Google to pay $1B in France to settle fiscal fraud probe
reuters.com
reuters.com
Every time a fine or an agreement is made, their stock goes up and the execs throw a party.
You can compare it to entrepreneur from a wealthy family
He can take risks, knowing that if he fail, it won't be to the ground
Damage to their brand worth billions
Cambridge analytica scandal costed FB a lot more then the fine
It cost them in their users trust
and that's the worst kind of punishment a large brand such as facebook can get
I guess there is a parallel with actual people. Personal reputation matters, but surely we need to be a bit more harsh when punishing certain behaviour.
It would have sent a strong message to other CEOs. Don’t fuck with people’s data.
But that seldom happens. It’s US, the rich rule the country.
I think, despite the title, this isn’t actually a criminal case. It’s Google taking advantage of that Irish tax loophole.
Fines are a deterrent and punitive measure. They punish you for doing something and make you hesitate to do it again. If these 2 goals aren't reached than the fine isn't really effective.
If they were a warning then you'd expect the second offense to be punished by some action that can make the fine feel like "just" a warning. What's that action? How effective is a string of endless warnings that are never followed up with real action?
One way would be to implement a series of exponentially growing fines. This would make them less "cost of doing business" and more "massive liability".
Yes, don't enter the EU market if you want to dodge taxes. More countries should be enforcing this..
There is no European tech company that's going to compete with Google. They could ban Google entirely and the result would be Baidu etc. coming in and doing the exact same things.
Any would-be competitor to Google is going to want to plow most/all of their revenue back into growth for years, perhaps over a decade. VC funded companies normally lose money so they can grow faster.
Once you're making money, yeah that's kind of a big sucking hole you want to deal with. But that's a political issue that other EU members states have with Ireland (and Luxembourg, and the Netherlands).
Certainly, tax is not the reason there are no Google competitors from France.
So it's like me doing something illegal and profiting $100k, but then getting fined $50k. I'd be stupid not to do it again. And again. And again.
At a minimum, the fine should be 2x the amount gained.
- Making it more profitable for the company to just leave your market completely, underservicing everyone there immediately
- Creating an actual monopoly with costlier and poorer service when the policed company exits the market (either from leaving or being dissolved - the latter not applying to Google in this case)
- Creating an incentive to actually challenge the authority in court. Exponentially raising the cost for enforcement and not guaranteeing any favorable outcome.
- And as a corollary to the court, the challenge of authority can result in all the enforcement tools being declared invalid, including the charter for the enforcement agency itself! Resulting in a big public sector layoff and void in enforcement capability.
Google haven't done anything illegal. The so called "loophole" in the law is actually the way the law was explicitly designed to work. If France pushed this too far Google might win and France would be left with nothing
The people cheering for France here are really just cheering for the end of the rule of law. Google pays little tax in France because it's not a French company, not because of "loopholes".
Look at what happened to Panama papers or Bermuda Papers or even what Snowden had said.
"Little people pay taxes" was a line I read in Panama Papers book, one which I'll never forget
A bunch of the super rich deal in wealth rather than income. Remember reading about tech execs with $1 annual paychecks? They earn their money differently and pay taxes differently.
I wish there was more online showing this in a simple form.
This is a technically true but extremely disingenuous and misleading argument, which is probably why I hear talking heads on Fox use it all the time.
Imagine the world consisted of a flat income tax, one multi-trillionaire and 8 billion people living on a dollar a day. That person would probably be paying the vast majority of income taxes, yet this is clearly not an equitable system and it would be absurd to suggest that person is somehow being wronged.
Note also that if the incomes of top earners increase while everyone else's remains stagnant (which is what has been happening since the 1970's), then mathematically the share of total income tax paid by them must increase. Again, it is ridiculous to claim that this is evidence that they are being treated unfairly. Not increasing the top marginal tax rate in this case would be a regressive tax pretty much by definition.
There are many different forms of taxes. Income is the one we tend to look at. There are other methods to pay taxes. Most income taxes is paid by the wealthy but I'm not sure about the super wealthy. They end up with other forms of taxes such as what Zuckerberg was reported as paying several years ago (billions in more than one year).
There's a difference between looking at the overall tax picture and a small segment of it. In many cases the details of the high level and breakdowns are not easily available for people to read.
1. Half the show is about the AG of SDNY throwing white collar criminals in jail.
2. It is fiction.
By the same logic, does developing a more efficient manufacturing process (eg assembly line) count as "anti-competitive"?
Edit: I thought it was common knowledge innocent parties settle lawsuits routinely. Is that not the case in Europe?
But then again, maybe you're right and Google would have paid their lawyers more than $1B fighting this, so it was cheaper for them to settle.
I think one of us might be pretty naive...
You can go and kill your competition and that would also be competitive - but we don't really want that kind of behaviour so we have rules against this. When you're breaking and undermining those rules you are being anti-competitive - you are subverting market competition.
nvidea grows greedy and hires shady accountants to commit tax fraud, enabling nvidea to keep more after-tax money.
next year, nvidea has more money to dump into R&D -- they build a better product, and charge more for it. market responds, nvidea grows richer, ATM suffers losses.
nvidea keeps stealing money. has more for R&D, and more for marketing. nvidea buying sponsored reviews. keep building reliable products. more money for support staff.
ATM operating with a smaller budget every year. still improving, but not growing.
nvidea has even more money for R&D. more money for aggressive marketing. more money for sponsoring studios. "our art was built with nvidea products, and is best enjoyed using nvidea products".
the practice of stealing money to further growth to eclipse the competition by any means is hella old.
Part of the governments job is to ensure that they react to potential loopholes faster, decreasing the competitive advantage that a non-conforming organization may have. A harsher punishment may even put some companies out of business, impacting unemployment rates, supply chains, medium-long term government revenue and the services they provide.
How would you go about increasing the punishment while considering the possibility that the corporation inadvertently did that? Would you punish larger companies more harshly? How would that impact the market place?
You increase the punishment because they inadvertently did it. Then maybe you'll get an incentive structure that prevents it next time.
Never thought about it that way, thanks for the insight!
Why don't we just jail executives responsible if they consistently fail to abide by the law?
https://www.huffingtonpost.fr/entry/prison-ferme-pour-vol-de...
Second: Cases like this often arise from different interpretation of laws that are all at least plausible. Companies may tend to be somewhat too optimistic in their interpretations, but it's rare, at least at that size, that they actively try to commit tax fraud.
Third: It is the company that profits from the offense, so it's only fitting to apply any sanctions to it.
Fourth: Making this criminal law would raise the required standards of evidence to a level where few of these cases could ever be prosecuted.
That's besides the point. If you want to operate in a certain country, you need to - as a business - familiarize yourself with their laws.
The CEO is ultimately responsible for ensuring the company abides the law. If the CEO doesn't know enough about French taxation, that's not an excuse not to follow the rules: the CEO should then delegate the task to someone they trust, but ultimately it's their responsibility.
That's usually the case for most crimes, which is why we have detectives investigate them.
How do you find a murderer in a large city? You Investigate!
Same goes for corporate crimes. Investigate!
This line of thinking becomes a shield for executives, letting them push subordinates into corners where they'll have very strong incentives to do illegal things. And they will benefit from these illegal actions, while being responsible of nothing as they won't know enough on any subject.
This feels like a moral hazard paradise to me.
That aside:
(1) We do jail executives, all the time.
(2) The reason maybe you think we don’t jail enough executives is because it’s hard to prove they did anything wrong. The criminal standard for proof is very high: beyond a reasonable doubt. When it comes to “blue collar” crimes, that’s pretty easy to meet. You wouldn’t believe the amount of evidence that exists in a typical drug crime! The defendant tried to sell drugs to an undercover cop; they found more drugs and an illegal firearm in the car; they searched his phones and got extensive evidence of drug transactions. (That is also why so many such crimes result in guilty pleas.)
But here the government didn’t win a case. It settled. You settle because there is risk you won’t win at trial. If you have to get accounting experts on the stand to argue about whether the thing that happened is illegal or not, good luck proving that beyond a reasonable doubt. (I don’t know what the standard is in France I don’t expect it’s much different.) Additionally, this is a tax case. It’s a “you put this number under section 3.3(b) instead of 3.3(c).” To secure a criminal conviction in a tax case, you need to prove beyond a reasonable doubt that the defendant’s interpretation of the law was not different from the government’s but that no reasonable person would have interpreted it the way the defendant did. Tax positions are carefully vetted and at a large organization like Google you’ll never take a tax position that isn’t at least plausible.
Stepping back, the problem is that you’re taking the government’s position at face value. At least in the US, the government prosecutes many cases that are, at best, based on aggressive or creative interpretations of the law. Of course the government says “Google defrauded the tax office.” Of course they have to say that. But dig into some high-profile white collar prosecutions. In the US they’re generally a matter of public record. They often are far from clear cut.
From https://www.spectator.co.uk/2014/04/why-did-we-ever-spell-ja..., "The Guardian long persisted with gaol too but changed to jail in the 1980s, like the other English papers."
In Australia there's a move away from prison/jail/gaol and towards 'corrective/correctional/detention facility / centre' presumably to make the places sound more aligned with their political or social intent.
However each of the Australian state's active legislation still refers to them as gaols.
Also, the vast majority of "executives" never see the inside of a cell, even pre-trial. They might be in a holding pen for a few hours, but they always make bail and if the judge/prosecution is particularly concerned, the suspect gets additional conditions such as some kind of monitoring/curfew. A great example is Paul Manafort.
You're right about the high standard of proof required for tax cases, and the difficulties of prosecuting complex white collar frauds, but I'm not sure that we have to set the mens rea bat as high as we do. Plenty of other crimes can be prosecuted on "known or ought to have known" rather than having to prove intent.
Granted, this is going to require significant changes politically in many countries, but among the general public across the spectrum, the hope that the wealth held by large corporations will trickle down to them through market mechanisms has long since worn quite thin.
https://www.reuters.com/article/us-france-tech-google-tax/go...
> The settlement comprises a fine of 500 million euros and additional taxes of 465 million euros
500M EUR -> $550M. The distinction between fines and taxes presumably matters for accounting?
so what :)
To be clear I think France has every right to do this and Google can decide to close up shop there if they want, nobody is forcing Google to operate in an unfriendly environment.
Hopefully this kind of fine will void the tax shenanigans Google uses to offshore their profits to Ireland as well as its reduced tax rate there.
Make money in France, pay taxes there. Doesn’t seem like to much to ask.
Maybe EU companies don't dodge taxes as much as US companies? Maybe there is a larger concentration of wealth in US corporate entities? Lots of sane reasons, no need to rush to wild conspiracy theories...
>To be clear I think France has every right to do this and Google can decide to close up shop there if they want, nobody is forcing Google to operate in an unfriendly environment.
Well, nobody is forcing Google to dodge taxes either...
[0] https://www.amazon.com/Chickenshit-Club-Department-Prosecute...