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The head of the internet giant Google has defiantly defended his company’s tax avoidance strategy claiming he was “proud” of the steps it had taken to cut its tax bill which were just “capitalism”.

In an interview in New York Eric Schmidt, Google’s Chairman, confirmed the company had no intention of paying more to the UK exchequer. Documents filed last month show that Google generated around £2.5 billion in UK sales last year but paid just £6m in corporation tax.

The Californian based search giant has also been revealed to have sheltered nearly $10bn of its revenues in Bermuda allowing it to avoid some $2bn in worldwide income taxes in 2011.

But Mr Schmidt said such schemes were legitimate and the company paid taxes “in the legally prescribed ways”.

“I am very proud of the structure that we set up. We did it based on the incentives that the governments offered us to operate,” he said.

The Silicon Valley boss went on to suggest that Google would not turn down the opportunity to draw on the big savings allowed under the law in the countries it operates in: “It’s called capitalism. We are proudly capitalistic. I’m not confused about this.”

He also ruled out following Starbucks in voluntarily handing more money over to the UK Government.

“There are lots of benefits to [being in Britain],” he said.

“It's very good for us, but to go back to shareholders and say, 'We looked at 200 countries but felt sorry for those British people so we want to [pay them more]', there is probably some law against doing that.”

Mr Schmidt’s defiant stance is unlikely to find favour on either side of the Atlantic with both the American and European Governments searching to find ways of forcing “stateless” internet companies such as Google to pay more tax.

The issue will be raised by George Osborne when Britain takes over the chairmanship of the G8 and will also be investigated by the Organisation for Economic Co-operation and Development (OECD).

Last week the Chancellor said he was committed to “leading the international effort” to prevent international companies transferring profits away from major economies, including Britain, to tax havens.

“We will put more resources into ensuring multi-national companies pay their proper share of taxes,” he said. “With Germany and now France, we have asked the OECD to take this work forward and we will make it an important priority of our G8 Presidency next year.”

Tonight Margaret Hodge, chairman of the powerful House of Commons Public Accounts Committee, which recently cross examined Google UK on its tax affairs said Mr Schmidt should be ashamed rather than proud of his company’s tax bill

“For Eric Schmidt to say that he is ‘proud’ of his company’s approach to paying tax is arrogant, out of touch and an insult to his customers here in the UK,” she said.

“Ordinary people who pay their taxes unquestioningly are sick and tired of seeing hugely profitable global companies like Google use every trick in the book to get out of contributing their fair share.

Google should recognise its obligations to countries like the UK from which it derives such huge benefits, and pay proper corporation tax on the profits it makes from economic activity here. It should be ashamed, not proud, to do anything less. ”

Tax haven competition is good for keeping taxes lower in other countries.

He's got a good point about the shareholders. Corporations are indeed legally obligated to not waste their shareholders' money, so it may very well be illegal for them to not take advantage of any tax loopholes they can find. I wonder how Starbucks's shareholders are reacting...

And American states.  Witness the capital flight from California to Texas.

It always comes down to this: incentives matter.

i know these guys are in bed with the cia and all but is it just me or does it seem as if they do so much more good than harm on net. Just the other day they had a petition against some new internet censorship bill right on google.com main page. Perhaps the elites are beginning to lose control of what used to be their machine? Or put differently the states emulation of capitalism is, despite the states best efforts, breaking free of its bonds and becoming real capitalism.

Any good propaganda has a seed of truth, otherwise no one would be convinced by it. This "breaking of the bonds" is a controlled event long planned for, and they have a new and improved set of chains waiting for you on the other side. All you have to do is click accept.



As far as the OP subject matter, as a regular every day person try walking into the IRS and telling them that. See how fast they repo everything but your dirty drawers. As an individual I believe this is a healthy mindset, the economy crushes individuals and small businesses and ANY advantage should be taken. IMO commercial entities, especially those that have a monopoly on an industry have a special responsibility to pay their fair share so YOU AND I don't have to pay ours AND THEIRS. Believe me, currently we pay so companies like google don't have to.

Yes. So many people forget this. It's the most basic law of economics, but all too often, it's simply ignored.

With this advantage, they should contribute to the general welfare of that country.  

He is correct on this.   We should incentivize companies to pay a fair tax and create domestic jobs for the nation they are headquartered in.  They have gain a significant advantage being able to pool capital as a corporation.  With this advantage, they should contribute to the general welfare of that country.  If not then it is acting like a parasite.   There is no free lunch.

If i want two candy bars and the guy next to me wants one candy bar he pays half as much as me, he pays his fair share. The market is where people pay their fair share. If i drive on a private road twice as often as joe i pay twice as much as joe, this is my fair share. Government is the place where people who don't use the roads at all pay 1000 times as much for the roads as some other people who use them all the time. Government is the only place where things get wacky and some people pay amounts that are not fair. Taxation isnt paying your fair share, paying your fair share is paying your fair share, donating to a charity is paying your fair share, donating towards the building of a road is paying your fair share. taxation is the use of violence to force other people to pay what you believe is their fair share to the people you believe they owe it to.

He is correct on this.   We should incentivize companies to pay a fair tax and create domestic jobs for the nation they are headquartered in.  They have gain a significant advantage being able to pool capital as a corporation.  With this advantage, they should contribute to the general welfare of that country.  If not then it is acting like a parasite.   There is no free lunch.

This doesn't make any sense. People are people no matter what "country" they're living in. Who cares if a company contributes to the "general welfare" of people in another country, by investing or selling products there. Your suggestion just promotes nationalism.

This doesn't make any sense. People are people no matter what "country" they're living in. Who cares if a company contributes to the "general welfare" of people in another country, by investing or selling products there. Your suggestion just promotes nationalism.

Yes is does, the nation you live in matters.  If you don't care about it at all then your a poor example of its citizenry.   I am American and I care about the general welfare of other Americans.   I also disagree with our current policies and I do what I can not to give me consent to it.  But I am still American and care about its people.   I also care about other nations and hope they feel the same way about their nation as well.  Under those terms I hope we can continually finds ways to peacefully works together and trade.

I guess we just have different values. I care about the human race no matter where they come from, not just some group of people living in some imaginary boundaries. Of course I care about the general welfare of my neighbor, someone I know, more than someone in Asia that I do not know. I can't really say that I care about the general welfare of someone I don't know living in California more so than someone I don't know living in the EU. They are both human.

From an economic perspective the poorest people in America are richer than the middle class/richest people in many other countries. So, if you think time/money will help educate/clothe/feed people in poorer countries, then every $1/minute you spend helping the poor in other countries will give those people a lot more value than it would if you spent the money/time on poor people in the USA. So in effect you are helping the human race more.

From an economic perspective the poorest people in America are richer than the middle class/richest people in many other countries. So, if you think time/money will help educate/clothe/feed people in poorer countries, then every $1/minute you spend helping the poor in other countries will give those people a lot more value than it would if you spent the money/time on poor people in the USA. So in effect you are helping the human race more.

How do you think those companies get their money?

Hey Dalkore, you seem to have missed this in the shuffle:

Care to answer?

Not sure that you asking.   I will give a shot to what I think your asking though.  I assume companies sell a product or service and they receive compensation for.

Exactly. And do these products or services not contribute to the general welfare of the country?

They do.  But I also add that this did not happen is a bubble or vacuum.  They took advantage of that stable environment that provided them the opportunity to profit.  From that profit, the company is responsible to pay a just portion is taxes that go to maintain that environment and infrastructure. 

They do.  But I also add that this did not happen is a bubble or vacuum.  They took advantage of that stable environment that provided them the opportunity to profit.  From that profit, the company is responsible to pay a just portion is taxes that go to maintain that environment and infrastructure. 

So what's the expected response when the government start getting in the way of the functioning of the infrastructure. Just as an example - California's newest round of emissions laws have forced truckers to purchase brand new rigs that actually get about 10% less gas mileage when hauling a load. They're also paying a higher licensing fee to pay for the regulation on the new engine components which are being inspected at weigh stations.

If they wish to maintain it, yes, and given that it's how they were able to provide the goods or services in the past, and presumably how they would be able to do so in the future, why would they not wish to maintain it?

Since they clearly would wish to maintain it, what purpose is there to forcing them to maintain it?

I think they should make a fiscal law where executives and shareholders linked with a corporation would have to pay every part of public service they use for that corporation.

So what's the expected response when the government start getting in the way of the functioning of the infrastructure. Just as an example - California's newest round of emissions laws have forced truckers to purchase brand new rigs that actually get about 10% less gas mileage when hauling a load. They're also paying a higher licensing fee to pay for the regulation on the new engine components which are being inspected at weigh stations.

Cite your source.   

Well what people should be doing on any issue that they have a problem with, is come up with a better solution and lobby the hell out of it so that a dialogue and start and work on a compromise if your new solution is superior than the law you think is inferior. 

It's legislation, not law. Solution: let people/businesses make their own personal decisions and take responsibility for their actions whether they are "good" or "bad."

Yes, that's called Anarcho-capitalism.

And how would people/business take responsibility for their actions?   It is taught in business school to externalize as much as you can, they are call externalities (http://en.wikipedia.org/wiki/Externality).  What if their decisions have a direct affect on me in a negative way?  What should happen then?  How would it be administered?   And by whom?

Mmm, you're starting to convince me. I like my socialist state, but I don't like when multi-nationals corporations come here, take all benefits and get their money out. It could be interesting that if a business is a multi-national, the anarcho-capitalism apply to that business. You come here, you pay no taxes, the government send you a bill and you deal with it. It cost too much? Go elsewhere or pay your taxes like everybody else.

And how would people/business take responsibility for their actions?   It is taught in business school to externalize as much as you can, they are call externalities (http://en.wikipedia.org/wiki/Externality).  What if their decisions have a direct affect on me in a negative way?  What should happen then?  How would it be administered?   And by whom?

If they wish to maintain it, yes, and given that it's how they were able to provide the goods or services in the past, and presumably how they would be able to do so in the future, why would they not wish to maintain it?

Since they clearly would wish to maintain it, what purpose is there to forcing them to maintain it?

They do.  But I also add that this did not happen is a bubble or vacuum.  They took advantage of that stable environment that provided them the opportunity to profit.  From that profit, the company is responsible to pay a just portion is taxes that go to maintain that environment and infrastructure.  

Actually, I'd call what he did conceding my point, and then attempting to make another one.

Externalities require that you are actually able to externalize all those costs. For instance, by dumping chemicals in a river instead of treating them.

With gov't regulations, you can buy a congressman or twelve, and get laws passed that let you do that. Without the government to do that, you're left dealing with the people who live downstream from you. Nothing like a big damage settlement to re-internalize a cost.

Actually, I'd call what he did conceding my point, and then attempting to make another one.

That's really close, except there's no monopoly government. It's just a collection of service providers. Some offering competing services. Trash pickup, for instance, or road paving, phone service, etc. Either you pay, or you don't get that service.

How are you going to capture your damages from your winning settlement?  Come force my "private" bank to give it up.   Maybe my private is the bank where there motto is "we don't give up your money to anyone".   This is what I am talking about, your voluntary system does not work without an actual third party strong enough to enforce compliance.

Myrkul - What happens to people in this society who can not afford a basic service?

Well, you're welcome to take that tactic, but then, I'm not obligated to buy your product, either. Neither is anyone else. And if you're going to be a dick about dumping poison into the river and then not paying to clean it up, I'm for damn sure going to make sure that all my friends, family, acquaintances, online peer groups, and random passerby on the street know that you're being a dick about it, and if they don't want to support you dumping poison into rivers, they should not buy your product, either.

Even the poorest families in the US have color TVs. Before you say that this doesn't mean anything in context, I assure you it does. If you think about it for a second, you may even see what.

But I see where your going and yes, we have a much higher standard of poor than even 50 years ago. I still would like to know what happens when someone who is truly poor can not pay for a basic service in your society.

Hate these politics guys.
You want companies to stop using tax loopholes? --> CHANGE THE FUCKING LAW.
Otherwise? --> STFU.

Myrkul - What happens to people in this society who can not afford a basic service?

I completely agree with your statement. I did however state it was my opinion. This is more along the lines of the message I was trying to communicate:

There is nothing wrong with nationalism, as long as it is not supremacist. People seem to be unable to get that there was a time when the two words weren't bound together conceptually. Currently nationalism is a reality of our economy. Most of the world has no problem being nationalist. We can talk about globalist utopias all day, but in that margin set aside for "globalism" the other nations will happily displace the resources which another nations once consumed and simply shift nationalist power. I do not think we will or should have a global government. Human beings are far too socially immature to allow control over the entire globe to be allowed to be had by a very small handful of people. There are too many unique differences in each place on the planet to be homogenized into a giant global "melting pot" without destroying exactly what makes them unique.

Nationalism is the belief that being born in an arbitrary plot of land that you didn't choose, somehow makes you superior or more worthy than being born outside said plot of land.

Nationalism is an insane belief, as insane as thinking that having faith in a certain invisible magical being is superior to having faith in a different invisible magical being.

Nationalism is also a very dangerous belief, because it predisposes people to collectivize strangers from different plots of land and believe evil and false things about them.  And you all know what is enabled by such an odious collective belief (hint: the rulers can use this to order the peasants to mass murder the other peasants, and their peasants will happily comply).

When you break beliefs into their structural components ("people doing things"), pretty much all modern cultural beliefs are simply insane.

Myrkul - What happens to people in this society who can not afford a basic service?

As already pointed out, this happens a lot, but the problem is their own loopholes, in many countries, including the UK.
I don't like what Google is doing, it's cheeky as hell, but if legally they can do it, that is the governments problem. Their own law allowed them.
Remove or close them loopholes, problem solved. They could stop it if they wanted, by changing the laws.
Problem is the people capable of changing them also like or use those loopholes so they'll won't be too inclined to do that.

Tax laws from little I know are a total mess, filled with addition after addition, allowing for loopholes everywhere.
Simplicity is needed, not another band aid, no if or buts or maybes in the right situation, can you avoid paying your taxes.

I think you're severely oversimplifying both concepts.

Both of these things exist because they appeal to certain built-in human qualities.