Google does something entirely rational.
Link: and there’s outrage.
Google has been taking the money that it earns in its overseas subsidiaries and “funnelling” it into its Bermuda holding/shell company. About $9.8 billion in revenue, thereby avoiding $2 billion in income tax (as calculated by the journalist who first wrote the article).
Of course, there are all kinds of legal ways to transfer profits from one jurisdiction to another. And I have no doubt that Google has enough awesome lawyers to have accomplished all this above board.
Only now there is general outrage that the US is not getting a share of income taxes earned in foreign countries. And the foreign countries are upset that they are not getting a share of income taxes earned in their countries. As though somewhere in all of this, there is a moral imperative on multinationals to not pay taxes efficiently.
The morally outraged are not being reasonable.
If we’re to talk about principles here, taxation operates as a type of rent for living in a country and getting to benefit from the public amenities it provides (defense, social security, healthcare). Surely we should be saying that those getting the greater share of those benefits should be paying the larger amount of tax? I don’t see Google getting social security and healthcare. Google gets to benefit from a legal system and relatively efficient financial markets, but it can also get some of those benefits in Bermuda. So forcing it to carry the burden for America’s middle class and the now-infamous 47% is, well, outrageous.
Secondly, companies like Google provide jobs, pay salaries, and stimulate investment. That, in itself, has a tax multiplier effect that would not be there if Google moved itself elsewhere. If you really want to compare these things, you should be including Google’s indirect impact on the tax revenue top line.
Finally, if Google has a moral imperative not to take advantage of the tax options available to it, then the American middle class has a moral imperative not to take any deductions, and to pay for its own medical costs…