Google Executive Chairman Let's Slip Again That His Firm Is a "Profitable Capitalistic 'Country'"

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In a recent interview on BBC's Radio 4 "Start the Week' Program, Google Chief Executive Eric Schmidt repeated a previous Freudian slip in which he defines Google not as a corporation, but in fact a country.

Schmidt was being interviewed on the weekly British cultural discussion program as the author of The New Digital Age, which postulates that the Internet is "the biggest experiment in anarchy in history." Unsurprisingly, what is not discussed in the book is how Google takes advantage of the resulting confusion to avoid paying its fair share of taxes.  

As usual, the "lamestream"' media were either too lazy or incompetent to pick up on Schmidt's verbal flub that Google "is a profitable capitalistic country." Or, perhaps they chose to turn a deaf ear, thereby doing their corporate paymaster's bidding by not questioning Google's hollow company mantra, "Don't be evil."

Google's corporate tax shenanigans, which include income-shifting strategies known to lawyers as the "Double Irish" and the "Dutch Sandwich," have recently been exposed on both sides of the pond. The strategies have helped reduce Google's overseas tax rate to 2.4 percent, the lowest among the top five U.S. technology companies as measured by market capitalization. In the UK, Google paid only $9 million in tax on sales of over $4.8 billion.

Schmidt's slips of the tongue have become something of a verbal tic. They strongly resemble his oft-repeated mantras that "Tax is not optional," and "We pay the taxes that are legally required," which he repeats ad nauseam during interviews these days.

The Google executive spoke about the "Balkanization of the Internet," and noted that "governments will try very hard to control [it]." On this issue, which he seemed quite passionate about, he had concluded that most governments had probably given up trying to regulate the system. No doubt, he wishes they would do the same concerning corporate taxation!

Schmidt's book is conspicuous for its lack of discussion about how multinational companies like Google are becoming more powerful than nation states. The book ignores how the multinationals benefit from tax- payer-funded government expenditures that create the so-called "free markets" and infrastructure systems of transport, finance, communications, and fair regulations without which they would be unable to function as businesses. Yet, for all the taxpayer support, these same corporations make every effort to evade and avoid paying their own fair share in taxes. In effect, they are dining on a free lunch provided by poor and middle-class income-tax payers.

In the radio program, Schmidt claimed that levels of corporate taxation are "a political decision for the UK democracy." At the same time, he said, he has a "fiduciary responsibility to shareholders to account for things properly," so that firms like Google "can't arbitrarily pay a different tax rate than required by the government, more favorable to a particular country." His concern was how he could go about such an accounting, and what the legal consequences were, since rules around the world are not uniform, whether they govern taxes, privacy issues, democratic practices, censorship, or other matters.

This all sounded to me like a lame excuse for any number of immoral, illegal, or unethical business practices--from avoiding taxes to employing child labor or poisoning the environment. Slavery was once legal, but that doesn't mean it was ever right!

Schmidt, Google, and other multinationals appear to operate in a moral vacuum from which they cherry-pick which laws, taxes, and regulations they wish to comply with. You can almost hear the PR men: "It's not our fault. We're just following the rules."