Google’s tax Gaggle

The world’s most well renowned and profitable company, Google,  avoided paying $2 billion dollars in taxes around the world by utilizing Bermuda tax shelters. This amount is double than what the company paid a few years before. This growing trend among the wealthiest of companies isn’t helping solve the global financial crisis that lies before us. By using legal loopholes to funnel profits into tax sheltered havens, Google skirts paying corporate income tax. This results in a 50% reduction of their overall tax rate. With the success of this approach it’s no wonder Google shift 80% of its pretax profit into these shelters protecting its income from the hands of federales.

This recent finding could result in global outrage from this wealthy elephant in the room. Known as tax dodging these taxes are completely legal…for the time being. Now many countries including US, France, United Kingdom, Italy and Australia are beginning to take notice. Especially since the economic crisis that shook the world.


Just recently, EU’s executive body advised its member board to take a stand against these abuses by passing new legislation banning the use of tax havens. In Europe alone this accounts to $1.3 trillion dollars in forfeited revenue per year. This avoidance is “scandalous” and “an attack on the fundamental principle of fairness,” said Algirdas Semeta, the European Commission’s taxation commissioner.

“The tax strategy of Google and other multinationals is a deep embarrassment to governments around Europe,” said Richard Murphy, director of Tax Research in England. “The political awareness now being created in the U.K., and to a lesser degree elsewhere in Europe, is: It’s us or them. People understand that if Google doesn’t pay, somebody else has to pay or services get cut.”

So what is Google’s defense to this claim? Google, like other wealthy elite insist that they are abiding by all the tax rules relevant to them. Also they claim that their investment in the various countries is enough to bolster their economies. They also claim that they employ over 2,000 people in the UK alone that helps fuel the supply chain resulting in tens of thousands of new jobs.

The corporate search giant has avoided paying its share of  billions of dollars in global taxes using a pair of tax shelter strategies known as the Double Irish and Dutch Sandwich. The strategy, which is 100% legal, moves pretax income to subsidies located in Netherlands and Ireland which are then moved to a Bermuda  tax shelter. This tactic allowed Google to pay just 3.2% of its profit that it earned overseas, even though those tax rates ranged from 26-34%.

So what does America think of this? Senator Carl Levin a democrat from Michigan called out the tech industry for moving billions of dollars of profit overseas and thus not contributing to the American economy. Levin is attempting to champion legislation that deters outlandish tax abuses. Levin estimates that US global companies have over $1.5 trillion dollars in accounts outside of the United States. This amounts to over 60% of their cash holdings.

In the UK company execs were drilled as to why they don’t pay more taxes there. Google claimed that it paid taxes where it creates “economic value” or the United States

Still we have to wonder here in the states how much of these taxes we aren’t seeing. It seems silly for you or I to make any more sacrifices so that Google can retain its history of windfall profits.