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Comment by thurn | Hacker News Reader

Obviously Google Inc. consumes US government services. The point is that Google Ireland Inc. probably doesn't. Google Inc. pays its fair share of U.S. corporate tax on domestic revenue, and Google Ireland pays tax in Ireland. Why should Google Ireland's revenue, which never comes into America, be subject to U.S. tax law? They don't rely on U.S. government services, they rely on Irish government services.

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Because they are waiting for a tax holiday so that they can repatriate the profit without paying taxes on it.

Yes, that was a pretty dumb precedent for Bush to set.

You still haven't explained why Google should pay US taxes on Google Ireland's profits. Those profits were made using Ireland's infrastructure and were taxed there.

Yes, Google Ireland is choosing not to invest money in the USA because of the hostile business environment in the US. So what? Is Google Ireland somehow obligated to do business in the US in an effort to pay more US taxes?

Is the Guinness Brewing Company or Tata similarly obligated to do business in the US just so the US government can tax them? And on the flip side, is GM obligated to do business in India so that India can tax them?

The shareholders of Google own stakes in Google, Inc. which is an American company not Google Ireland. Google Ireland is a subsidiary of Google, Inc. Ultimately the end goal of Google, Inc. is to maximize profit for shareholders. To pretend that Google Ireland is some independent company company that makes its own decisions where to do business isn't particularly prescient in my opinion.

Given the billions of dollars that is building up in parking spaces overseas for major tech companies such as Google indicates to me here that the motivation isn't to re-invest in business overseas but to wait patiently for a tax holiday and repatriate the capital at next to tax free. And this is what I disagree with.

We can come up with all sorts of points and counter points about why our particular positions are correct but my issue is as follows:

1. I suppose that Google has built all these complicated transfer pricing agreements so that they can accumulate capital with out being taxed and wait for a tax holiday to repatriate the capital at next to no cost.

If 1 is true then I believe that this is wrong and Google is not paying their fair share.

Which part of this do you disagree with?

You are making the implicit assumption (2) that Google's "fair share" includes some fraction of the money they make outside the US.

I disagree - I believe taxes are payment for government services received. Google Ireland and the Guinness Brewing Company did not receive government services from the US, and hence their "fair share" (to the US) is precisely $0.

Incidentally, the shareholders of Google USA may not live in the US. And similarly, the shareholders of Guinness may be located in the US. If it turns out that some large fraction of Guinness shareholders live in the US, should Guinness start paying taxes in the US for it's Irish operations?

(Guinness does, of course, pay taxes in the US for profits made by it's US subsidiary.)

When Google transfers its IP that was created in the US to an overseas company "headquartered" in the Bahamas so that their subsidiary in Google Ireland can license the IP and not pay money to Google US, thereby avoiding US taxes, then Google Ireland certainly received benefit from the US government. This holds up so long as you believe that Google receives government benefit from US laws, regulations, and infrastructure, which I think they certainly do.

So it's not so much about forcing truly international companies to pay taxes in the US (though they should pay taxes if they are indeed subsidiaries making money from the work of a parent company when that parent company repatriates profits), it's more about exposing the legal-by-letter-but-not-by-spirit practices of companies that hide money generated in the US overseas.

See http://www.npr.org/2011/03/17/134619750/how-offshore-tax-hav...

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