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As Long As It’s Legal, Corporations Will Act Selfishly

By - December 11, 2012

(image) There’s a hubbub in the press this week about Google employing a “Double Irish – Dutch Sandwich” tactic to funnel profits from Europe over to Bermuda, where there is no corporate income tax. Reuters reports that the company saved around $2 billion in taxes by employing the structure, which, as far as I can tell, is perfectly legal.

Of course, there’s a difference between that which is perfectly legal and that which seems, well, unseemly. Creating multiple shell companies across four nation states so as to avoid paying taxes may make shareholders happy, but it sure has pissed off a bunch of (revenue starved) countries in the EU. The article mentions the UK, France, and Italy as all investigating Google (and Facebook, among others) for potential abuse of the tax code.

To which I must say this: What else did you expect?!

Corporations will act exactly in their own best interest, period end of sentance. When it comes to saving billions of dollars, corporations won’t “do the right thing” or “step up and pay their fair share” – certainly not if there is *any* legal possibility that they can get away with avoiding doing so.

I very much doubt anything is going to change here, for any number of complicated reasons. The Irish have their own competitive reasons for ignoring US IP transfer law, the Dutch have similar reasons for allowing their corporate structures to exist. And Bermuda? Please. Google (and many other companies like it) is simply acting like a corporation – which at times feels like an excuse for a bunch of humans to act in very un-human like ways. Behold what we have created, and wonder.

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6 thoughts on “As Long As It’s Legal, Corporations Will Act Selfishly

  1. ModerationIsBest says:

    Agree, but….at the very least, the executive leadership of these corporations should not publicly/loudly/with great levels of “enlightenment” scream for higher taxes and then do everything possible to avoid taxes. No different than other “preaching” we see from the various sides in politics / religion / etc.

  2. Nick Holmes says:

    I don’t think many of us expect many corporations to have morals; they are there to max the profits. However, their own best interests longer term are served by keeping their customers happy. When those customers discover that these nice efficient corporations are maxing their returns by saying fuck you to the societies in which they operate, then they will vote with their feet. In a few short weeks Starbucks UK sales have dropped substantially and are unlikely to recover any time soon; their voluntarily offering to pay £20 million tax which they don’t legally owe is a sick joke. Amazon generates its profits on UK sales in Luxembourg, Google in Ireland (and thence to Holland and Bermuda as uyou helpfully illustrate): we are being seriously fucked over. Sure we (UK gov) need to fix our tax code, bring Crown-dependent tax havens into line, negotiate tax treaties etc, but meantime we (customers) are entitled to say “don’t be evil”. That’s what we expect.

    • johnbattelle says:

      I had no idea Starbucks usage had dropped so quickly. I’m going to guess, however, the same is not true of Google usage!

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