Corporate Welfare

Google Dodges Billions in Taxes

Google may not exactly be the good corporate citizen it says it is: The company hides billions in tax revenue from the U.S. government by moving its foreign profits through subsidiaries in Ireland and the Netherlands to Bermuda. It's part of a tactic many companies engage in called "transfer pricing" that costs the U.S. government up to $60 billion per year. As a consequence, Google pays an effective overseas tax rate of 2.4 percent, despite the fact that many of the countries in which it operates have corporate tax rates over 20 percent. The company is able to pull off the tax dodge by allocating income to tax havens and attributing expenses to higher-tax countries. Google’s strategy is perfectly legal, and, in fact, popular: Facebook is preparing a similar structure.