Goggle’s Bermuda hideaway/HSBC’s too-big status: time to rein in the corporations!

by Linda Beale

Goggle’s Bermuda hideaway/HSBC’s too-big status: time to rein in the corporations!

If you are a company that depends on IP for a lot of your revenue, you may be able to avoid considerable taxes by funneling profits from subsidiaries in high-tax countries into a Bermuda shell company.  Google avoided about $2 billion in worldwide income taxes in 2011 by shifting about 80% of its total pretax profits– $9.8 billion — into Bermuda.  See Jesse Drucker, Google Royalties Sheltered in No-Tax Bermuda Soar to Nearly $10 Billion, Bloomberg.com (Dec. 10, 2012).

Meanwhile, the US decided not to take action against HSBC for its fraudulent behavior because it was considered so big that it could damage the financial system (again) to interfere with its continuing corporate existence.  See  Glenn Greenwald,HSBC, too big to jail, is the new poster child for US two-tiered justice system, guaradian.co.uk (Dec. 12, 2012) (noting that “one of the world’s largest banks, HSBC, spent years committing serious crimes, involving money laundering for terrorists; ‘facilitating money laundering by Mexican drug cartels’; and ‘moving tainted money for Saudi banks tied to terrorist groups’ ” but US officials decided “not to prosecute HSBC for accepting the tainted money of rogue states and drug lords on Tuesday, insisting that a $1.9bn fine for a litany of offences was preferable to the ‘collateral consequences’ of taking the bank to court”).

Maybe this kind of information will finally incense governments against corporate tax dodging.  What we need are laws that refuse to recognize shell companies set up in tax-haven countries to siphon profits from the countries where they originate.  What we need are fewer possibilities for companies to expand through tax-free mergers and acquisitions that allow them to get so big that they become immune to ruin when they commit major crimes.

cross posted with ataxingmatter