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Taxes are for the little people

By Owen Paine on Saturday October 23, 2010 09:10 PM

Don't imagine that the only profit arbitrage open to our vigorous multinational shapeshifters is built out of forex-manipulated wage and input costs. Check out this tax arbitrage:

"Google Inc. cut its taxes by $3.1 billion in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda. Google’s income shifting [reduced] its overseas tax rate to 2.4 percent... [Google] operates throughout the world mostly in high-tax countries where the average corporate rate is well over 20 percent. The U.S. corporate income-tax rate is 35 percent. In the U.K., Google’s second-biggest market by revenue, it’s 28 percent.

Google, the owner of the world’s most popular search engine, uses a strategy that has gained favor among such companies as Facebook Inc. and Microsoft Corp. The method takes advantage of Irish tax law to legally shuttle profits into and out of subsidiaries there, largely escaping the country’s 12.5 percent income tax.

.... Such income shifting costs the U.S. government as much as $60 billion in annual revenue."

Google's reward?
"Google’s transfer pricing contributed to international tax benefits that boosted its earnings by 26 percent last year, company filings show... Based on a rough analysis, if the company paid taxes at the 35 percent rate on all its earnings, its share price might be reduced by about $100 [currently ~ $600 -- OP]"
On this very loophole mechanism, hopers got a promise from Barry O:
"... the Obama administration proposed measures to curb shifting profits offshore, part of a package intended to raise $12 billion a year over the coming decade. While the key proposals largely haven’t advanced in Congress, the IRS said in April it would devote additional agents and lawyers to focus on five large transfer pricing arrangements."
Note part II, there: the IRS could hammer these outfits if unleashed by the White House, but Baby Bush's gang saw to it that "Google received approval from the IRS in 2006 for its transfer pricing arrangement. The IRS gave its consent in a secret pact known as an advanced pricing agreement."

Time Ohbummer's IRS revokes that secret deal, eh?

Read the link. It's lovely. And as with most beauty and other devil's work, it's all in the details.

I saved this bit as an after-dinner mint:

While the administration “remains concerned” about potential abuses, officials decided “to defer consideration of how to reform those rules until they can be studied more broadly.”

Comments (19)

gluelicker:

Leona Helmsley and... the Osmond Brothers? But I guess the guy on the right is more gummy than toothy.

"While the administration “remains concerned” about potential abuses, officials decided “to defer consideration of how to reform those rules until they can be studied more broadly.”

I'm sure they'll get right on it after the election. The study I mean. Followed up by a committee to review the study and make recommendations and then a blue ribbon commission to study the recommendations select which ones will be brought to a an "up or down" vote.

But eventually they'll get to it I'm sure.

MJS:

Well, they're not really household faces, are they? And with good reason. Larry Page and Sergei Brin, the Googlers.

hapa:

seriously the thing that pops into my head is how can these microsoft & google & such relationships not be related to NSA projects.

gluelicker:

What this post raises for me is this: AFAICT, the European social democracies (what's left of them, that is) feature corporate profit tax rates no higher, on average, than the US, and suffer revenue losses from offshore profit shifting no less than the US. So how are they able to continue funding their (yes, somewhat hollowed out) welfare states at a more generous clip than the US? Because the US has a fucking WARFARE state that gobbles up half of the federal take. (Also, the Euros rely more on taxing the rich and VAT's than the US?) Yes, to some extent the US uses the security dependence of its capitalist allies as current account balancing leverage, but from where I sit, ever since March 2003, this gambit doesn't work quite like it used to. In other words, as far as US imperial decline is concerned, the staying power of the military-industrial-Congressional-lobbyist complex is a much bigger thorn in the side than Google and their international tax lawyers, fucking crooks though they may be.

Drunk Pundit, don't you realize how much your cynicism enables corruption? Tsk.

I think it's time for somebody's glass of Hope-and-Change-Aid™ to be refreshed.

seriously the thing that pops into my head is how can these microsoft & google & such relationships not be related to NSA projects.

Or other, non-"national secret" federal bureaucratic spending?

Barry O'Barmy promised a second dot-com / tech revolution. I bet y'all forgot that. He DOES know how to deliver on his promises. It's just that he promises different things to different people and ...well... some of those promise-receivers are just little people, that's all. Obama is the giant, we are the little people. Be thankful he lets us live!

Also, I really like the devaluing of America on so many fronts. Crush the dollar, baby. If you're one of the crushers, and you know where you're putting your currency-stores (in what subsequent currency or national economy), who cares if the little people get fucked by the dying dollar? Who the fuck cares? You got yours, eh? Crush that dollar, turn your back on it like you turned your back on your dirt-poor upbringing, you social climber!

"I think it's time for somebody's glass of Hope-and-Change-Aid™ to be refreshed."

5 gallons of vodka, 2 gallons of vermouth and a barrel of martini olives coming right up, because that's a whole lot of drinking I'm gonna have to do.

op:

"who cares if the little people get fucked by the dying dollar?"
oxy that is wildly off base
a falling dollar is precisely the best outcome for liittle americans

Y'know, not that it isn't barely on-topic or not, but looking at those two fotos, I honestly can't say which I find more repulsive -- Leona or Sergey'n'Larry. Right now I want to say S&L, just for the pure raw media-darling smugness radiating off of them. At least right now, they're the ones I want most to give a good smacking around. Leona's kind of played these days.

Drunk Pundit writes at 20:22 on 10.24.10:
"I think it's time for somebody's glass of Hope-and-Change-Aid™ to be refreshed."

5 gallons of vodka, 2 gallons of vermouth and a barrel of martini olives coming right up, because that's a whole lot of drinking I'm gonna have to do.

.

Dude. You put olives in them? I also notice you prefer vodka to gin. That would be the "James Bond" as opposed to the "William Jennings Bryan", as I recall.

Myself, I could do with about thirty-seven bong hits right now, but my hookup is out of town -- in Amsterdam at the Cannabis Cup... or was it on a trade-show tour for Dr. Bronners? I forget which. So, sadly, at least for now, it's black coffee and Nat Shermans.

"Dude. You put olives in them? I also notice you prefer vodka to gin"

Yes, my depravity knows no bounds.

I can't smoke much pot these days. Thankfully I don't need to, a small amount goes a long way for me now. I'm a total lightweight.

a falling dollar is precisely the best outcome for liittle americans

so is a riddle wrapped inside an enigma that's surrounded by a conundrum.

op:

oxy
the Rx suggested here is hardly
"a riddle wrapped inside an enigma that's surrounded by a conundrum"

with time a signifigant non reversed
fall in the dollar against several seriously undervaled currencies
would boost our employment and wages

a well understood mechanism
that cuts imports and increases exports
thru major relative price shifts

so
please try to contain yourself
you're shitting in your hat

if you don't understand macro economics
and refuse to learn it
all well and good
it's boring stuff
i suggest after a vigorous
cannonade of boo's
farts pukes and urinations
all richly deserved by the dismal science
and its justly maligned practitioners

you depart for the great threads here
where spirits brimming with wit and jest
swan about up over and thru
a lovely cataract
of fast passing literary stimuli


I'd like to see a healthy dose of inflation too. A nice 6 or 7 percent per year inflation rate would do nicely.

Of course the investor class would shriek like pricked baboons but that would make it all the more attractive to me.

gluelicker:

Speak for yourself, Drunk. I was planning on blowing this joint and clipping coupons for the rest of my life.

op, if you can't see that sports commentary isn't the same as playing the sport, then maybe you should stick to economics.

op:

oxy
u mean
the sport of life i take it
how can one not
from it ...no... in it you can run
but u can't hide

now if u just mean say the job market
or any other commercial arena

there in i've found my self .....on occasion ...over the years

indeed
the front lines of exploitation
are not entirely unknown to me

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