Google is moving even more money through a shell corporation in Bermuda—reaching a total of €8.8 billion ($11.91 billion) in 2012, 25 percent more than it did in 2011. By employing a legal yet ethically questionable practice, Google is saving itself billions in taxes worldwide.
The new figures were first reported by the Financial Times on Friday, citing “[recent] filings by one of Google’s Dutch subsidiaries.” This widespread strategy of moving money around involves two specific tactics known as the “Dutch Sandwich” and the “Double Irish.” (Ars obtained a copy of this filing, dated September 27, 2013, from an anonymous source.)
As the Times concluded, these disclosures mean “that royalty payments made to Bermuda—where the company holds its non-US intellectual property—have doubled over the past three years. This increase reflects the rapid growth of Google’s global business.”
Google’s tax avoidance practices may be good for Google’s bottom line, but they are not responsible. Companies that claim to be good corporate citizens don’t use tax loopholes and accounting tricks to dodge taxes on a grand scale like Google and other tech giants do.
Google, of course, is only following in the footsteps of companies like Microsoft and Apple, which also distribute proprietary software and dodge state and federal taxes in the United States, plus taxes overseas. These feats of tax avoidance are made possible by rigged tax codes, which allow chief financial officers to get their companies out of tax obligations, to the detriment of society. Is it any wonder that income inequality has gotten so much worse over the past few years? Companies like Google are prosperous and powerful, but they don’t pay what they owe. That means regular folks are left to foot more of the bill for infrastructure investments that companies like Google wish to see made.
If Google wants college to be affordable, or for fiber to reach more Americans, it ought to pay its taxes without complaining or shuffling money through shell companies.