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High in the foothills of the Great Smoky Mountains, in the quiet community of Lenoir, North Carolina sits a sprawling facility shrouded in mystery. Lenoir used to be home to the most well-known scions of furniture manufacturing in the United States, but those factories and jobs have all been moved to China. The most notable thing about Lenoir these days is the massive, monolithic structure hidden from view behind dense trees and tall, opaque, security fences. Regardless of where one tries to get a perspective of what lies beyond the fences, it is virtually impossible to do so. The highly guarded, secretive facility belongs to Google. Ironically, other than flying in a plane (there is no airport in Lenoir), the only way to see the facility is by using Google Maps.
My point is that one of the most popular search engines in the world is also intensely secretive about its operations, no matter where they are located. Is it ironic or intentional that the name Google is a variant of the mathematical term “googol,” which is 10 to the 100th power, a number even rocket scientists rarely use? In other words, it is “unfathomable” or “unknowable.”
Well, if the Public Accounts Committee of Parliament has its way, Google is going to become a bit more fathomable. If a massive information company like Bloomberg, I mean Google, is so secretive about its operations, isn’t it likely that there things other than facilities hidden in the woods somewhere? In this case, it appears that Google has been clandestine about its sales methods in the UK. Simply explained, they claim that they do not transact sales here, but that all sales are processed through their office in Ireland in order to avoid paying UK taxes. The only thing I find more absurd than Google’s Matt Britten peddling that poppycock is that he would imagine that anyone would believe him. Given the reactions of the committee members, no one does.
Here are a few of the words that committee members used to described Google’s tactics: serious, unethical, devious, calculated, evil, disguised, manipulating, smoke and mirrors.
Britten, Google’s boss for Northern Europe, claimed last November that no selling has been transacted in the UK. He modified his statement today to explain that Google sales people have, indeed, been selling in the UK – a fact that is undeniable now with testimony from a “stream of whistle blowers” – but that all of the sales have been “closed” in Ireland.
May I add my own word to describe this balderdash? I guess I just did.
Committee chairman Margaret Hodge turned a Google motto on Britten, saying, “You are a company that says you do no evil and I think that you do do evil in that you use smoke and mirrors to avoid paying tax.” Britten’s response was like shining a spotlight on what the whistle blowers have been saying and what the documentation seems to prove. He said, “We comply fully with the laws that are set down by politicians. Tax is not a matter of choice. Tax is a matter of following the law.” This has been the language of tax-avoiding scoundrels for as long as “loophole” has been a word, and it’s the reason why companies hire tax attorneys.
The concept is really simple. Companies like Google are perfectly willing to pay taxes. It’s unavoidable. However, in the interest of keeping more of the money they have earned, their willingness to pay is tempered by their desire to avoid paying any more than they have to. The very wise tax gurus on their payroll are there to ensure a) that they are paying what takes are due, and b) that they are paying not one penny more than they need to.
Now I understand that everyone reading this is a taxpayer, so deep inside of each of us there is a tiny bit of a feeling of a kindred spirit with companies like Google. But think like you are the government for a minute. Google comes into your country to sell it’s product, but it devises a scheme to pay the taxes on the goods and services sold in your country to another country. How does that ultimately serve the public welfare? The answer is that it simply does not. It, in fact, cheats the system.
Google is living up to its namesake. What it is doing is simply unfathomable. It’s time for Google to drop the deception and and be honest about what is going on in their virtually impenetrable world.
Google (NASDAQ:GOOG) share price was down 7.634 this morning to $908.37. It will be interesting to see where it goes as this scandal continues to unfold.
