6 ms·

Half the outrage is the claim that these companies are paying no U.S. taxes. Is that claim substantially incorrect? There are all these details you mention, but

by TwoBit 5y ago

Half the outrage is the claim that these companies are paying no U.S. taxes. Is that claim substantially incorrect? There are all these details you mention, but if Google is avoiding paying US taxes on billions in profit then how much detail do people really need to know?

Jon_Lowtek 5y ago
Well the key detail is that Google used the "Double Irish Sandwich" to push profits from the european market towards Bermuda instead of paying taxes on those profits in the european union. That might be a somewhat relevant detail for that whole outrage about not paying taxes in the USA. Taxation on international IP licensing is regulated in complex web of bilateral "no double taxation" contracts between nations and the whole Bermuda thing worked because ireland accepted "taxed elsewhere" but elsewhere was a tax haven with 0%. It is probably not a coincidence that trumps "tax cuts" create a tax rate that is slightly lower then the corporate tax rate in ireland. So it is better to move profits from the EU market towards the USA instead of taxing them in the EU. However the multinationals have likely already found a new way again to avoid both. The article is right that the multinationals can't move money from these offshore accounts into the USA without getting taxed and they can't move them back into the EU without getting taxed either, but there still were, are and will be opportunities to use those tropical island shell company treasure chests with no or minimal taxation. Like for example for investing into companies and assets worldwide. As far as i know many multinationals only transferred a small part of their existing offshore money to the USA and used most of that to buy back stocks and pay dividends. The article doesn't mention how much money had been "repatriated" to the USA from these accounts. It is correct that the whole idea of offshore shells holding intellectual properties for international licensing thing is done and over thanks to reforms in the EU killing the double-irish tax avoidance scheme and the USA introducing GILTI as a general measure against US companies sending oversea profits to a tax havens instead of the parent company. So the "intellectual property assets" are moving back to the USA. However i think the IP licenses also got a lot cheaper now that they are taxed, but i have no details on that. The european parts of the conglomerate will probably invest in some new data centers or a robotics company, lowering their taxable profits, instead of moving these profits to the USA. I know that Google moved €19.9B towards Bermudas in 2017, €21.8B in 2018 and €63B in 2019, the last year of the 0% tax scheme. (note: these numbers are different then the articles) Google EU did not grow 200% in 2019, they put off investments and stored the profits while they could avoid taxes. I would love to see some numbers that tell how much revenue they made per region of the world and how much taxes they paid in those regions and how much cash they move between tax regions to abuse the complex international web of tax laws. One side note: I do not know how much was initially invested to set up these global operations, if that investment money "leaving" even had any economic effect on the US market back then, if the investors got something, like shares of the privately traded international subsidiaries, and if the "repatriation" of money has an economic effect now. It is also completely unclear how big of a cut the US treasury got from all of that. As in: did the USA collect significantly more taxes in 2020 then in 2019 thanks to the "tax cuts" incentivizing moving money from oversea subsidiaries into the USA? So yes, the claim is substantially incorrect because it argues that the USA could get a lot more taxes IF multi-national companies would send all their global profits to the USA. While that is technically the truth, it is also nonsensical, they won't ever do that. Being outraged about that is a misunderstanding on how multinational mega-corporations function. And one last thing: only a hardcore american nationalists can truly believe that whenever someone in europa, india, south-east-asia or elsewhere uses the google pay app for a transaction in their own currency the american government is somehow entitled to get a cut because they collect taxes on the licensing fees of the google branding. How do they sayeth? No taxation without representation! (throws android phone into harbor)

by TwoBit 5y ago

Jon_Lowtek 5y ago

Well the key detail is that Google used the "Double Irish Sandwich" to push profits from the european market towards Bermuda instead of paying taxes on those profits in the european union. That might be a somewhat relevant detail for that whole outrage about not paying taxes in the USA. Taxation on international IP licensing is regulated in complex web of bilateral "no double taxation" contracts between nations and the whole Bermuda thing worked because ireland accepted "taxed elsewhere" but elsewhere was a tax haven with 0%. It is probably not a coincidence that trumps "tax cuts" create a tax rate that is slightly lower then the corporate tax rate in ireland. So it is better to move profits from the EU market towards the USA instead of taxing them in the EU. However the multinationals have likely already found a new way again to avoid both. The article is right that the multinationals can't move money from these offshore accounts into the USA without getting taxed and they can't move them back into the EU without getting taxed either, but there still were, are and will be opportunities to use those tropical island shell company treasure chests with no or minimal taxation. Like for example for investing into companies and assets worldwide. As far as i know many multinationals only transferred a small part of their existing offshore money to the USA and used most of that to buy back stocks and pay dividends. The article doesn't mention how much money had been "repatriated" to the USA from these accounts. It is correct that the whole idea of offshore shells holding intellectual properties for international licensing thing is done and over thanks to reforms in the EU killing the double-irish tax avoidance scheme and the USA introducing GILTI as a general measure against US companies sending oversea profits to a tax havens instead of the parent company. So the "intellectual property assets" are moving back to the USA. However i think the IP licenses also got a lot cheaper now that they are taxed, but i have no details on that. The european parts of the conglomerate will probably invest in some new data centers or a robotics company, lowering their taxable profits, instead of moving these profits to the USA. I know that Google moved €19.9B towards Bermudas in 2017, €21.8B in 2018 and €63B in 2019, the last year of the 0% tax scheme. (note: these numbers are different then the articles) Google EU did not grow 200% in 2019, they put off investments and stored the profits while they could avoid taxes. I would love to see some numbers that tell how much revenue they made per region of the world and how much taxes they paid in those regions and how much cash they move between tax regions to abuse the complex international web of tax laws. One side note: I do not know how much was initially invested to set up these global operations, if that investment money "leaving" even had any economic effect on the US market back then, if the investors got something, like shares of the privately traded international subsidiaries, and if the "repatriation" of money has an economic effect now. It is also completely unclear how big of a cut the US treasury got from all of that. As in: did the USA collect significantly more taxes in 2020 then in 2019 thanks to the "tax cuts" incentivizing moving money from oversea subsidiaries into the USA? So yes, the claim is substantially incorrect because it argues that the USA could get a lot more taxes IF multi-national companies would send all their global profits to the USA. While that is technically the truth, it is also nonsensical, they won't ever do that. Being outraged about that is a misunderstanding on how multinational mega-corporations function. And one last thing: only a hardcore american nationalists can truly believe that whenever someone in europa, india, south-east-asia or elsewhere uses the google pay app for a transaction in their own currency the american government is somehow entitled to get a cut because they collect taxes on the licensing fees of the google branding. How do they sayeth? No taxation without representation! (throws android phone into harbor)