FaceTheft

fb theft Turns out our friends who are “in the advertising business” are major tax evaders. The Guardian recently ran a story reporting:

Filings for Facebook Ireland, through which all of the social network’s profits outside the US are channelled, show it paid the Irish tax authority €3.2m (£2.9m) last year.

Facebook is structured so that companies buying advertisements on the website in the UK, or anywhere outside of the US, have to pay Facebook Ireland. This allowed Facebook Ireland to make gross 2011 profits of £840m – or £3.1m per each of its 287 staff. Despite the high gross profit, Facebook Ireland was able to cut its tax bill to just €3.2m by using an accounting technique called the “Double Irish”.

The manoeuvre allows multinationals to move large amounts of money to other subsidiaries in the form of royalty payments. Facebook moved nearly £750m to the Cayman Islands and its Californian parent in licensing and royalty payments. After the transfers, Facebook Ireland reported a £15m annual loss, despite it accounting for 44% of the social network’s $3.15bn (£1.95bn) revenues.

Like Apple and Google, Facebook uses its Irish subsidiary to reduce its liabilities to HM Revenue & Customs and other European tax regimes. Amazon and Starbucks also cut their British tax bills by using the same technique via other European countries.

Business Insider notes that this represents an effective tax rate of 0.3%.

All perfectly legal, of course, in our continuing epoch of [Black] Reaganism.

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Martin
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Martin

Yes, these practices are abominable, and show the utter depravity of the predator CEO-managerial class. These Facebook, Google, Amazon morons are people that probably consider themselves “good” – but to punish the poor by deftly shielding corporate profits derived from pollution from government accounting shows what Craig dilworth painstakingly showed in “Too Smart for Our Own Good” – this is how humans proceed with technology, culture, and social institutions, and it drives the conditions of our existence into the threat of our species extinction. But, thanks, you motivated me to insert a little “Amazon tax avoidance” slam in my, yes,… Read more »

Marla Singer
Guest
Marla Singer

They have won – my reaction to these types of blatant theft at this point is no reaction at all. I am completely desensitized to such type of info. Only a massive all out confrontation can pull me out of this apathy (which is probably a naive and counter-productive yearning).

High Arka
Guest

To consider this a “deft shielding,” or an “evasion” would imply that there was something being shielded or evaded. It does far too much credit to the tax code, just as assuming that Bush made “mistakes” in invading Iraq does far too much credit to him being the elected representative of an educated democratic republic. Tax codes, like “nations,” are designed to accomplish this sort of thing; they are expressly meant to extract resources from people who actually work, and redirect them to people who do not work. The precise details of “how” Facebook or any of the other entities… Read more »

Marla Singer
Guest
Marla Singer

That’s exactly why I’m so apathetic –> even the most mainstream, most obedient lap dogs of the economics profession (e.g. Mankiw, Summers, etc) have openly acknowledged that tax “cuts”/”credits” etc. are indistinguishable from public subsidies. So it’s not like they’re trying to sugar coat it or anything. The theft is now way out in the open, and it is accepted by everybody.

Only a massive and quick ecological and energy crisis can save us. Without that, the system has taken a life of its own, and does just fine, thank you very much.

High Arka
Guest

Dear Marla, look to your dreams. Even if they take everything else vis-à-vis atoms and molecules, do not surrender your hope. The greatest thing they will imagine is sitting forever on a hoard of gems, surrounded by moaning, agonized slaves–an Eden that would end with them turning on themselves for still-greater riches, until the very last one sat eternally alone in gilded misery, and decided to end it all. If you look to an end of fire or starvation, then ultimately, you look to the same end that they do: the destruction of an irrevocably flawed existence. Shelter, instead, a… Read more »

Martin
Guest
Martin

HA: The left and the right were always aimed at the same place, but the center subverted them.
What “left” are you talking about? There was and is no US “Left,” as in an entity that possessed and social or legal or financial power.
As far as the other Freeper stuff you say about taxes, and about the sainted goodness of the Gomer Pyles, well I’d say the same thing if I was surrounded by them.

Marla Singer
Guest
Marla Singer

Actually, I believe all these things, I just fear we need the major crisis just for a fighting chance to pursue them ;(

Either way, love your blog.