CommentsEDITOR’S PICK--Airbnb, star of the “sharing economy,” is “committed to strengthening the neighborhoods and cities we serve.” Uber is “passionate about the cities we call home.” Google wants “a better world, faster.” Facebook has its own “social good” team.
But as much as Silicon Valley powerhouses love to tout their efforts to give back to their communities and make the world a better place, they also love to hide their money in tax havens.
The Panama Papers scandal has shaken the world by exposing a secretive world of offshore shell companies, which can “facilitate bribery, arms deals, tax evasion, financial fraud and drug trafficking.” But the use of shell companies to avoid taxes is a tried-and-true method of corporate governance for many of America’s biggest companies.
A new report by Oxfam tallied the offshore money of 50 top public U.S. companies, and the winner was Silicon Valley’s own Apple, with $181 billion held offshore. The company would owe $59.2 billion in taxes if the profits weren’t held offshore, according to a report by Citizens for Tax Justice.
As for Airbnb, the first tenet of its “Community Compact” states: “We are committed to treating every city personally and helping ensure our community pays its fair share of hotel and tourist taxes.” But as Bloomberg reports, Airbnb manages its finances “via units in Ireland and tax havens like Jersey in the Channel Islands” that will allow it to avoid the grasp of the Internal Revenue Service.
Uber, meanwhile, uses a Netherlands entity headquartered in Bermuda to shield its non-U.S. income from U.S. taxes, according to Fortune.
Here’s Bloomberg’s David Kocieniewski:
“This is the challenge that Airbnb, like Uber and other companies in the so-called sharing economy, poses for the world’s treasuries. In the five years since these businesses began their spiraling growth, some cities and states around the globe have fought hard to make them play by the same rules as traditional hotels or taxis and collect various local taxes – often as not, they’ve lost.”
Google – as in “don’t be evil” or “do the right thing” – had mastered the strategy long before.
Bloomberg’s Jesse Drucker reported in 2010 that Google saved $3 billion in taxes with complicated income-shuffling arrangements known as the “Double Irish” and the “Dutch Sandwich.” The strategy sparked outrage, but never mind that – Google saved another $2.4 billion in 2014 with a Bermuda shell company.
Facebook did it, too. Those tech companies may have to disclose more about their income-juggling act under new European legislation sparked by the Panama Papers.
But while Panama faces a lot of flack, Drucker reminds us that the U.S. has something in common with the Central American nation: “Neither has agreed to new international standards to make it harder for tax evaders and money launderers to hide their money.” In fact, he reported, the U.S. is “becoming the go-to place to stash foreign wealth,” with shell companies in states such as Nevada, Wyoming and South Dakota.
So it’s not all about offshore. The New York Times found that Cupertino-based Apple avoided millions of dollars in taxes in California and other states by routing profits through Nevada, where the corporate tax rate is zero.
And the amazing thing is that, unlike the secrets revealed by the Panama Papers leak, all of these tech company shenanigans have been well documented for years and are easily findable on, well, Google.
(Will Evans is a reporter of Reveal News … where this piece was first posted.)
-cw
Who are California Techies Stashing Billions in Offshore Accounts, Not Paying Taxes?
