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True or false? 21% of zero equals 49% of zero

December 11, 2012

Google’s got some ‘splaining to do…just not the ‘splaining this story suggests:

Google is great at optimization and efficiency in many things. Among them: Taxes.

The company paid a total of $1.5 billion in worldwide income taxes in 2011, avoiding an estimated $2 billion more by moving the equivalent of 80 percent of its profit to Bermuda, Bloomberg reported today.

Google’s effective global tax rate was 21 percent last year, less than half of what it might have been expected to pay in the United States.

So if $1.5 billion is a 21% tax rate, then $3.5 billion – Google’s estimated tax liability without the international shuffling – is 49%. And the world is simply outraged that Google wants to avoid paying half their income in taxes.

As if the rest of us wouldn’t. As if we’d just happily pay half when we could very easily pay only one-fifth. As if Wisconsin’s own teacher’s union doesn’t still have advice on its webpage about retiring out of state to take advantage of lower tax rates.

You know what the real outrage here is? There are two. First, that U.S. tax policy is such that Google would rather spend the time, effort, and money finding ways to avoid it. Second, that Google is still paying 21%. Hey, Google! Do your shareholders know that you’re not doing everything possible to increase your share value?

Hat tip Wombat.

Related:

A spate of proposed tax hikes is leading hundreds of wealthy French to consider leaving the country and putting their homes on the market, real-estate agents say. The result: the best opportunity in years for foreigners to buy a Parisian pied-à-terre or country château.

Seventy-five percent of zero equals 21% of zero, which equals 49% of zero. True or false?

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