Taxes, How do corporations pay them?

You would be surprised, but some of these big corporations such as Google, pay less taxes (percent) than you. Over the last three years Google has utilized a smart scheme that manages to detour around paying the 35% income tax for their company in the U.S and saved over 3.1 billion dollars in taxes. Of course Google is not the only one, but they sure seem to be utilizing the method wisely.

Essentially, the trick is to use income shifting, in methods that some lawyers name as “Dutch Sandwich”, or a “Double Irish.”  What companies do to get by the exorbitant tax percentage is shift their income to off shore subsidiaries where they are not required to pay these 5% tax percentage but a more lenient 2.4% maybe. Keep in mind however, these loopholes are technically not illegal…yet.

Analysts calculated that without this loophole and because of the decreased earnings it would entail, Google’s stock price which is around the 600 dollar range would be approximately a hundred dollars less. Note that the stock is currently at $536Image

To find out more about this loophole and the specifics on the subsidiaries like the Cayman Islands and Ireland, please visit the original story: http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-shows-how-60-billion-u-s-revenue-lost-to-tax-loopholes.html

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