October 21, 2010, 5:20 PM — There are a couple of interesting articles today about Google and its actions as a corporate citizen.
One involves the search giant's increased spending on lobbying in Washington, D.C. According to ConsumerWatchdog.org, "Google increased its spending on lobbying 11 percent over the previous year to $1.2 million in the third quarter, demonstrating the Internet giant’s willingness to spend to shape federal policy."
ConsumerWatchdog.org reports that Google "has spent $3.92 million (on lobbying) so far this year compared with $4.03 million in all of 2009."
The group doesn't level a particular charge against Google, but points out that the company has tried to exert influence on a number of issues under discussion in the nation's capital, such as "online advertising regulation including privacy and competition issues, patent reform, online consumer protection, cloud computing, renewable energy, smart grid, Congressional Internet service usage rules and broadband access."
Obviously, many companies and industries lobby, and are legally entitled to do so. But ConsumerWatchdog.org says Google "outspent some rival tech companies" in Q3, including Apple ($340,000) and Facebook ($120,000). Another big spender in D.C. is Microsoft, which racked up $1.63 million in third-quarter lobbying costs.
The other interesting article, published by Bloomberg, details how Google "cut its taxes by $3.1 billion in the last three years using a technique that moves most of its foreign profits through Ireland and the Netherlands to Bermuda."
Again, Google hardly is alone. Bloomberg says the company "uses a strategy that has gained favor among such companies as Facebook Inc. and Microsoft Corp." It's called "income shifting," and it features specific strategies such as the "Double Irish" and the "Dutch Sandwich."
Trouble is, as Bloomberg points out:
Companies that use the Double Irish arrangement avoid taxes at home and abroad as the U.S. government struggles to close a projected $1.4 trillion budget gap and European Union countries face a collective projected deficit of 868 billion euros.
Which isn't a corporation's concern, one could fairly argue. Indeed, Bloomberg quotes Irving H. Plotkin, a senior managing director at PricewaterhouseCoopers LLP’s national tax practice in Boston: “A company’s obligation to its shareholders is to try to minimize its taxes and all costs, but to do so legally.”
Not everyone sees things that way.
Google is “flying a banner of doing no evil, and then they’re perpetrating evil under our noses,” said Abraham J. Briloff, a professor emeritus of accounting at Baruch College in New York who has examined Google’s tax disclosures.
“Who is it that paid for the underlying concept on which they built these billions of dollars of revenues?” Briloff said. “It was paid for by the United States citizenry.”
Briloff is referring to research funding the U.S. National Science Foundation provided Stanford University, where Google co-founders Sergey Brin and Larry Page started the company, as well as scholarship money Brin received while working on what would become one of the most powerful companies in the world.
So is Google "perpetrating evil under our noses"? Is it "evil" to have your start-up subsidized by the government, only to do everything you can -- once you've become a hugely profitable company -- to avoid paying your share of taxes when the U.S. faces a massive deficit? Or is it just ungrateful? Or neither? I'd love to hear what readers think.