Facebook Paid 0.3% Taxes On $1.34 Billion Profits 592
theodp writes "Facebook is unlikely to make many new (non-investor) friends with reports that it paid Irish taxes of about $4.64 million on its entire non-U.S. profits of $1.344 billion for 2011. 'Facebook operates a second subsidiary that is incorporated in Ireland but controlled in the Cayman Islands,' Kenneth Thomas explains. 'This subsidiary owns Facebook Ireland, but the setup allows the two companies to be considered as one for U.S. tax purposes, but separate for Irish tax purposes. The Caymans-operated subsidiary owns the rights to use Facebook's intellectual property outside the U.S., for which Facebook Ireland pays hefty royalties to use. This lets Facebook Ireland transfer the profits from low-tax Ireland to no-tax Cayman Islands.' In 2008, Facebook COO Sheryl Sandberg cited 'local world-class talent' as the motivation behind Facebook's choice of tax-haven Dublin for its international HQ. Similar tax moves by Google, Microsoft, and others who have sought the luck-of-the-Double-Irish present quite a dilemma for tax revenue-seeking governments. Invoking Supreme Court Justice Potter Stewart's famous common sense definition of ethics ('Ethics is knowing the difference between what you have a right to do and what is right to do') is unlikely to sway corporations whose top execs send the message that tax avoidance is the right thing to do and something to be proud of."
People will say their duty is to shareholders... (Score:2, Insightful)
Re:Tax avoidance (Score:3, Insightful)
Tax avoidance impoverishes the job creators in order to transfer wealth to the leaching class.
Job creators being the working people who actually create wealth through their labor, and consume goods to drive the capitalist system.
Leaching class being the plutocrats who do nothing but extort and siphon off the labor of others.
Re:Tax avoidance (Score:5, Insightful)
Because it is flamebait! Some folks have this fantasy that you can get everything for nothing. Things cost money! As I was writing to the GP, sure we can argue about a bloated government. But to argue that tax avoidance is a good thing is not correct either.
Police, military, firemen, judges, etc, etc all cost money. Adam Smith who was a capitalist wrote in his papers that government and taxes were needed. The question is how much government, not whether or not government there is a government.
Maybe your tax laws ought to be adjusted (Score:5, Insightful)
Seems logical to me. Ireland is happy to get 4 million that they wouldn't otherwise get at all. Ireland's simply undercutting other governments. Makes sense.
But if you want to collect tax dollars from companies that operate in the .U.S.A., you might want to assess their global revenues, period. Global companies paying global rates makes perfect sense.
Otherwise, you're looking at a future without tax revenue. Good luck with that. Let me know how it goes.
On the other hand, you can look at this as simple capitalism. Ireland made a better offer. You lost. Suck it up, or learn to compete.
Either way, don't bring ethics into it. You're talking about taking someone's money for "the greater good". And you're forcing them to participate. If you're going to discuss ethics, you might want to start with your own.
Re:Tax avoidance (Score:5, Insightful)
I like to pay taxes, with them I buy civilization.
That a lot of deluded "rugged individualists" falsely think they are entirely self-made and have no obligation to pay back into society amuses me. Seeing them frustrated and resentful at paying taxes makes me smile.
Re:Tax avoidance (Score:2, Insightful)
"Some folks have this fantasy that you can get everything for nothing."
Some folks wish they got a lot less from government.
Some folks have this fantasy that they are entitled to someone else's money.
Hypocrisy writ large (Score:3, Insightful)
Re:Tax avoidance (Score:3, Insightful)
It is a fact of law in the US that the police are not required to protect you or your property (at least in most jurisdictions).
In its landmark decision of DeShaney v. Winnebago County Department of Social Services,” Stevens writes, “the U.S. Supreme Court declared that the Constitution does not impose a duty on the state and local governments to protect the citizens from criminal harm.
In Warren v. District of Columbia, it is a "fundamental principle of American law that a government and its agents are under no general duty to provide public services, such as police protection, to any individual citizen."
In Castle Rock v. Gonzales, "the police have no duty under federal law to protect the citizens."
There are other cases that more or less have the same result.
When seconds matter, the police are only minutes away. Maybe.
Re:Tax avoidance (Score:5, Insightful)
I get it. You don't like paying for lazy people. Fair point, neither do I.
But what happens if you stop welfare? Crime rates go through the roof. People that can't eat get desperate and start doing things they'd never do otherwise. Poor people won't just starve and go away, they WILL rise up and take a lot more from you.
People are only complacent when they have something to lose. If you give them a little something to lose, then you can control them better. Create a society of have's and have not's and eventually the have's are all destroyed by the have not's.. It's happened throughout history, and apparently people don't learn from it.
Re:Tax avoidance (Score:2, Insightful)
And if there wasn't a large and powerful government, then corporations would suddenly have no power over the system? How does that work?
Rob
Re:Tax avoidance (Score:5, Insightful)
The problem isn't "more" or "bigger" government - but having a government that has the balls to stand up and say "pay your fair share"
Unfortunately - here in the UK we have the same problem... the people pay more while the corporations pay next-to-nothing
Re:Tax avoidance (Score:5, Insightful)
Re:Tax avoidance (Score:4, Insightful)
But to argue that we should pay zero taxes make NO SENSE WHATSOEVER.
Suggesting no corporate taxation is not the same as suggesting no taxation.
For if we don't pay taxes you better be prepared to pay Vinny down the street a bit of money to make sure that you don't get mugged, robbed, or killed.
Even if Facebook were paying more in taxes, that money wouldn't be paying police in my town. It wouldn't even be paying police in the town where Facebook's employees live. Or fire departments, or roads, etc. Taxes paid by Facebook employees, however, do pay for government services where they live.
Focus on taxing the money at the point it gets transferred to individuals and the only way the taxes can be avoided is to move the people... but if they move the people they move the costs as well as the revenues. Note that companies can't work around this by giving employees (or executives) cars, houses, etc., because those sorts of benefits are treated as taxable income.
Counties and cities can, and should, also use property taxes to get the cash required to maintain roads and other local infrastructure used by corporations and their employees.
Set corporate taxes to zero and focus on taxing the money as it flows out. This would include taxing capital gains. Then corporations would have no reason to move to Dublin... unless they really are looking to use Irish labor.
Re:Hypocrisy writ large (Score:5, Insightful)
Yeah, but I suspect the poster, like most people, doesn't have the option of transferring all his money to a shell corporation in the Cayman Islands so he doesn't have to pay tax on it. If he did that, the IRS would probably put him in jail.
The law needs to be changed so that it is fair; either he should be able to do that, or Facebook should not.
Re:Tax avoidance:....root cause... (Score:5, Insightful)
contractors are not included in the official headcount yet for all intents and purposes they are govt employees. And they are not cheap.
It's simple - see through the bullshit and judge the size of the govt by what it spends.
Re:Tax avoidance (Score:4, Insightful)
I like to pay taxes, with them I buy civilization.
Please feel free to hand your entire paycheck to the government. There is no law stopping you. It will make you much happier knowing that you are getting much more civilization than your neighbor.
I suspect, however, that you really mean that you like the concept of taxes paid by others because it pays for the control over them that you appreciate (and that you call "civilization").
That a lot of deluded "rugged individualists" falsely think they are entirely self-made and have no obligation to pay back into society amuses me.
I have an obligation to pay back into society that which it asks me to pay and I have agreed to. There is no EULA or "shrink-wrap license"; no unilateral contract. If "society" wants to promote home ownership and does so by creating tax deductions, then I will use them and feel no sorrow at paying less in taxes. Ditto for energy-efficient appliances, weatherization, charitable donations, etc. If the sum of the deductions meets or exceeds the "tax liability", then why should I have any obligation to pay at all? After all, society has told me what it expects; I have met that expectation.
This same concept applies to corporations. Obeying the laws and paying what is owed is their obligation; paying extra because you want "more civilization" isn't.
Seeing them frustrated and resentful at paying taxes makes me smile.
Why would anyone be resentful at having to pay for things that you think they should pay for but they don't? How silly of them. And isn't it such a wonderful feeling of accomplishment when you can force them to do so, and feel superior to them at the same time?
Re:Tax avoidance (Score:5, Insightful)
When talking about income taxes, yes, you are member of the society, you benefit from such things, you should pay taxes. Companies, however, don't benefit from army, from healthcare and from any other things that society provides. In fact, when nobody uses the company, the company ceases to exist. Taxing the companies only forces the companies to spend every year the most so they don't have to pay such high taxes. For me, it is not bad if for example Microsoft holds great untaxed amount of cash this year and invests it the next year or the year after. The company is already punished for not spending their money by inflation, the income tax is just bad tool and shouldn't be used.
Complete bullshit across the board.
Example: Halliburton rebuilding the Middle East
I work in the Healthcare analytics world, a healthy population has a DIRECT correlation to higher productivity from your workforce, ergo higher profits. This is why companies track Health and Productivity Management and implement programs designed to change employee lifestyles to be more healthy.
Drop the corporate shill routine that companies don't benefit from the government. They benefit a hell of a lot more than most citizens and at a lower effective tax rate.
Re:Tax avoidance (Score:4, Insightful)
Re:Corporations should not pay taxes on profits (Score:3, Insightful)
The double taxation is because income is taxed first as corporate income and then as capital gains (by the shareholders).
I'm surprised you've not heard this argument before. It's not exactly new. Another problem with corporate income taxes is that corporations don't pay taxes. Their customers and employees do, in the form of higher prices and reduced salaries respectively. A tax on a corporation is just a hidden flat tax on individuals. Not just a flat tax, either; a flat tax with no deductions, exemptions, credits, refunds, rebates, or any other way to stop it from screwing over the poor.
Re:Corporations should not pay taxes on profits (Score:2, Insightful)
Eliminating corporate taxes might have some benefits (that is a BIG "if" though) but the employment rates and wages would not be effected by them at all.
The companies will only hire someone if they bring in more money to the company than they cost which would not change with a change in the taxes for them at all. Neither would be change in wages, they pay as little as they can for most companies and so the most they would do is bump up the pay an extra 25 cents an hour as a way to show it helped and then lower it back down again.
Companies right now are already showing record setting profit margins while employs in the US are showing record setting low wages. They could already virtually double employ wages in the US and still maintain profitability. They just refuse to do so. Look at Costco, you can make $40,000 a year out there as a cashier within 2 years of starting while at other places they only wish to pay about $14,000 a year even if they bring in more money than them.
America has plenty of problems, none of it has to do with the fact that corporations are being taxed but plenty to do with how the same corporations are avoiding them taxes to force us to drag their dead weight across the finish line come tax time.
Also, if you eliminated the corporate tax, it still wouldn't keep them from avoiding taxes when they are paid. They would have many purchases come directly from the company as to avoid it passing directly through their own hands to avoid the taxes and others would still launder the pay through overseas areas and have it look like they just transferred it from an existing account rather than just got paid and as such pay zero taxes on it.
There are ways to fix it, but removing the corporate taxes are not one of them and would cause massive problems while fixing little to none of them in my opinion.
Captcha: "Quagmire".
Giggidy, Giggidy
Giggidy, Goo
Re:Tax avoidance (Score:2, Insightful)
insure yourself so you won't have to sell your property for peanuts when it's already on fire - problem solved.
it's in the interest of insurance companies to lower the impact of fires and some even fund their own firefighters.
http://www.sfgate.com/bayarea/article/Private-firefighters-role-growing-in-state-3275585.php [sfgate.com]
Re:Tax avoidance (Score:5, Insightful)
And some folks believe they should get a lot while giving very little.
This is called tax avoidance and is legal, immoral and unjust.
If Facebook thinks 0.3% tax is reasonable than their fire protection should be limited to a tall glass of water, their access roads should be reduced to trampled grassland and they should dispose of their sewage waste using government-provided paper bags.
Re:Tax avoidance (Score:4, Insightful)
Yes. The solution is helping people to be gainful members of society. We all know that.
The problem is that the current right wing philosophy is cut cut cut, with no money to spend "Teaching a man to fish". He just wants to take the fish away and say "Go get a job" when there are few jobs to be had, even for those that are motivated and educated.
I'm not arguing Welfare is good, but it's a far sight better than simply throwing people to the wolves.
Re:Tax avoidance (Score:4, Insightful)
It also can't have profits and can't pay taxes - it's a company, not a human being.
So I suggest we get rid of the notion of "companies". It's harmful to society. Instead, let's have the employees and the shareholders responsible for taking the profits and for paying taxes. That'll be a lot simpler, and would require them to actually relocate to the Cayman Islands before they can enjoy the tax benefits.
And if specific employees and/or shareholders find ways not to pay taxes, then the government can find ways to withhold services such as education, health, roads and sewage. Agreed?
Re:Tax avoidance (Score:5, Insightful)
wrong.
The government is accountable to the people, when all is said and done,. Money doesn't vote, people do.
We have seen time and time again where the government has fought and one against a multitude of corporation and their abuses.
With strong government regulations, you can limit damage corporations do. With out it it means corporation can do whatever they want. We have seen that. we have seen the results from that, it's not pretty.
Why should corporations pay taxes anyway? (Score:3, Insightful)
I still wonder what's good about corporations paying taxes anyway.
Wouldn't it be more beneficial if they didn't pay taxes?
So, if corporations didn't have to pay taxes. They would hire more people or pay them more. Those additional hires or higher salaries will then be taxed again. So the Gvt. does get it's money.
The effect is, that corporations won't have to go offshore for the best tax deal and pay taxes there.
So we would benefit a lot more if the corporations stayed here - tax free - but in return hire more people or pay higher salaries.