For a company with the unofficial motto of “don’t be evil”, Google’s tax practices seem a little bit…sketchy. The company has used various loopholes in numerous countries to save $3.1-billion in taxes. While I understand that a publicly traded company is supposed to maximize profits to keep shareholders happy, it’s a little funny that the “don’t be evil” company has cost America money when the country has an enormous deficit. It’s even funnier when you consider that Google is based in California, a state with a wrecked budget that has resorted to imposing unpaid furloughs on government employees.
Here are the details on Google’s scheme via Bloomberg:
Google Inc. cut its taxes by $3.1 billion in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda.
Google’s income shifting — involving strategies known to lawyers as the “Double Irish” and the “Dutch Sandwich” — helped reduce its overseas tax rate to 2.4 percent, the lowest of the top five U.S. technology companies by market capitalization, according to regulatory filings in six countries.
Don’t be evil, hey?
Google is hardly the only American company engaging in these practices, but it’s one of the biggest and most influential. What do you think of these loopholes? Is it cheating America out of money? Or is it fiscal cleverness that Google is obligated to pursue on behalf of its stockholders? And yes, I fully expect RPadholic smartguy for a full analysis from an accountant’s perpective.