all taxes. This average household would have paid 0.8 percent of its income in corporate taxes (through the stocks it owned), 0.9 percent in gas and other federal excise taxes, and 9.5 percent in payroll taxes. Add these up, and the family’s total federal tax rate was 14.2 percent.

[tater]

So what? That's not the only tax that people pay in real life. You can't just ignore reality because it doesn't fit into your narrative. Taxes paid are taxes paid. Money in, money out.

Here's some hard numbers: http://www.nytimes.com/2010/04/14/business/economy/14leonhardt.html?_r=1&partner=rss&emc=rss

YOUR graph says total federal tax revenues. Your graph is meaningless in the context of local and state taxes. We're talking in this thread about FEDERAL taxes. Remember OP and Google? FEDERAL.

Regardless, you take 0% income tax, add on 0% state income tax, then add in property tax at maybe 2% of income. Throw in FICA (including the hidden half of the tax if your are a Republican, and believe the "employer contribution" crap if you are a dem so only count 7.65% for dems ;) ), that's 17.3% (11.65% for dems ;) ) tax. Assume that they pay 6% sales tax on 50% of their remaining income (half not being taxable—the less they make, the more likely ALL retail expense should be "necessities" and untaxed)).

That's ~4.8%. So they pay ~22% tax. At the most, and many pay less. They also actually get a return on those taxes in the form of medicaid, and other government charity.

Our effective tax rate (all federal I think) is ~28-30% according to our accountant. State is ~8%. Add in property and sales tax and it's maybe another couple points. So roughly 40% tax. Actually, given my wife's medical practice, we also pay a special "medicaid tax" placed only upon doctors. She gets paid below cost for medicaid—not even counting her time, below overhead cost—and must take medicaid to have privileges at any of the 3 hospitals in town. The direct, out of pocket costs amount to about a 5-10% tax on our family given the large number she's required to see (haven't actually calculated it, but we were spitballing the numbers once with the accountant). So we're closer to 45-50% tax.