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He said Google pays exactly what it's supposed to pay

The United Kingdom has been looking into the tax-paying practices of large companies, and Google's Eric Schmidt doesn't see the big deal. 

Schmidt, Google's executive chairman, defended Google -- which was criticized for profit shifting and dodging larger tax payments -- saying that the UK should change its tax system if it wants large companies to pay more or less each year. 

"What we are doing is legal," said Schmidt, referring to Google's UK tax payments. "I'm rather perplexed by this debate, which has been going in the UK for some time, because I view taxes as not optional. I view that you should pay the taxes that are legally required. It's not a debate. You pay the taxes.

"If the British system changes the tax laws, then we will comply. If the taxes go up, we will pay more, if they go down, we will pay less. That is a political decision for the democracy that is the United Kingdom."

Earlier this year, it was reported that Google avoided paying about $1.6 billion USD (£1 billion) in UK taxes. Google sent £6 billion through Bermuda over the course of the year, which halved its 2011 tax bill. In fact, Google funneled 80 percent of its global revenue through the island and ended up paying about £1 billion less to the government.

David Cameron, the Prime Minister of the UK, said that companies like Google are immorally minimizing tax bills and need to be stopped.

Just last month, the UK openly stated that it was concerned with the fact that Google only paid £6 million ($7.8 million USD) in UK corporation tax. Schmidt defended Google at that time as well, saying that Google "empowers literally billions of pounds of start-ups through our advertising network" and is "a key part of the electronic commerce expansion of Britain, which is driving a lot of economic growth for the country."

Google isn't the only large company under the microscope. Apple is also being questioned for profit shifting, where it made an estimated £6B ($9.50B USD) in Britain last year, but paid only £10M ($15.8M USD) in taxes.  Apple was able to do this because of the British tax code's rule that largely exempts companies based in Ireland from paying British taxes.

Apple CEO Tim Cook offered tax reform proposals to U.S. Congress at a Senate hearing last Tuesday in an effort to bring back foreign earnings to the United States. Furthermore, he's suggesting that this money be invested in research and development and creating jobs in the U.S. 

Source: BBC News

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By Lazarus52980 on 5/28/2013 10:16:17 AM , Rating: 5
Tough to argue with his logic. If Google is following the law, why should anyone be upset with them?

RE: Logic
By SublimeSimplicity on 5/28/2013 11:08:12 AM , Rating: 5
He's wasting his time introducing logic into an argument fueled by wealth envy and mob rule.

RE: Logic
By Alexvrb on 5/28/13, Rating: 0
RE: Logic
By maugrimtr on 5/30/2013 5:01:33 AM , Rating: 2
Sweet, any other unsubstantiated conspiracy theories to share? ;)

RE: Logic
By cyberguyz on 5/28/13, Rating: 0
RE: Logic
By invidious on 5/28/2013 12:10:53 PM , Rating: 5
The problem is the loopholes not the corporations. Corporate profit should be taxed at a flat rate and then there could be no confusion.

Our taxes keep going up because our politicians are corrupt, they are the ones that put the loopholes in the law in the first place.

RE: Logic
By kattanna on 5/28/2013 12:50:37 PM , Rating: 3
Our taxes keep going up because our politicians are corrupt, they are the ones that put the loopholes in the law in the first place.

how can you blame the politicians? they are not the ones who keep electing themselves into office.. its their constituents.. and they are the ones to blame

RE: Logic
By BRB29 on 5/28/2013 12:54:02 PM , Rating: 2
We voted for those politicians, those politicians lied to get our votes. I still can't figure out if the chicken or the egg came first.

RE: Logic
By kattanna on 5/28/2013 1:11:34 PM , Rating: 3
aye.. but whats up with RE ELECTING those who have lied to you already?

thats what mystifies me

RE: Logic
By BRB29 on 5/28/2013 1:23:14 PM , Rating: 5
because people don't bother to check if those retards they voted kept their promises.
People just want to hear sweet nothings in their ears.

How happy they are with politicians also depend tremendously on how the economy is doing also.
Since any economics impacts are usually felt years later, we tend to cheer and jeer the wrong leaders.

Basically, everything is more of a knee jerk reaction for people. Politicians hide their blunders in a good economy and then find someone/something to blame during bad economy. People tend not to question political matters in a good economy.

RE: Logic
By theapparition on 5/28/2013 1:46:16 PM , Rating: 4
When 90% of a populace is only interested in voting along party lines instead of actually researching the candidates and issues, what do you expect.

RE: Logic
By Mint on 5/29/2013 2:44:02 PM , Rating: 2
Even if you did research, what choice do you really have?

We have only two parties to choose from, and corporate tax is certainly not the #1 issue that I will base my vote on.

My preferred solution isn't even available. I'd like to scrap loopholes and then, instead of reducing the marginal rate, create a deduction for every man-hour of employment that a company creates. The more they employ, the less tax they pay.

RE: Logic
By rameshms on 5/28/2013 3:31:55 PM , Rating: 2
Most of the time people don't vote for what the politicians achieved, but for several other reasons, religious beliefs, race, city/state of birth for ex.

Plus, people don't contribute $$ to their campaign.. the corporations do :)

RE: Logic
By BRB29 on 5/28/2013 3:55:25 PM , Rating: 1
People do contribute quite a bit. Depending who you are looking at, I think Obama had more funding from people while Romney is mostly from corporations.

RE: Logic
By KCjoker on 5/29/2013 6:44:54 PM , Rating: 2
Wrong, that was just money funneled from large corporations down to people to sound good.

RE: Logic
By cyberguyz on 5/28/2013 1:36:18 PM , Rating: 2

It really doesn't matter who gets in. Anything that was implemented by the predecessor will be preserved by the successors - no matter who that is.

So if corporate loopholes are created by a predecessor, you can bet who ever gets into power will ensure they stay there.

RE: Logic
By zephyrprime on 5/28/2013 1:17:25 PM , Rating: 1
Corporate taxes are ALREADY taxed at a flat rate. It's lame that so many people don't even know the basic facts about the tax law they are trying to debate. The current problem is offshoring. Corps set up fake shell companies offshore (in this case ireland) where taxes are low and that allows them to escape taxes in the countries they do business in. The solution is obvious - tax based upon where business is conducted, not where the corp head quarters is. Where your corp head quarters is should not matter one ioata since it's possible to set up fake headquarters easily. If you do business in england whether you are google or HSBC, you should pay the same taxes. If HSBC does business in Hong Kong, England should levy no taxes on that profit made in Hong Kong.

RE: Logic
By BRB29 on 5/28/2013 1:26:05 PM , Rating: 2
except they're not

Taxable Income ($) Tax Rate[27]
0 to 50,000 15%
50,000 to 75,000 $7,500 + 25% Of the amount over 50,000
75,000 to 100,000 $13,750 + 34% Of the amount over 75,000
100,000 to 335,000 $22,250 + 39% Of the amount over 100,000
335,000 to 10,000,000 $113,900 + 34% Of the amount over 335,000
10,000,000 to 15,000,000 $3,400,000 + 35% Of the amount over 10,000,000
15,000,000 to 18,333,333 $5,150,000 + 38% Of the amount over 15,000,000
18,333,333 and up 35%

Welcome to the world of humility.

RE: Logic
By Mint on 5/29/2013 3:52:37 PM , Rating: 2
Effectively, it's pretty flat. Take a look at corporate income distribution:

The $335k to $10M bracket has 15k returns, comprising maybe $70B of profits taxed at 34% (the $113,900 works out to 34% also). All the brackets below that total less than $1B of profits. That leaves over $1T+ of profits from all the companies earning $10M+, which have net rates of 34-35%.

So over 99.9% of profits get taxed at 34%-35%. That's about as flat as it gets.

RE: Logic
By BRB29 on 5/30/2013 9:56:54 AM , Rating: 2
I already know that but I was replying to this claim in your comment.

Corporate taxes are ALREADY taxed at a flat rate

RE: Logic
By lyeoh on 5/28/2013 1:33:53 PM , Rating: 2
To me even sending the money overseas is fine. What's not fine is organizations somehow being able to declare profits from various entities as theirs in financial, public statements etc but not pay taxes on them. And worse in some cases even being able to use that untaxed money as collateral for loans.

If it's not your money you shouldn't be able to declare it as your money/profit or use it as if it's yours. If it's your money then you should pay the taxes on it. And if you

If you say "S" is not you so the money you gave to "S" isn't taxable, and you made a loss (and so aren't taxable), you shouldn't be able to say "S"'s money is yours. You should also NOT be allowed to control "S" or "S"'s money . And if "S" runs off with the money you shouldn't get any help to get the money back... They've committed no crime - the money belongs to them (if it belongs to you, pay the taxes ;) ).

RE: Logic
By Mint on 5/29/2013 4:16:34 PM , Rating: 2
Decent idea in theory, but how does the US make foreign companies pay tax for selling products here?

Even tracking all imports from every company (which is impossible) is easily circumvented. Samsung can set up a foreign subsidiary called Samsing, which buys phones from Samsung, puts a label on it, and sells them in the US at the same price. Samsing then shows zero profit to the US gov't, while Samsung claims all sales are in Korea.

In the end, currency alongside repatriation tax is the only solution. Wherever you do business, you're going to get currency in those dollars. That money can sit offshore, but it won't do anything useful until it become income for someone else and get taxed (and if it was declared as income for an employee/owner or other business expense in the first place, it'd be tax deductible anyway).

RE: Logic
By kmmatney on 5/28/2013 2:15:57 PM , Rating: 2
I don't think it's as easy as just going to a flat rate. A flat rate on what? The problem is that their profits get funneled through Bermuda (or Ireland) through transfer pricing.

RE: Logic
By Arsynic on 5/28/2013 2:24:24 PM , Rating: 2
The problem if the government is having revenue problems it either needs to change the laws to increase revenue or cut spending.

RE: Logic
By BRB29 on 5/28/2013 2:56:43 PM , Rating: 1
raising taxes is only a short term solution. If you raise taxes then businesses suffer and cause higher unemployment. Taxes are already high in both UK and US.

In this economy, the government is supposed to bite the bullet. To stimulate the economy again it must lower interest rates, increase spending, lower taxes. After the economy is going strong you raise taxes, lower spending, and increase interest rates to stop inflation.

So in a bad economy, the government will be in huge deficit to help the economy recover. When the economy is back up, it's supposed to use the surplus to repay the debt. The problem is when there's a surplus, they just spend more instead of repaying debt. People don't pay attention because their life is good so they get away with it. Eventually, every 1st world country is in a massive amount of debt. This happens to every 1st world country so far.

RE: Logic
By fredgiblet on 5/28/2013 4:29:58 PM , Rating: 2
The main problem is that no one can implement and maintain a long-term plan like that. One of the weaknesses of democracy is that it's difficult to make things happen on a long scale because the leaders keep changing.

RE: Logic
By Mint on 5/29/2013 3:27:48 PM , Rating: 2
That's not the only problem. How do you know when an economy is indeed "back up"?

What if today's unemployment is actually good compared to 10 years from now, when automation replaces even more jobs, and the beneficiaries of that income shift barely increase their consumption to create new jobs?

Even today, people compare to 2007 to point out how bad the economy is, as if that was a sustainable economy. The only reason unemployment was so low back then is that we tapped into equity to create debt like crazy ("we've done it for 25 years without a banking crash, so why would it crash now?"), allowing people to spend and invest more than they normally would. We built houses, bought cars and stocks on HELOCs, etc. Now that financial resource is completely tapped out.

So really, we have no idea what a good economy is and what a bad one is. We just make flawed historical comparisons.

The mechanism you describe is also broken now that we're in a new world with sustained 0% rates that aren't increasing spending and inflation. That wasn't supposed to be possible. Surely well off people would spend now rather than watch their earnings shrink in purchasing power with 0% saving, right? Apparently not.

RE: Logic
By wookie1 on 5/28/2013 10:02:28 PM , Rating: 1
Two things - first, corporations are part of the private sector, not sure what you mean. Second, corporate taxes are similar to the VAT, just a stealth tax on the products and services that the corporations provide that gets passed on to the consumers. Where do you think a corporation gets money?

RE: Logic
By testerguy on 5/28/13, Rating: -1
RE: Logic
By testerguy on 5/28/2013 11:58:20 AM , Rating: 2

RE: Logic
By Motoman on 5/28/2013 12:04:06 PM , Rating: 5
Sorry, you fail.

As an executive of a publicly-traded company, he (and all other executives, and the BOD) has a duty to maximize revenue and minimize expenses.

Taxes are an expense. Google, like every other corporation in the world, will follow the law in paying their taxes. The tax law defines a game. Corporations play the game. The corporations legally pay the least amount of tax they can, based on their obligations as defined by the law. There is no "morality" in laws. Only legal and illegal. What corporations are doing is legal. Period. Black and white.

If a corporation's executives/BOD *didn't* seek to minimize the amount of taxes they paid, they'd be derelict in their duty to the shareholders. They'd be fired. Sued. An maybe go to prison.

Ergo...if you think that corporations shouldn't be using loopholes to minimize their tax burdens, close the f%cking loopholes. Otherwise, shut your mouth.

RE: Logic
By BRB29 on 5/28/2013 12:11:22 PM , Rating: 1
If a corporation's executives/BOD *didn't* seek to minimize the amount of taxes they paid, they'd be derelict in their duty to the shareholders. They'd be fired. Sued. An maybe go to prison.

No, they can't be sued. They can be fired. They definitely won't go to prison for not using tax loopholes. You actually have to break the law to go to prison.

RE: Logic
By Motoman on 5/28/2013 12:15:48 PM , Rating: 3
You can get sued for losing shareholders' money by being derelict in your duties as an officer of a publicly-traded company.

Not using loopholes isn't a crime. Being wasteful with shareholders' money can bring a class-action suit though claiming damages through negligence, or something similar.

RE: Logic
By BRB29 on 5/28/2013 12:44:37 PM , Rating: 2
The executives cannot be sued for derelict of duties either unless they are breaking something on their contract. They still can't go to prison unless they're breaking the law. Breaking the contract will only cost them money.

If executives are blowing the company's money on personal BS and claiming it as work expense, then you can sue them because that's illegal. Not evading taxes is perfectly legal. There's no way you can prove that not evading taxes is costing the company massive profit unless you are in the company. The logistics and cost analysis on how much a new branch or entity in another country is massive.

RE: Logic
By Motoman on 5/28/2013 3:26:37 PM , Rating: 2
IANAL, but I think you're talking about a civil suit in such a case. Basically, you're entrusted by the shareholders to be a proper steward of their money. And if you do something patently stupid - like pay more taxes than you have to - you're not being a proper steward of the shareholders' money.

It's happened more than once before, and will happen more than once in the future.

RE: Logic
By BRB29 on 5/29/2013 9:29:02 AM , Rating: 2
I know you're not a lawyer but neither am I. But I do know my rights as a stockholder, different types of stocks, corporate responsibilities, etc... because I put my money on the line in their company.

CEO gets paid a small or 0 salary and a big incentive package. That's their motivation to make the business successful because the value of that package is based on their performance.

The CEO is just like any other employee because he/she is also an employee. They are only prosecuted by the law if they break the law. So a bad performance evaluation is not grounds for prison.

They are not a steward of your money. You pay money to own a share of the company. That share's value is what people are willing to pay and you are willing to sell. No one is holding your money. They are only responsible for making sure that your share is real and accounted for. You also get certain rights depending on what you purchased. Even if you buy the company's bonds, they are only liable to pay you back.

RE: Logic
By Motoman on 5/29/2013 11:43:24 AM , Rating: 2
That's simply not true.

Google "ceo sued by shareholders" or something similar. You'll find endless numbers of cases where such a thing happens without anything *criminal* having happened. Simply the BOD/executives making decisions that the shareholders found to be harmful.

RE: Logic
By BRB29 on 5/29/2013 12:42:32 PM , Rating: 2
anyone can sue anyone else or business and even the government for any reason. It doesn't mean anything. You can bring that case to court and waste your time/money but you won't get anywhere.

Yea, I googled it and it says exactly what I said. The only lawsuits that had any actions against the CEOs are the ones that showed they did something ILLEGAL like the HP case.
All the other ones show that they just get tossed aside because neither the court or the corporation cares(eg. Apple cash lawsuit). You can waste money to create a lawsuit that would probably be thrown out after the judge looks at it.

I'm no lawyer, but I do accounting. I've spent years learning this and still in school to get my MBA. I have to study business laws as part of both my degrees.

Almost every CEO out there is under performing right now. They should all be served papers.

RE: Logic
By SublimeSimplicity on 5/28/2013 12:47:34 PM , Rating: 2
What if one of the investors IS the government. Could they be charged with defrauding the government, for not avoiding paying taxes to the same government?

RE: Logic
By Motoman on 5/28/2013 5:10:34 PM , Rating: 2 theory, yes. If the government is a shareholder, then the government's interest in the company is the same as any other shareholder - so, maximize revenue and minimize expense.

It might seem odd to think of it that way, but yes...the government may not initiate such a lawsuit, but I can't imagine it wouldn't participate in a class action if it was brought.

RE: Logic
By BRB29 on 5/29/2013 10:40:42 AM , Rating: 2
An investor can be anyone/anything with a Tax ID. It's not fraud if it's legal. You can call it shady but that's as far as you go. If you don't dodge tax, it's still legal.

I don't understand the whole argument. Any executes cannot be sued for underperforming regardless of who owns the stock. Stockholders can sue the company but it probably won't get them anywhere but waste more money. The company can sue the executives for not following their contract. That's all there is to it.

If you don't like a company's way of doing business then I wonder why you bought the stock. If you did not know when you bought it then you did not do enough research. Even then, you can still sell it and watch their stock price tank as they are not competitive in the industry. I don't think any executives would ever want to make their company uncompetitive as it means their payout will be significantly smaller.

RE: Logic
By testerguy on 5/29/2013 9:03:11 AM , Rating: 1
Sorry, you fail. As an executive of a publicly-traded company, he (and all other executives, and the BOD) has a duty to maximize revenue and minimize expenses.

Oh, you mean like Starbucks, who did exactly the same thing and lost billions having to pay back the tax as well as billions in lost revenue from the bad publicity?

Now what was that you were saying about a duty to maximise revenue?

You missed my whole point, I specifically stated that it's not illegal, but it will potentially come back to haunt them because it's clearly a shady practise, as I said.

RE: Logic
By SublimeSimplicity on 5/28/2013 12:12:01 PM , Rating: 2
The government makes all the rules and has all the guns to enforce them and on top of that you believe google has some additional moral obligation?

When you watch the discovery channel, you must root for the cheetah and jeer the gazelle for having the audacity to avoid being his lunch.

RE: Logic
By testerguy on 5/29/2013 9:05:24 AM , Rating: 1
When you watch the discovery channel, you must root for the cheetah and jeer the gazelle for having the audacity to avoid being his lunch.

Yeah, because if Google actually paid taxes they would be 'eaten alive'..... right, good analogy there, clever boy.

The government will indeed enforce the taxes shortly, but the damage this bad publicity will do for Google underlines that despite your ignorant stance otherwise, public facing companies like Google rely very much on positive perception which involves moral activities.

RE: Logic
By amelia321 on 5/29/2013 11:37:38 AM , Rating: 1
If you think Harold`s story is unbelievable,, 5 weaks-ago my girlfriend's half sister basically actually earnt $9321 grafting a 40 hours month in their apartment and they're buddy's step-sister`s neighbour has been doing this for 8-months and brought home over $9321 parttime at There laptop. use the guidelines available here, kep2.comCHECK IT OUT

RE: Logic
By KCjoker on 5/29/2013 6:42:44 PM , Rating: 2
The same reason people hated Romney for it. He wasn't breaking any laws but people hate when big companies or rich people use loopholes. Of course the very same people use every "loophole" they can as well.

"I'd be pissed too, but you didn't have to go all Minority Report on his ass!" -- Jon Stewart on police raiding Gizmodo editor Jason Chen's home

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