Friday, October 22, 2010

Foreign direct tax avoidance?

While trying to nap on the bus this morning I was listening to talk of Google's tax arrangements and how they used Ireland and Bermuda to reduce their tax bill. I didnt think much about it, just another Irish centric story about how foreign companies use our tax laws to reduce their tax bill elsewhere. The US complains about us taking Google, we complain about U2 moving to Holland and the Dutch probably complain about tulip companies moving to Eastern Europe or somewhere else. It's been going on for years and stopping it was a campaign issue for Obama but nothing ever happens. I always assume that it's just the Irish media hyping up a story that mentions Ireland and major international companies. No one outside of Ireland will even hear about it, right?

Woops, looks like news sites like Bloomberg are reporting the story, which you could kind of ignore because, lets face it, Ireland has been a popular whipping boy for Bloomberg lately. But then I found the story on Gizmodo the gadget and technology blog. Now I wouldnt exactly say Gizmodo is a world financial policy setter but if they are reporting on the story then it's spreading beyond the confines of the business pages. If it becomes a popular topic in the US media it could be an easy win for the Obama administration in advance of the November primaries. They could revive the pledge to stop American companies using foreign countries to avoid tax in the US and this time do something about it. Things would look much worse in the run up to the December budget if US companies suddenly started making plans to move back home.

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