Is Google Too Cool to Pay Taxes? The Company Is Sheltering Billions in Bermuda
According to Bloomberg, the search engine giant Google has avoided paying about $2 billion in corporate taxes by funneling $9.8 billion in revenues to a shell company in Bermuda.
The amazing thing is it appars to be legal! According to Bloomberg on Dec. 9:
By legally funneling profits from overseas subsidiaries into Bermuda, which doesn’t have a corporate income tax, Google cut its overall tax rate almost in half. The amount moved to Bermuda is equivalent to about 80 percent of Google’s total pretax profit in 2011
Bloomberg went on to report:
The Internet search giant has avoided billions of dollars in income taxes around the world using a pair of tax shelter strategies known as the Double Irish and Dutch Sandwich, Bloomberg News reported in 2010. The tactics, permitted under tax law in the U.S. and elsewhere, move royalty payments from subsidiaries in Ireland and the Netherlands to a Bermuda unit headquartered in a local law firm. Last year, Google reported a tax rate of just 3.2 percent on the profit it said was earned overseas, even as most of its foreign sales were in European countries with corporate income tax rates ranging from 26 percent to 34 percent.
CEO Eric Schmidt has said he is proud of Google's tax structure, labeling it capitalism. Critics say these tax-dodge efforts place unfair burdens on other major multi-national corporations that have to pick up the slack.
Rush Limbaugh pointed out recently the lack of public and government outcry over Google's tax dodging is because the company is considered cool and politically correct.
The federal tax rate for such large corporations is 35 percent. Walmart paid about $7.1 billion in total taxes from its estimated profit of $22.1 billion last year.
Limbaugh said on his radio program last week, public and government perception of certain companies allows them to get away with almost anything. Walmart has been a whipping post for a number of years over alleged claims of worker mistreatment. It's also been the target of labor unions trying to use illegal tactics to organize the workers. Yet the world's largest retailer pays one of the highest corporate tax rates.
Walmart doesn't try to shelter it's money overseas, or hide money in Bermuda. Yet there's no outcry when Google is found to be using loopholes to dodge taxes. Similar claims have been made against Starbucks and Amazon. While the tactics are legal, they are unethical, and its clear the company is doing it for the purpose of avoiding paying what other major corporations do.
Many critics believe the United States has the most crippling corporate tax structure in the world -- and it can be proven with statistics. Many companies have moved operations or factories overseas for this reason. But it can be argued it's not right for some companies to deliberately use the system to dodge what they are expected to pay and place burden on others, while some companies do not.