President Obama is all for demonizing large American corporations that avoid taxes through income shifting…except when those large American corporations are dumping money in his campaign coffers.
Bloomberg is running a big story on Google’s lucrative use of the very loopholes Team Obama wants to eliminate:
Google Inc. cut its taxes by $3.1 billion in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda.
Google’s income shifting — involving strategies known to lawyers as the “Double Irish” and the “Dutch Sandwich” — helped reduce its overseas tax rate to 2.4 percent, the lowest of the top five U.S. technology companies by market capitalization, according to regulatory filings in six countries.
“It’s remarkable that Google’s effective rate is that low,” said Martin A. Sullivan, a tax economist who formerly worked for the U.S. Treasury Department. “We know this company operates throughout the world mostly in high-tax countries where the average corporate rate is well over 20 percent.”
The U.S. corporate income-tax rate is 35 percent. In the U.K., Google’s second-biggest market by revenue, it’s 28 percent.
Google, the owner of the world’s most popular search engine, uses a strategy that has gained favor among such companies as Facebook Inc. and Microsoft Corp. The method takes advantage of Irish tax law to legally shuttle profits into and out of subsidiaries there, largely escaping the country’s 12.5 percent income tax. (See an interactive graphic on Google’s tax strategy here.)
Will the subject come up tonight in Palo Alto, where Obama will attend a mega-bucks fund-raiser hosted by a Google executive? (hat tip: reader James)
To be clear, my beef isn’t with legal income shifting. My beef is with Team Obama’s selective bashing/targeting of companies that engage in such practices.
Cue the sound of crickets chirping:
President Obama’s motorcade is scheduled to skim past the Stanford campus this evening as Obama returns to the Bay Area today for two Democratic fundraisers.
According to the White House, Obama will land in San Francisco at 3 p.m., after which he will head to the Palo Alto home of Marissa Mayer ’97 M.S. ’99, a vice president at Google. There, he will attend a $30,000-per-person fundraiser for 50 Democrats, according to media reports.