Friday, October 22, 2010

Google's tax rate isn't 2.4%

This is one of those things that drives me batty. A sloppily written story from Bloomberg implied that Google's effective tax rate is a mere 2.4%, and the blogosphere swallowed it whole. It should take anyone that isn't a moron no more than 20 seconds to pull up Google's audited financials and see that their effective tax rate has been between 22 - 28% for the past 3 years, but people are dumb and gullible.

So where did that number come from? It's basically a recycled Bloomberg story. They did a marginally interesting story in May about transfer pricing, and when they crunched the numbers they found that income that had been routed to Ireland would ultimately be taxed at 2.4% by Ireland (12.5 statutory rate less deductions for fees paid to Bermuda). They recycled that 2.4% figure back into the Google story, and voila! Dipshits all over the blogosphere - even congresspeople! - are vomiting back that piece of crap that they gulped down without thinking.