Google pays no tax on £1.6bn in Britain | Hacker News Reader

Google pays no tax on £1.6bn in Britain

technology.timesonline.co.uk

8 pointsAndrewWarner25 comments

Casually forgetting the income taxes paid by the employees, of course, though the millions paid in social security contributions (NICs) is mentioned almost as a footnote.

I'm a major fan of The Sunday Times, but I can't believe they went with a non-story whose only intention is to ruffle the feathers of the Times' high income demographic (who are getting taxed to death themselves). What Google's doing is, on the surface, fully compatible with EU tax law. Devolving most of our powers to the EU is the British government's fault, not Google's.

How would things be different if the UK wasn't part of the EU?

At the least, VAT collectable by the UK would have been charged and earned on all of that £1.6bn (which would be well into the £100~200m range). Instead, Ireland got the VAT due to EU VAT collection harmonisation.

I fail to see what Google has done wrong. Why wouldn't they place their European headquarters in a EU country with the lowest corporate taxes rates? Also, how does the UK have any more right to complain than France or Cyprus? This is just political grand-standing!

They've done nothing wrong. But what they have done is promote and campaign for politicians who advocate higher taxes, then turn around and do everything possible to avoid such taxes.

http://online.wsj.com/article/SB122446734650049199.html (Google CEO Eric Schmidt will hit the campaign trail this week on behalf of Barack Obama)

http://gawker.com/5119039/google-execs-pay-150000-for-obama-... (Google Execs Pay $150,000 for Obama Bash)

I don't think taxes were the only issue for Eric Schmidt/Google.

Only hypocritical if you don't understand what a tax is. Obama didn't go out and advocate that individual corporations voluntarily pay more in taxes. All that would do is make the companies that voluntarily did it disappear from the marketplace as they get outcompeted. He advocated that to solve a collective action problem, a majority dictates (with teeth) that all parties pay more taxes.

Presumably Google could be in favor of Britain fixing the loop-hole (if it really is one) it it affects their competitors as well as them, but they aren't going to voluntarily stop using.

It is like saying someone who advocates that we all quit ironing our pants in order to save energy, but in the meantime keeps ironing theirs, is a hypocrite. That isn't true, and it is a misunderstanding of what they advocated.

The ironing example is being a hypocrite. One should lead by example, if they really care about saving energy they will change their behavior to save it.

Nope, it is a collective action problem. There is a simple game theory payoff matrix:

(units: e=energy_savings, ss=social_standing)

One guy's payoffs:

                         one guy
                         iron                | no iron
    everyone    iron     0ss - 0.1e = (-0.1) | -1ss + 0e = (-1.0)
                no iron  1ss - 0.1e = ( 0.9) |  0ss + 0e = ( 0.0)

Society's payoffs (1000 people):

                         one guy
                         iron                    |  no iron
    everyone    iron     0ss - 100e = (-100.0)   |  0ss - 99.9e = (-99.9)
                no iron  0ss - 0.1e = (  -0.1)   |  0ss -  0.0e  = (   0.0)

Ironing his clothes gives the person no greater benefit than not ironing their clothes--so long as no one else irons their clothes either. It isn't hypocritical to point this out and still iron your clothes.

I understand that that it's a collective action problem, but game theory only applies if things stay constant. By practicing what he preaches, and taking the hit to ss he shows that it is important, and he can use that to convince others to do it. As more people do it, the loss of ss per person goes down, and it might even invert (lose ss for ironing).

What if not ironing your pants affects your income significantly?

That's the price you pay for standing up for what you believe in.

Murdoch shouldn't be the one to point fingers, News Corporation (which owns Times) is one of of the world leaders in tax evasive subsidiaries.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aK0a...

I think the Google gives the UK a lot more than just taxes.

Ad spam on web pages of the world?

Sounds like what any company big enough would do.

If this bothers the British, they might want to consider a law that allows them to tax both funds transferred to another country as well as funds reported as the company's local income.

That way the country would always get their share should Google decide to have a presence in the UK.

As a member of the EU, the UK can't pass such a law. We've given up some sovereignty for the benefits of being a member of the larger entity.

I have to say, what they've done seems perfectly legal -- in British law as well as Irish law. If the Brits feel wronged by this, perhaps they should consider changing the laws that allow it?

And of course the only options ever presented in stories like these are more regulation and stricter enforcement. How about lowering tax rates to compete with Ireland?

Just take a look at Ireland's current fiscal and overall economic position.

And imagine how much worse it would be if Google (and Facebook, and others) weren't paying 12% Corporation Tax to the Irish Treasury.

If you thought people were complaining about the December budget... wait till the corporations start pulling up stakes wholesale!

The funny thing is Ireland has very good social welfare benefits - enough that fraud is a serious issue. A coworker told me a recent (non-gov't) investigation suggested it could be as much as 2 billion EUR per year. That's my euros the fraudsters are taking but the government can't be bothered to battle fraud more effectively! sigh

In the December 2009 budget announcement the low corporate tax rate was specifically mentioned as a competitive advantage and would not be touched any time soon. Much to the chagrin of some law makers.

IIRC Ireland has the lowest (or darn close) corporate tax rate in Europe so why wouldn't companies have their HQ here? It's simply taking the best actions for their shareholders.

Couldn't the government require that money collected from UK residents go to a UK company?

No, the UK cannot enforce such a law without violating membership in the EU.

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