How Google Avoids Paying Billions in Taxes
'Double Irish' and 'Dutch Sandwich' maneuvers save big bucks
By Kevin Spak, Newser User
Posted Oct 21, 2010 3:39 PM CDT
Updated Oct 24, 2010 6:45 PM CDT
In this photo taken Friday, Oct. 8, 2010, a sign at Google headquarters in Mountain View, Calif. is shown.   (AP Photo/Paul Sakuma)

(Newser) – Google has shaved a staggering $3.1 billion off its tax bill over the last three years by shuffling its earnings through Ireland, the Netherlands, and Bermuda, Bloomberg reports. Using common maneuvers like the “Double Irish” and the “Dutch Sandwich,” the search giant has brought its overseas tax rate down to just 2.4%, the lowest of the top five US tech companies. Quite a feat, says a former Treasury Department official, considering it operates "throughout the world mostly in high-tax countries where the average corporate rate is well over 20%."

That international maneuvering (which is fairly involved; read the entire piece for the breakdown), in turn, shaved Google's overall effective tax rate to 22.2% last year. Countless companies around the world use such arrangements—Facebook, for example, is prepping a similar setup through the Cayman Islands. But Google’s efforts are somewhat ironic, Bloomberg notes, since taxpayers funded the Stanford research that helped create the company. Google is “flying a banner of doing no evil,” complains one business professor, “and then they’re perpetrating evil under our noses.”

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Showing 3 of 64 comments
jjay83
Oct 25, 2010 3:53 AM CDT
It is quite likely that Google did do something illegal. If you read the article from Bloomberg, you'll see that Google "sold" their IP to another company in Ireland for a "secret" price. They had to have grossly and intentionally undervalued their IP, otherwise, their HQ would have made billions in profit from the sale and the tax savings would have been zero. And, given Google's competence, it is also most likely that they manipulated the IRS into agreeing to this. I suspect if you look closely at all the involved transactions you would discover something illegal. You can't just get something for nothing. This is similar to the laws of energy conservation, but we are talking about monetary value, not energy units.
BlueAyez
Oct 25, 2010 12:42 AM CDT
So naturally we should elect more rich people and conservatives to help reduce their tax bill even further.
fractal
Oct 24, 2010 10:46 PM CDT
"I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. As a result of the war, corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed. I feel at this moment more anxiety for the safety of my country than ever before, even in the midst of war. God grant that my suspicions may prove groundless." -- U.S. President Abraham Lincoln, Nov. 21, 1864 (letter to Col. William F. Elkins) Ref: The Lincoln Encyclopedia, Archer H. Shaw (Macmillan, 1950, NY)