Bit of a problem for the Google tax campaigners

Advertisers continued to pour money into Google at the end of last year but a $9.9 billion tax charge pushed its parent company Alphabet to a loss in the fourth quarter.

Even without the charge, which was linked to the US tax reforms passed late in December, Alphabet’s underlying profit missed Wall Street’s expectations, sending its shares down last night.

Alphabet is a holding company for Google, its largest business, and a smaller division that houses several experimental projects, known as “other bets”. Google, the world’s most popular search engine, makes more money from digital advertising than any other company.

Alphabet reported a fourth-quarter loss of $3 billion compared with a year ago, when it made a profit of $5.3 billion. Without the tax charge the company would have reported a profit of $6.8 billion.

You know, given that it is actually paying tax?

8 comments on “Bit of a problem for the Google tax campaigners

  1. bis

    “It’ll be wrong sort of tax?”

    Of course. It’s a Trump tax and therefore, by definition, evil.

  2. Suspect the tax charge relates to more than just the last tax year but is lumped in to avoid having to restate previous years’ accounts.

  3. DP.

    The tax is on repatriated foreign earnings over multiple years. The decrease in the corporate tax rate will make up for this one time hit in short order though.

    For the life of me I can’t figure out why Keynesian spending during the good times while avoiding it in the bad thrills Republicans so much. Yes, we really needed tax reform, and still do, but cutting taxes and raising spending during the ‘good’ times when we’re already running ~20% deficit is not a good thing. It’s not like we’re getting Laffer curve effects. The tax cut alone is projected to increase the deficit by roughly 25% over the next decade, assuming no recessions. The only reasons for doing this are cynical, ie pushing the next recession off until after the next election. Is there any good that can come out of this attempt to summon the magic money tree?

  4. I read in the Guardian that Richard Murphy is advising Mr Trump on his political economy.

    Oh, wait…

  5. @DP: 146% is the ratio of tax on taxable profits and gains divided by accounting profits before tax.

    The two profit measures are not the same because tax and accounting rules (in this case US and overseas tax and US GAAP) are not the same.

  6. Incidentally (geddit?), if the share price fall follows a profit fall linked, at least partially, to the tax, it makes me wonder who is paying the tax.

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