Whenever Rush Limbaugh sees an article and talks about it everybody wants know what’s going on. Just a few minutes ago on his show he mentioned how Google’s relative revenues of almost $10 billion were diverted to a shell company in Bermuda to avoid about $2 billion of worldwide income taxes.
When people hear this they automatically think that the US taxes are being avoided. Course one of the biggest arguments during the latest election between Obama and Romney was how are we going to solve our deficit and who should bear the bulk of the tax burden.
The average Joe of course wants the big corporate entities like Google to pay their fair share of taxes and when a subject like this arises at is like throwing gasoline on the fire. Of course Rush Limbaugh understands the volatility of the subject and its great radio to talk about $10 billion hitting off the coast and a tax shelter. Bloomberg reported the other day that
Google Revenues Sheltered in No-Tax Bermuda Soar to $10 Billion
But it’s pretty obvious that it’s not taxes in the United States and that it’s an international tax strategy and the European countries are the ones crying foul. Here’s a quote by Richard Murphy an account in director of tax research LP in Norfork, England which was reported in the recent Bloomberg article:
“The tax strategy of Google and other multinationals is a deep embarrassment to governments around Europe,” said Richard Murphy, an accountant and director of Tax Research LLP in Norfolk, England. “The political awareness now being created in the U.K., and to a lesser degree elsewhere in Europe, is: It’s us or them. People understand that if Google doesn’t pay, somebody else has to pay or services get cut.”
It appears that the UK is Google’s second-biggest market and responsible for about 11% of its sales were almost $4.1 billion. And the House of Commons issued a report declaring that multinationals do not pay their fair share of tax. Is also reports that the French and Italian governments and others are conducting audits of the local national Google and Facebook offices to determine if there is any illegal tax avoidance occurring with Google procedures.
It appears that countries from all around the world are trying to reform their tax laws to make it harder for multinationals to bypass taxes by shifting profit into tax havens such as the one in Bermuda used by Google.
That compares with the average combined US and state statutory rate of about 39%.
I guess this just confirms the old adage that the rich keep getting richer and the poor continue to get poorer.