Like Apple and Twitter, Google skirts the U.S. government's higher business taxes by funneling revenues through subsidiaries in Ireland and other tax havens. And we mean almost all its revenue. This may not be new news, but the numbers remain staggering, and disgusting. Google's Ireland-based subsidiary just reported a $22 billion profit, on which it paid a grand total of 0.17% in taxes, or $37 million. To Ireland.
As Quartz reports, this has been going on for a while, and it's totally legal. Apple does it, and that's something that raised eyebrows in the Senate last year. But yeah, they're still doing it. And so is Twitter, and Facebook.
President Obama isn't ignoring this problem, and he said in an interview Thursday that he's deeply disapproving. But I'm not clear what he wants to do about it.
What we're trying to do is to say that if you simply acquire a small company in Ireland or some other country, to take advantage of the low tax rate, you start saying we're now magically an Irish company despite the fact that you may only have a hundred employees there. And you've got 10,000 employees in the United States. You're just gaming the system. You are an American company. You continue to benefit in all kinds a ways from being an American company. It is true that-- you know, there are a lot of things that may be legal that probably aren't the right thing to do by the country.
Quartz gets a bit deeper into the numbers, which include huge "administrative expenses" for Google Ireland Ltd. But no matter how you cut it, they're avoiding paying billions of dollars to the U.S., which the U.S. might want to start demanding.
Of course, it’s not fair to count tax a percentage of revenue, so here’s a slightly better measure: In 2013, net income before tax at Google Inc, the US company, was a little over 20% of revenue (p.27). If its European operations were equally profitable, that would suggest net income of €3.4 billion, making Google Ireland’s effective tax rate 0.81%still hardly a big burden.
Google also has a Bermuda-based subsidiary for the same reason, where they were funneling $10 billion in profits as of 2011, and meanwhile you have Republicans arguing over the notion that the federal minimum wage should rise any higher than $7.25 an hour.