Adam Cohen tells Romenesko readers he wanted to talk to David Cay Johnston off the record “to be sure my response would reflect the breadth and complexity of this issue.” He notes that “the international tax system can’t be summed up with a few short words.”
What would I have said to David Cay Johnston off the record?
Well, I would have explained that the UK’s headline corporate tax rate is 21%, not 28% as he claims. And UK effective tax rates likely will keep falling due to government policies, including new tax breaks for intellectual property. I would have explained that Google’s current effective tax rate is 20.4%, the majority of which is paid in the United States, where our business originated.
I would have explained that the US, unlike European countries, taxes its companies’ profits on a global basis. And I would have talked about the process underway at the Organization for Economic Cooperation and Development to redesign the the global corporate tax system. The UK, the US, and many other countries are involved, because this isn’t just about Apple, Google, or the UK.
David Cay Johnston writes that companies are “siphoning profits out of high-tax countries in Europe, Japan and North America and moving them around under various tax treaties until they are not subject to any tax because they are being reported in a nonexistent country called Nowhere.” This simply doesn’t reflect the facts of our business or the amount of tax we pay — 20.4%.