Maybe it's because I'm young and don't have experience with large-scale tax problems, but I have struggled for years and still cannot understand why companies do this. Is it truly in Google's interest to work towards the minimization of government capability wherever it is? To ensure that California roads are less taken care of? To ensure that any local public debt is increased rather than decreased? It doesn't make sense to me. Wouldn't a company want to contribute its share of taxes to the government of where it is located, so that the quality of life is better for everyone there including the employees?
It seems to me that Google, especially being in California, is being...well, something close to evil by making sure they help out their local governments and people as little as legally possible.
I understand that their profits are higher each quarter because of this. I understand that's what shareholders demand. But why?! Can this attitude lead to anything except terrible news? I just don't get it.
Google pay taxes on all US income (not to mention payroll taxes, consumption taxes, etc.). There is a massive miscomprehension of these tax stories as they portray Google, Apple etc. avoiding all taxes when this is not the case. The income housed in Bermuda is from non-USA receipts, each of which have already passed through a local tax jurisdiction from wherever they were generated. They are not avoiding any taxes.
The reason they are kept offshore is because if the funds were naturalized back in the USA they would be double-taxed. It is difficult to argue that Google should pay local taxes once where a product is sold and then pay taxes again on that same money when it is transferred back to the USA.
Many large corporations that hold large cash balances keep them offshore. Around 75% of Apple's large cash holdings are held offshore. They have already paid tax on that money. It is the US naturalization laws that are broken, and the perception that Google, Apple et al aren't paying taxes or somehow avoiding them.
The best thing the US Government could do would be to institute another repatriation tax holiday. There is precedent for it as happen in 2004. As much as a trillion dollars could make its way back into the US economy if a deal could be worked out - a private mini-stimulus that the economy of 2 years ago really needed.
1. Companies are not necessarily double-taxed on foreign profits when they enter the US - they can actually claim a foreign tax credit to offset their US taxes. See here: http://www.irs.gov/pub/irs-soi/06itcorptaxsnap.pdf. There are issues with this - you cannot have a tax credit that results in a refund - but it is not a given that all profits are double-taxed.
2. Google (along with a lot of other companies) utilizes the so-called "Double Irish" (http://en.wikipedia.org/wiki/Double_Irish_arrangement) - and this, specifically, is a tax avoidance strategy. Thus, it is a misrepresentation to say that they are not avoiding taxes. Granted, they have passed through one local tax jurisdiction (Ireland) on their way to Bermuda, but that means that a lot of other countries, in addition to the US, do not get access to the taxes from companies that are operating in their countries.
3. US companies are already holding enormous amounts of cash on their books - but that hasn't lead to large-scale increased capital spend.
4. On 2004: the argument then (as now) was that these funds would result in jobs and new capital being spent. But that didn't happen. Instead most of the money was just paid out in dividends which really only affects, a big scale, people in the 1-2% incomes who get a lot or most of their income from dividends.
A red herring, I feel. If tax had been paid properly as you suggest then they could hold it in jurisdictions where it was generated, such as the UK. Instead it is moved to places like Bermuda through byzantine schemes to minimise the amount paid in the jurisdictions where the income was generated.
I'm sure you'd like the money to be "repatriated" to the US, but I'd like just some of it to stick around in the UK and Europe to pay for roads, schools, hospitals (and nuclear submarines) first.
Google paid £6M on tax on a turnover of £395M in the UK - given that they don't have that much operations in the UK that suggests they they have been avoiding tax on their UK operations by manipulating where they choose to make profits so that the profits occur offshore rather than in the UK.
Nothing particularly unusual or illegal about this.
So they have been "avoiding" tax - but there is nothing illegal about that, or from my perspective, particularly immoral about it.
£6M in corporate income tax, which is only one of many taxes (and usually the smallest component) that a corporation pays.
For eg. they would have collected a 20% VAT (consumption tax in the rest of the world) - which is another £80M, a 13.8% national insurance contribution, which would work out to be approx another £40M, and then on top of that a payroll tax.
I am not familiar with the other payroll tax rates in the UK but it is similar in most other countries - the three or four different tiers. In the USA payroll taxes are 5-6x larger than corporate income taxes. Add them up for Google in the UK and you get to £130-140M contributed from a gross of £395M - a very different story to the headline figures that are being argued.
edit: forget the figures, I don't know the UK tax system enough to even guesstimate, but the tl;dr is that corporate income tax is the smallest of a number of tax components that a corporation pays and arguing by taking out corporate income tax figures alone is misleading. This is the point that Google attempted to make.
For eg. they would have collected a 20% VAT (consumption tax in the rest of the world) - which is another £80M, a 13.8% national insurance contribution, which would work out to be approx another £40M, and then on top of that a payroll tax.
Consumer VAT and consumer income tax are not tax paid by a company, and it's disingenuous to suggest that 'a corporation pays'. They merely collect them from the customer/employee for the government, it's not as if the corporation contributes anything on top of that. They do contribute to NI as you mention, and local business rates on property in the UK at least, but the vast majority of revenues can escape taxation, and I don't think customer VAT, and employee IT can be considered paid by the employer, they are paid by the customer or employee.
There are of course many benefits to having a company setting up in your country (the aforementioned VAT and income tax receipts from the employees, rates, and jobs generated), but companies offshoring profits and shopping for tax jurisdictions by setting up fake subsidiaries whose sole purpose is to evade tax is a huge problem for all western countries, and not one they can address with current tax law. That's the reason that many receipts in Europe nowadays bear the legend 'S.a.r.l, Luxembourg'. All major corporations from Apple, to Amazon, to Google do this to some extent, and it results in tiny countries like Luxemburg collecting huge amounts of tax (in proportion to their size, and the true number of business who truly transact business there (as opposed to claiming they do)), simply because they're willing to give corporations the lowest international rate,and let them set up shell companies to funnel online revenue through the tax haven.
VAT is paid by the consumer, not by Google. The best you can argue is that maybe if people had not spent that money with Google they might have spent it on goods that do not have VAT levied on them. That is a pretty weak way to claim they are responsible for £80 million in additional tax revenue.
> Google pay taxes on all US income (not to mention payroll taxes, consumption taxes, etc.). There is a massive miscomprehension of these tax stories as they are portrayed as Google, Apple etc. avoiding all taxes when this is not the case. The income housed in Bermuda is from non-USA receipts, each of which have already passed through a local tax jurisdiction from wherever they were generated. They are not avoiding any taxes.
Saying they've paid anything in the "local tax jurisdiction[s]" isn't quite true. In most cases they've passed through Ireland and the Netherlands, even if the income is from other European countries. In most cases they haven't paid any corporation tax at all on the profits made in the local countries.
Take Starbucks in the UK as an example. They had sales of £400m but paid £0 corporation tax by ensuring the company didn't make a profit in the UK. It paid various license fees to foreign sister companies, and even purchased its coffee from Starbucks Switzerland to help offset profits. £0 profit in the UK, £0 corporation tax due.
> The reason they are kept offshore is because if the funds were naturalized back in the USA they would be double-taxed. It is really hard to argue that Google should pay local taxes once where a product is sold and then pay taxes again on that same money when it is transferred back to the USA.
They wouldn't be double taxed, the USA have double tax treaties with many countries. The reason they keep it off shore is because they're waiting for one of those amnesties that would allow them to bring the cash home to the US and pay far less than they would have outside the amnesty.
Example with no amnesty:-
Google pay 12.5% corporation tax in Ireland on European Revenues by using "license fee", loan or other perfectly legal schemes.
Google move money from Ireland to Bermuda tax free.
Google move money back into the US and pay (to the US) the difference between tax due originally and tax already paid (in Ireland).
Net result is Google pay the standard 35% (or whatever it is in the US) tax on the money. It's just a chunk of it goes to Ireland rather than the US.
Example with amnesty:-
Google pay 12.5% corporation tax in Ireland on European Revenues.
Google move money from Ireland to Bermuda.
US announce amnesty rate of 5.625% and Google moves money back to the US paying a total of 18.125%. That's a whole lot less than 35%.
It's exactly those amnesties that mean large US corporations can do this. Without them there would be little reason to hoard money offshore as it could never get back to the US without the full amount of tax having to have been paid on it.
I agree that tax amnesties are stupid, but you've got the logic wrong. When they've had them in the past, proponents were shocked at how few corporations took them up on it.
The trouble is that there is no advantage to bringing the money back. If you have your money in Bermuda, you can still invest it. You can buy securities, or you can loan it back to your sister companies in higher tax jurisdictions, and then the interest they pay you on it is generally tax deductible in the higher tax jurisdiction. The loan gives you all the benefits of having the money with none of the taxes. In that way they do bring the money back -- they just don't pay the taxes.
Even if they brought it back through the tax amnesty, what happens then? They've now got an extra billion dollars they didn't pay taxes on, so now they go out and invest it and the returns are taxable in the higher tax jurisdiction. Who thinks they're that stupid, when the alternative is to invest the money in the exact same investments but have the profits go to the sister company in the lower tax jurisdiction?
I remember reading that the US Congressional sub-committee report into a possible amnesty found that approx 50% of the money was back in the USA via securities and loans anyway.
With the 2004 amnesty - you are right - but there are a few things you can't do with offshore funds - which is why this time Cisco, Apple and the big pharma co's are lobbying for an amnesty
You can't do acquisitions, you can't do a share buyback and you can't pay a dividend.
If you are managing smaller reserves it makes sense to leave it offshore - but with larger reserves such as with Apple investors want you to do more with it (they want to _get paid_)
>If you are managing smaller reserves it makes sense to leave it offshore - but with larger reserves such as with Apple investors want you to do more with it (they want to _get paid_)
If they hold stock in a company whose share price has appreciated as a result of accumulating undistributed profits and they want money, they can always sell some of their shares.
And are you sure they can't do acquisitions? What stops them borrowing the acquisition money from their sister company, or doing the merger for stock?
Nice spin. Regardless of your angle, there is no "miscomprehension of these tax stories", but it is the case the Google does its best to avoid paying taxes in all countries except the US.
Considering that over 50% of Google's revenues are non-US, I personally find appalling how they avoid paying little-to-no taxes in other countries. Here are the self-proclaimed "don't do evil" and "down with Wall St." institutions acting as "vampire squids".
You should read about transfer pricing. In many cases it is entirely possible to assign where a large firm's income is made for tax purposes by internally transferring intellectual property.
On the point of why would tech companies want to do this instead of helping the community, I argue it may actually help California. Instead of doing the responsible thing and moving the firm to somewhere with a lower state corporate tax rate, the firm can simply avoid taxes. This keeps employees in the area contributing to state income and property taxes. In a world or multinationals, I am not certain corporate income taxes make sense.
I have first hand experience with transfer pricing. My old startup had offices in Australia, India and the USA, income from all over the world, etc.
These tax systems also apply to the smallest of startups operating online. Its just that Google can afford the best advice and are the biggest target.
My concern is that further changes to tax laws that are aimed at Google and Apple could end up affecting smaller companies and startups as collateral damage.
Google and Apple will wriggle their way out of any changes to transfer pricing laws, as they usually always do, while small startups and businesses might not.
While I agree with the general sentiment of your argument, it's still wrong since Google would get a credit for foreign taxes paid. Your post is moot due to this fact, aka reality. :)
You are free to send the government as much money as you like. How much do you send? If you are in the US, do you just send the amount that turbo tax tells you to, or do you send more?
Do you take any deductions (i.e. the standard deduction, or itemizing)? By the reasoning of your post, that would make you "something close to evil."
Priorities. I would pay the lowest possible amount I can legally pay in taxes and give to things that I prioritize. For example, the ACLU, the EFF, and the NRA. You sound like someone who already gives but for everyone else's benefit, here is a link [1]. Contributions to the ACLU Foundation are tax deductible for charitable purposes. (This means talk to your accountant if you make a lot of money.) Give, won't you?
But I don't want you to give money to the NRA (I assume that's the gun club), I would much rather you paid taxes.
I see the danger in the system you mention that lots of money will go to niche organisations out of proportion with societies requirements. Better to pay taxes in the hope that they are distributed where they are most needed.
I just saw [this](https://www.youtube.com/watch?v=SZb8EXUrQTo) video and I hereby withdraw any and all association I had or I implied I had with the deranged senile people. I hope everyone who still is a part of the NRA dies a slow and painful death (without the use of guns).
No matter how much cryptoz makes, he won't get near paying $2B in taxes. The extra taxes cryptoz could pay would have no effect on anything in the government but could really alter his/her quality of life. Google looks like they will make over $12B in profits this year, so $2B less of it wouldn't be noticeable in any tangible way.
If you are in the US, do you just send the amount that turbo tax tells you to, or do you send more?
Speaking for myself, I enter deductions into the H&R Block program and watch the estimated payment. When the payment is something I think is reasonable, I stop entering deductions. So yes, I do send more than I have to.
You do realize this is highly unusual behaviour, correct? OP's question was more or less hypothetical, in that almost everyone who isn't a programmer sends exactly the amount they have to, and no more.
(and often less, if they think they can get away with it)
That isn't equivalent to what Google does at all though; if they didn't shift business around to shell companies in Ireland or Luxembourg and just paid the "the amount they have to, and no more" they would pay a hell of a lot more tax in the UK. You are comparing two different things: sending in extra money, which I think we can all agree is rare (although I also could pay less tax than I do), and actively using complex accounting involving other countries so that you pay far less then you normally would (and other equivalent dodges for individuals), which is not common among individuals.
Of course, it is not so easy to avoid tax as a salaried individual, which is why your comparison is failing. Somebody on PAYE (i.e. most people) can't create a clone of themselves in Ireland to pay their income tax there instead of the UK. If that option was available to individuals then I'm sure plenty would take it (assuming Irish income tax is lower, I have no idea). That is what the debate is about though: some entities have great flexibility and can avoid tax if they want, others (individuals of average means or less) don't have the choice to pay less.
Agreed, it's different. I didn't want to make a broader comment, actually. Was just letting OP know that his behavior (used as an anecdote to counter the other poster's hypothetical) is highly unrepresentative.
On a side note, one point I've been stuck on is what to call the commentors above me. I know there's established language for it (parent, grandparent) but I have trouble using it right. Anyone know what I should have called the poster of the hypothetical, and the response that I responded to?
This strikes me as a tragedy of the commons. It's in everyone's individual interest (including corporations) to pay as little tax as possible.
Assuming that this is entirely legal, I don't see how this is a problem in Google's behaviour. If there is a problem, it is in the tax code, and the Government has sole responsibility for that.
Making tax codes simpler would make it easier to not leave loopholes, but politics always seems to drive it in the other direction. Perhaps the need to avoid this kind of situation can be a good force in keeping tax codes simpler.
These "loopholes" are not really what you think they are. Most of the complexity of the tax code doesn't come from "loop holes," but from trying to define a framework for computing net income as opposed to gross income. In the corporate tax case, complexity also comes from trying to avoid taxing companies for profits that have nothing to do with American operations.
> These "loopholes" are not really what you think they are.
I am defining a loophole as anything that the media are getting into a frenzy about that is perfectly legal. If one prefers that they weren't using some technique to minimise tax, then it [that technique] is a loophole. If this means that they've failed to "define a framework for computing net income as opposed to gross income" that works, then that's a loophole.
> In the corporate tax case, complexity also comes from trying to avoid taxing companies for profits that have nothing to do with American operations.
I don't see what has got to do with it. Clearly no jurisdiction can justifiably claim that it deserves tax revenue unless a company has operations there. If it has operations there, it falls under that jurisdiction's tax code. If the company can avoid paying some tax in any particular jurisdiction that one would like it to be paying, then the tax code of that jurisdiction is broken.
A good example of this is the Mortgage Tax Credit, a much loved tax break for average, middle class families. This is essentially a "tax loophole" for people who buy houses.
It's just more fun to yell about tax loopholes that corporations utilize, because big faceless corporations sound more evil than tax breaks that John and Jane benefit from.
Ironically, the largest beneficiaries of the mortgage interest deduction are the banks. If you give one person a subsidy, it allows that person to buy a home when they otherwise couldn't. If you give everyone a subsidy, they just bid up housing prices by nearly the entire amount of the subsidy. (If the government really wanted to make it easier to own a home, they should subsidize new home construction in order to increase the supply of homes and thereby reduce their cost.)
But once you've established the deduction and people have already bought homes expecting it, they require its continued existence to be able to keep making the payments.
What they really ought to do is remove the deduction for new mortgages but not existing mortgages (or refinances of existing mortgages that don't increase the loan principal).
I'd say that was more of a welfare benefit than a tax loophole. It's just that we don't like to label money going to average middle class families as welfare. Much government social expenditure is structured this way: if you are poor you are really made to know that you are receiving welfare, and sometimes they don't even give you real money. On the other hand, middle class people don't get 'welfare', just 'tax breaks'.
The result of this is that better off people underestimate how much direct government assistance they have received [1]. I won't comment on the potential political motivations for dividing up the welfare state in this way
The mortgage interest deduction benefits wealthy households much more than "average middle class" households. The tax advantage of home ownership is also reflected in higher prices for those houses, so it's not much of a win in any case.
I only used the terminology 'average middle class' because the parent had. I'm British and terms like working class and middle class seem to have slightly different meanings in the US so usually I try to avoid using them.
Also, even if it is not much of a win for the wealthy households, higher property prices generally mean higher rents so it disadvantages the class of people that rent. A similar argument applies to housing benefit in the uk, which is something you receive if you are poor (working or not). The recipient doesn't really see the money, but it helps to keep rents high so it's more of a 'landlords benefit', much like your mortgage deduction seems to be of more benefit to the banks than home owners.
Just to be clear, there are two problems with the mortgage interest deduction. First, it's regressive; by the numbers, the people who benefit most from the deduction are those least in need of a benefit from the government. Second, regardless of your income level, the mortgage interest deduction artificially increases the desirability of residential real estate, which drives up the prices, which acts as a shadow tax on home ownership.
The first problem you could address by capping the benefit somehow. The latter you cannot.
My microecon is a little rusty but isn't the second problem essentially a wash? It seems that the shadow tax should never exceed the mortgage interest deduction (assuming rational markets).
To a first approximation, the MID pushes up the costs of housing by as much as the tax deduction. Making it entirely useless for "encouraging home ownership."
Honestly, it's hard to say exactly how much money the government has given someone. If I agree to a compromise where my taxes go up by $10,000 but I now get to deduct my frobozzes and so they go down $1,000, am I being given $1,000?
Or, if the government decides to tax everyone at 100%, but then gives out a series of "tax breaks" that lands everyone at their current tax level, is whatever government people get to keep welfare?
I don't want to go to far in the other direction. It's 100% possible for politicians to spend money via tax breaks. So neither worldview really works, but you have to have something between them.
As others have said, many people think that corporate tax should be abolished completely. I'm fairly liberal (socially and fiscally), but I also support this.
Ultimately, I want corporations to be as profitable as possible, because that is good for our economy. Profitable companies buy and sell goods, hire individuals, the usual talking points. If we want to give more money to public education, increase income/capital gains tax (e.g. individuals)...not corporate tax.
Besides, you can make the case that only a small portion of the taxes Google pays actually improves the roads or public education. A large percentage will go towards things like defense research, healthcare, bridges in Alaska, any number of things that have no bearing on Google at all.
(I'm not a Google apologist, this would apply to any company.)
I want corporations to be as profitable as possible, because that is good for our economy
What if they spirit all of that money out of the country to somewhere else? Surely it benefits the host country more to tax profits rather than just let them escape entirely?
This is a fair point. But why would a company spirit the money away if there wasn't corporate tax? Wouldn't it be wiser to let it sit in country that doesn't tax it?
I honestly have no idea, but if the company is owned abroad by a company listed on a stock exchange in that foreign country, by institutional stockholders also in that country, one would assume that they'd be trying to move some proportion of it back 'home', if there is such a place.
I'll freely admit my knowledge of corporate finance falls apart somewhere around here.
So corporations should be able to use all infrastructure provided by taxing individuals and make no contribution? Should they pay, for example, local property tax?
I'm not sure I understand how those two are equivalent. If you want to tax a company for using public infrastructure...tax them for using the infrastructure (property tax, tolls, etc).
Collecting a portion of their profit just because it's another place to add a tax doesn't seem to make sense. Imagine Google compared to a trucking company. Google makes 100x the profit of this particular trucking company. Does Google add 100x the wear and tear on roads that the trucking company does? Why should they be liable for a larger portion of maintenance on said roads simply because they have a larger profit?
Many western economies have a graduated tax system, that is the more money you earn, each additional dollar is taxed at a slightly higher rate than the previous dollars (or euros). You will experience this as the harder you work the more money you are obligated to give to the government.
But here is the rub, what if the Government spends the money you gave them on an all expense paid trip for themselves to Las Vegas where they ran up big bills at strip clubs and on luxury suites? How do you feel about that?
How about the Greek people, their economy in flames, their country ruined, where "not paying taxes is a national pastime" according to The Economist.
The insight you are missing is that when "your" opinion of the government's fiscal policy is destroyed by abuse, "you" feel completely justified in exploiting all the legal ways to not give them any more money than you have to.
It is hard for an individual to fix government it is easy for an individual to minimize their tax burden. So people take the easy way out.
> You will experience this as the harder you work the more money you are obligated to give to the government.
This is not really true. There are many ways to make money without expending much effort. Example: capital gains. By simply having a lot of money, I can invest this and make a solid profit...and be taxed in a lower bracket.
It has no bearing on effort expended. In fact, you can easily argue that "More Effort = More Money" has a very definite ceiling which you can't cross. At some point, you have to start leveraging other assets (money, employees, etc).
Taxing based on the amount of income earned is really the only sensible way to tax. You can't tax "effort"
I don't disagree with your thesis that earned income is a reasonable basis for taxation, it is certainly better than 'value added.'
But wonder if you are arguing that earning money through non-manual labor is 'effortless' ?
This could use some clarification:
" By simply having a lot of money, I can invest this and make a solid profit...and be taxed in a lower bracket."
Is there some magic money pool somewhere that I can put a million dollars into and count on it to make a "solid profit" ? What is a 'solid profit' ? Is it inflation + 4%? 5%? 10%?
People have told me that programming takes no effort, they say "Oh yeah, you just go in there and type in some stuff and make a word processor or something and then sell that again and again for $100, its like printing your own money!" I realize that they don't understand what programming involves in terms of making a living at it.
For the last 15 years or so I've had the opportunity to manage the funds that I rolled over from a 401K as a 'self managed IRA'. I haven't found making that money 'grow' either easy or effortless. Rather it has been very much a challenge.
During the dot-com frenzy I knew people who mortgaged their houses to raise capital that they were going to 'make money hand over fist' with. But I don't know any of them where that turned out to be the best use of that capital. Not definitive I know but it made me cautious.
It takes effort to make a solid profit from investing, but more than that, it takes effort to avoid losses.
That's one of the reasons wages and investment are treated differently: your effort can be wasted in either case, but with investment you can also lose your capital.
Largely true, with the exception of the banks lucky enough to be a Primary dealer for the Federal Reserve, for whom the Fed is indeed your magic money pool.
In regards to investing, nearly everyone is best off just investing in an index fund of the entire market.
The progressive income tax exists because there's a diminishing marginal utility of income.
In regards to government expenditures, I'd say generally, it makes sense morally to reduce your tax as low as possible, and than donate that amount to charity, research, or whatnot, not just because government wastes money, but because they use money to engage in horrific activities such as the Iraq War.
This would make sense if you were talking about Zynga, but we're talking about Google here.
A dollar spent on Google's self-driving cars program will improve transport in California more than a dollar spent on resurfacing highways; a dollar spent on removing SEO spam from search results will improve education in California more than a dollar spent on paper textbooks full of lies sold by corrupt monopolies; and a dollar spent on developing Android will improve smartphones more than a dollar spent adjudicating pointless patent cases filed by patent pirates like Apple and Intellectual Ventures to eliminate competition.
And then there's the benefit to the rest of the world outside California.
And then there's the fact that a third of your tax money goes to the military, whose mission is to make the world a shittier place for everyone outside the US.
When I wrote that comment, I thought that investment in R&D was taxed because it added to the book value of the company —you carry the results as intangible assets on your books until you depreciate them. Some other comments have asserted that that's not the case, since capital investment is not taxed as profit.
From the tax money they would pay only a very little part would go towards their community and employees. Most of it would be wasted on a lot of nonsense. If their goal was to make the world a better place it would be a lot more efficient to take the matter in their own hands and use their money directly on stuff they think should work better. States and governments are hugely inefficient.
> Is it truly in Google's interest to work towards the minimization of government capability wherever it is?
This is the wrong perspective. They're working toward maximizing their profits, not minimizing their benefit to the state.
$1 billion of taxes into the state does not even come close to producing $1 billion of benefit to themselves. Considering how much money gets distributed to parts of the state hundreds of miles away and how inefficiently (and sometimes wasted) the government handles money, it's probably fractions of a penny on the dollar that they actually get back in some benefit.
Is it worth it to you to avoid taxes? Yep. Even if it means that your local school where your children actually go to gets a bit less money, you save a couple thousand dollars and the school misses out on a hundred bucks. The impact on you personally is beyond negligible.
It depends on the country, but in many (certainly in the US) a very significant portion of tax revenues goes toward funding immoral activities and corruption. If you're worried about the health of society, you should be worried about the trillions devoted to war and propping up the financial industry's elite, not the billions Google retains in order to create more free services on the internet.
It seems to me to be a "tragedy of the commons" situation: It's in each individual business' interest to avoid as much tax as it can, as it receives all the benefits of the extra net income, while the damage to the state is shared by everyone; but, if every business makes this individually-rational economic decision, everyone suffers from the adverse effects you describe in your first paragraph.
Free rider problem. Google would get some benefit from it's local governments being more effective, but it would also pay a cost. Meanwhile, it's competitors keep high margins, and don't pay anything.
Say California closes tax loopholes. Then all California companies are placed on an equal footing. But they're now at a disadvantage to non-California companies that don't pay taxes.
Usually higher/simpler taxes will be the better solution. The higher the level they're applied at, the better, as far as the companies are concerned.
Recall that Amazon has been pushing for Federal rules on state sales taxes. Absent those, it's been simpler for amazon to fight paying taxes rather than set up a compliance system and pay taxes on a state by state basis.
Perhaps Google as well as anyone else, including my self, feel that they can spend 2B in a better way than the government would. For example, lobbying for more open internet.
They're not spending that $2B. They're putting into "safe" investments like treasuries or just keeping as cash. Thus, you are effectively paying them to hold onto it via your taxes (for the bonds) and inflation (for the cash).
I would imagine what Google does is less "evil", while also being totally legal, than how California government would actually chose to spend those taxed dollars. Maybe if Google holds off a little longer then California may actually get more competent people handling their debt obligations and future expenditures. Overspending at a local level needs to be reigned in for any tax revenue to be truly effective.
Why is California's state government in lots of debt?
A city of 36,664 with a 16% unemployment and a per capita income of $24,800 paid its council men twice of what is the salary of the POTUS[1].
I am personally opposed to capital punishment but I would not mind the strictest possible sentence to these people other than a death sentence. Perhaps suspend their drivers' license and passport and make them pay some enormous amount of money (in addition to the money they took from the government) which they cannot wipe away with a bankruptcy.
If the CA government had more income, I'm sure they would just find new ways to deplete it even faster. More money does not fix behavioral problems. This is a common pattern which many fail to observe.
It seems to me that Google, especially being in California, is being...well, something close to evil by making sure they help out their local governments and people as little as legally possible.
I understand that their profits are higher each quarter because of this. I understand that's what shareholders demand. But why?! Can this attitude lead to anything except terrible news? I just don't get it.