Jesse Drucker at Bloomberg is fast developing a reputation as one of the best tax journalists in the world.
He has just published an investigation into Google's tax affairs.I strongly recommend it.
And yes, I do know he quoted me, and that I have done work on Google in the past, which Drucker's report develops, but the work is his alone.
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Very interesting report. The one thing that jumped out at me though was that Google employs 2,000 people in Dublin. That, to me is a real presence there, and that’s 2,000 people all paying tax and contributing to the economy in Ireland. I am thinking, “good on Ireland”.
If that means that the US loses out on some tax, then so what? Does the US lose any sleep over the 100s of billions it is depriving countries of by continuing to allow Delaware, Wisconsin, Nevada etc to operate as offshore centres that are the most lax and secretive in the world?
It is such a pity that my own country the Netherlands plays this role in this.
Lets not forget that the IRS has agreed the structure. Clearly they aren’t too concerned about it.
Richard – You are getting through – keep it up!
An article appeared today in the Irish Times with a partial attribution to Bloomberg. To my knowledge the phrase ‘Double Irish’ has never before appeared outside online comments in that organ.
@Freeborn Man.
The tax remits of the Google employees pale into insignificance compared with the lost corporation tax. Say €40m compared with €bns.
@Pope Epopt
Thanks
And about time too!
Why are the Irish so tolerant of tis absurd abuse?
Pope – but if Ireland did not offer the tax incentives then Goggle would not employ anyone in dublin. The Irish government would never get the corporation tax as google would not be there in the first place, or they use some other mechanism to avoid the tax. So, we figure, it’s better to have the jobs than nothing.
Richard “Why are the Irish so tolerant of tis absurd abuse?”
1. Because it creates jobs in ireland
2. It isn’t abuse in their eyes, nor in the eyes of the IRS, who have approved the structure – presumably in the recognition that Google will either remit profits to US eventually, or the extra profit is used to create more jobs in the US
3. If the Irish didn’t do it, then some other EU country would – mamy of them have similar holding company regimes, including the UK, which also offers the same secretive unlimited company structure that is outlined in te article
@Richard Murphy
We have (with some honourable exceptions) until the recent collapse, admired what we call ‘cute hoors’. These are people that play the system to their own benefit and damn the consequence to others; who will never take the straight road when a twisted one can be invented.
It’s still not possible (see Freeborn Man’s response) to even discuss the absurdities and the longer-term sustainability of the Irish corporation tax arbitrage scam in polite society.
@Richard Murphy
Fortunately I don’t mix much in polite society, and polite society doesn’t mix with me.
I know people like banging on about Cayman, BVI, Monaco etc in relation to abusive tax avoidance. But the reality is that the Big 3 that facilitate most tax avoidance in the EU are Ireland, Luxembourg and the Netherlands. Richard, when are you going to dig into this? I know Cayman and Monaco always yield the odd Tory minister or Philip Green but they are small fry when compared with the private equity funds etc. who route through the Big 3.
@Vercingetorix
Open your eyes
See http://www.secrecyjurisdictions.com
and http://www.financialsecrecyindex.com
When you’ve rwead the 2,000 odd pages available come back
Pope – i know the cute hoorism (and hopefully now it is dead for good) you refer to, but that is not the point here.
My point is that, like it or not, commerce is now global, and companies have a vast choice of where they base their operations/headquarters/holding companies. It is particularly true in services such as those that Google provide. All I am saying is that arbitrage is occurring everywhere – if Ireland doesn’t offer the tax incentives that attract Google, then there are plenty of other jurisdictions to choose from who will (including the UK).
Arbitrage also occurs in non tax ways as well – Government grants, cheap land deals to build on, and subsidised training, for example. Another is an indirect form of arbitrage carried out by the Governments of developing countries like India, who deliberately fail to tackle poverty, resulting in a ready supply of cheap labour for developed nations’ outsourced services.
And even within countries arbitrage occurs – if Bangalore gets too expensive, then hey, let’s just move to Pune where the people are poorer. If rents are too high in London, then, hey, Manchester are giving land away, let’s move there. That’s how easy it is now.
I am not trying to justify the worst excesses of offshore tax/secrecy abuse – I think a lot of the abuse that this site publicises should be stopped – such as bank secrecy. However, if a company like Google are going to create 2000 jobs in a small country outside the US, then I would much prefer those jobs to be in Ireland than anywhere else. Why should all the good jobs be in London or New York? Why can’t small nations compete for a piece of the action too?
I know critics of the 12.5% corporate tax rate in Ireland blame it for some of Ireland’s problems now – but that isn’t true. Ireland’s problems were caused by the same issue that caused the problems in the UK and US – lack of effective regulation, which would have occurred regardless of the tax rate. I grew up in Ireland in the 1970s and 80s – believe me, it was an even bigger basket case than it is now. You’re welcome to disagree with me, but I believe that if Ireland did not have the low corporate tax rate, things would be even worse now.
@Freeborn Man
I’m afraid to say that’s just rhetorical nonsense – for all the reasons that the same arguments when promulgated for NI are also rhetorical nonsense, as my recent paper on NI explained.
And as ever I find the idea that lack of regulation is blamed – that was exactly for it was the same neoliberalism that promoted low tax and law regulation
Your argument makes no sense for that reason
I wouldn’t have expected you to agree with it Richard. But, at the end if the day, Ireland has benefited emmensely from low corporate tax rates. My view makes sense to the 2000 people who work for google in Dublin, and all the other people who have not had to leave Ireland to find a decent career. For that is the only alternative – go back to the bad old days of mass emigration. Can you think of any other?
As for northern Ireland, I agree with you – they will not get their reduced corporate tax rate. Join a united Ireland, and then they will. But what’s the chance of that in our lifetime?