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Google's tax avoidance highlights political corruption

Column Eric Schmidt's excuse isn't good enough
Fri Dec 14 2012, 16:13

IT WAS WITH REFRESHING CANDOUR earlier this week that Google chairman Eric Schmidt defended his firm's tax avoidance schemes in the US, the UK and Europe. By speaking out so frankly he managed to highlight the corruption of our political and fiscal policies by corporate interests in the developed world.

Google had been criticised for allegedly avoiding $2bn in US corporate income taxes by washing $9.8bn in revenue through Bermuda.

But Schmidt fired back at his company's accusers in an interview with Bloomberg. "We pay lots of taxes; we pay them in the legally prescribed ways," he said.

"I am very proud of the structure that we set up. We did it based on the incentives that the governments offered us to operate," Schmidt explained.

Then he added, "It's called capitalism. We are proudly capitalistic. I'm not confused about this."

He might just as well have said that Google is all in favour of attending church on Sunday.

This was Schmidt's subtle sleight of hand in attempting to deflect criticism. Of course everyone is in favour of capitalism. Even Red China believes in capitalism now, although its leaders are careful to refer to it as "capitalism with Chinese characteristics", by which they mean substantial ownership by the State.

But, as a concept, capitalism does not excuse morally bad behaviour. Drug smugglers are enthusiastic capitalists, and so are pirates - the real variety that steal ships and hold them for ransom or worse, murder their crews and keep the booty.

No, what Schmidt was dancing away from right there was his immediately prior candid acknowledgement that the few taxes Google pays, it pays only because it hasn't figured out how to avoid them yet.

There's the implicit assumption that it's still working on perfecting that through corporate lobbyists who corrupt politicians to betray their countries' interests, in league with those of finance capitalists - that is, banksters - who infest Wall Street, the City of London, Brussels and elsewhere.

That's why politicians calling the officers of large multinational corporations before committees in the US Congress and UK Parliament and other bodies to answer for avoiding corporate taxes in their national jurisdictions are always farcical exercises.

Grandstanding lawmakers always stand up on their hind legs and bray about how wrong, how awful, how terrible it is that these massive, unaccountable firms don't pay taxes on the huge revenues that they manage to extract from their national economies.

Of course the company executives in the dock always fall back on the same justification that Eric Schmidt grasped - that their avoidance of taxes is simply legal, that they're only doing what is allowed, and that they therefore can't be faulted for simply taking maximum advantage of the tax laws as they find them in all developed nations.

Then the politicians mutter and complain some more, and finally they just shut up, and nothing is done, of course. The creatures of politics somehow never get around to asking why their countries' tax laws are structured so as to permit and encourage such blatant tax dodging by huge multinational companies.

This is often because these same legislators themselves wrote those very same laws at the urging of corporate lobbyists, with the incentives of legal bribery in the form of substantial campaign contributions or favourable treatment by the complicit corporate owned or influenced financial and popular press.

Meanwhile, unfunded wars proliferate, national budgets fall deeply and seemingly inexorably into the red, offshoring of both blue collar and white collar labour to second and third world countries continues apace while unemployment in the US, the UK and Europe explodes into double digits, societies unravel into widespread misery, despair and violence, and the financial class clamours for ever more austerity to funnel increasing profits into their own unproductive, greedy hands.

It is all enough to make anyone observing these charades who knows what's really going on sick.

It's about time that lawmakers shake out the tax systems to stop Google, Amazon and the many others from getting away with paying such low taxes - or at least come out with a credible explanation for why these tax avoidance schemes are allowed to stay in place. µ


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