On the Google corporate website, under the heading Our philosophy there’s a subheading that says You can make money without doing evil. Well, that’s good to know. In fact, Google has set up a philanthropic organization at www.google.org to do good.
On the google.org website, under the heading Philanthropy @ Google, it says, “Google approaches philanthropy in a variety of ways. In 2010, charitable giving at Google exceeded $145 million in funding to non-profits and academic institutions, and more than $184 million in total giving when including Google Grants, Google.org technology projects and product support for non-profits.”
That’s impressive. And it suggests that Google is interested in being a good corporate citizen, doing good instead of evil while making money.
On the other hand, we heard from National Public Radio that eight years ago Google transferred all of its non-U.S. intellectual rights to a subsidiary in Ireland. Intellectual property rights are the meat and bones of Google’s business. And if those rights were in the U.S., all profits due to those rights would be taxed at the usual corporate tax rate of 35 percent. But Google’s tax rate in Ireland is only 12.5 percent.
But wait, there’s more! Google’s Irish subsidiary pays royalties to a second Irish subsidiary that has its tax residency in Bermuda where the corporate tax rate is zero.
Wait, wait, there’s still more! Ordinarily, the first Irish subsidiary would have to pay taxes to shift money from Ireland to Bermuda, so to get around that little problem, Google sends the royalties from the first Irish subsidiary to a Ducth subsidiary that passes them on to the second Irish subsidiary that has designated no-tax Bermuda as its residency.
When it comes to arranging things to lower your taxes, U.S. Supreme Court Justice Learned Hand has said this — Everybody does so, rich or poor, and do right, for nobody owes any public duty to pay more taxes than the law demands. Taxes are enforced exactions, not voluntary contributions.
Maybe the tax code needs to be rethought and rewritten.