Print 64 comment(s) - last by BRB29.. on May 30 at 9:56 AM

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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RE: Logic
By cyberguyz on 5/28/2013 11:29:06 AM , Rating: 0
The problem is that when large corporations pay billions less in taxes, the governments take the shortfall out on the private sector. The average Joe can't afford the armies of tax lawyers or to launder their income through offshore bank accounts and channels. They get stuck losing their anal virginity to the tax collector every time.

Do you wonder why your income, sales and VAT taxes keep going up? Look no further than this. Large corps slip through the system's legal loopholes while we end up paying the butcher's bill.

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?

“Then they pop up and say ‘Hello, surprise! Give us your money or we will shut you down!' Screw them. Seriously, screw them. You can quote me on that.” -- Newegg Chief Legal Officer Lee Cheng referencing patent trolls

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