Responding to my criticism of Google's tax bill, Andrew Sullivan writes:
This seems to imply that the typical business is evil. But even a corporation that wanted to maximize the money it spends on public goods unrelated to its industry would be better off paying as little in taxes as possible and then giving the savings to the charity of its choice. Money funneled through Washington DC is spent partly on things like ethanol subsidies, foreign wars, and interest on the national debt.
It's hardly evil to imagine that putting your dollars to different uses is a better investment in the public interest than feeding our inefficient federal system.
Andrew's missing the point a little (Kevin Williamson, my original interlocutor on the topic, makes a similar argument). The original Google slogan, "Don't be evil," necessarily implies -- in a tongue-in-cheek way -- that the standard, profit-maximizing-at-any-expense way of doing business is, well, evil. I don't think Google means every executive at another corporation is going straight to hell, and neither do I. But it means Google intends to hold themselves to a higher standard than other corporations.
It's an ethos that necessarily will cost them money in the short term, but one which they believe will make their company more valuable in the long run. Google could have kept doing business in China and made more money, but it decided not to. Similarly, it could have paid $3.1 billion in taxes over the last three years (out of revenues of approximately $62 billion) rather than run their money through offshore subsidiaries to dodge the tax man. I'd happily grant Andrew that if they had given this money to a charity or done some good with it, that would be fine, but that's not what Google is doing, making it sort of a moot point. Their nonpayment of taxes does seem especially relevant given Andrew's long history of concern with the federal deficit and debt.
My point, all along, is that Google can't pride itself on higher ethical standards than other corporations if it engages in the same sleazy corporate accounting. Some people are working themselves into a high dudgeon arguing that it's perfectly fine to exploit any and all loopholes you can in the law, but I thought the point of having a system of ethics -- or corporate social responsibility -- is that there are higher standards than simply behaving legally.
Incidentally, when Kevin Drum points out that he doesn't mind taking advantage of tax policies he opposes, like the mortgage deduction, that's totally fine but has little to do with what we're talking about here. The mortgage deduction, at least, has a public policy purpose. The tax strategy Google is using, so far as I know, has no public policy purpose save allowing corporations to avoid taxes. That seems like a valuable distinction, and it's one I made in my original post. If you've ever heard a corporate accountant or attorney explain the workings of these little deals, you know that, well, let's just say it's hard for them to do it with a straight face.
Let's round this post out with Kevin's comment -- "I certainly don't feel bad for refusing to be a high-minded sucker while everyone else follows the actual existing law." But Google's "Don't be evil" motto is intended to signal that, unlike everybody else, they're high-minded, and that's one of the things that makes their brand valuable. I'm merely pointing out that Google isn't so high-minded after all. Policy-wise, I'm all for a commonsense bargain that reduces corporate tax rates while closing loopholes and, heck, maybe some of this tax repatriation Ezra's been on about today. But when it comes to avoiding taxes for the sake of avoiding taxes, yup, Google's offshore tax shelters are just a little, well, evil.
-- Tim Fernholz
