Google Executive Chairman Eric Schmidt has defended his company's 'immoral' tax policies, saying of the internet giant's evasions to get out of paying billions of dollars: "It's called capitalism."
News reports this week revealed that Google avoided paying at least $2 billion in taxes in 2011 by siphoning off $10 billion in profits to a Bermuda shell company. The figure is almost double the amount the company was hiding offshore three years ago, official company documents show.
When asked about Google's tax evasions by Bloomberg News last night, Schmidt said: ‘It’s called capitalism. We are proudly capitalistic. I’m not confused about this.’
The company reportedly uses complex tax schemes called the 'Double Irish' and 'Dutch Sandwich', which take large royalty payments from international subsidiaries and set up a shell corporation in countries with no corporate taxes, like Bermuda.
In the UK, Members of Parliament on the powerful Public Accounts Committee last month slammed Google’s methods as ‘immoral.’
And while governments in France, Britain, Italy and Australia are probing Google's tax avoidance, in the US there has been no such probe. Instead, Google's Schmidt was reportedly asked by President Obama to serve as either Treasury or Commerce Secretary in his second Administration. Apparently Schmidt said no.
California's ConsumerWatchdog.org, the progressive non-profit which advocates for taxpayer and consumer interests, wrote Wednesday to Sen. Max Baucus, Chairman of the Senate Finance Committee, calling for a Senate hearing into Google’s global tax avoidance strategies:
Governments in Europe, many of which have been targets of Google’s morally bankrupt tax polices, are actively seeking redress. But this is not a problem that only impacts other countries’revenues. Google’s tactics strike at the U.S. treasury as well, forcing the rest of us to make up for the Internet giant’s unwillingness to pay its fair share. It will be necessary to work with other countries’ tax authorities and to amend our tax code to put an end to egregious loopholes that allow cynical exploitation by this generation’s Robber Barons. What makes Google’s activities so reprehensible is its hypocritical assertion of its corporate motto, “Don’t Be Evil.”
Google isn't alone among big corporate tax evaders moving profits to tax shelters abroad. Boeing, DuPont, Capital One and General Electric paid a negative U.S. tax rate in 2010, according to Citizens for Tax Justice.