Rep. Hensarling Uses Google’s Tax Dodging To Call for Cutting Corporate Taxes

Yesterday, Bloomberg News released an extensive report showing how Google used tax havens in Ireland and the Caribbean to dodge $3.1 billion in taxes in both the United States and abroad. Employing strategies known to lawyers as the “Double Irish” and the “Dutch Sandwich,” Google managed to lower its effective corporate tax rate all the way down to 2.4 percent, far below the U.S. statutory rate of 35 percent.

Last night, CNBC ran a segment on Google’s tax dodging, which even CNBC’s supply-side guru Larry Kudlow seemed to think was out of bounds, saying, “I think, with a $1.3 trillion budget deficit, we do want corporations to pay their share.” Rep. Jeb Hensarling (R-TX), though, used the revelation regarding Google’s handiwork to call for cutting the corporate tax rate. Hensarling freely admitted that he didn’t actually have any clue what it was that Google did, but he is certain that Google’s taxes should be cut anyway:

I don’t know the individual facts of the Google situation. What I do know is that, second only to Japan, we have the highest corporate income tax rate of any industrialized nation of the world. I also know that for companies that want to repatriate their capital to the American shores, they’re looking at a 35 percent income tax rate, where on many other OECD nations, several of the EU nations, will tax it at zero to two percent. So, again, I don’t know the individual situation with Google, but I do know that zero times zero is zero and we ought to be look at how do we get this capital back into the United States of America.

Watch it:

So that Hensarling can get up to speed on the situation, here’s a handy interactive graphic laying out how Google’s tax scheme works. But Hensarling is hardly alone in finding corporate tax dodging a justification for lowering the corporate tax rate. Over the summer, Rep. David Camp (R-MI) said that the U.S. corporate tax rate “puts pressure” on companies to shift income, and therefore needs to be reduced.


But Hensarling’s position makes little sense. He called for bringing the corporate tax rate down to 25 percent, but why would that prevent companies from using tax havens? After all, Google’s 2.4 percent rate is still far below Hensarling’s proposed rate. And when given past opportunities to repatriate money at a lower tax rate, as Hensarling also suggested, corporations have used that money to enrich shareholders and executives, not to create jobs or make investments.

From his seat on the Financial Services Committee, Hensarling has consistently carried water for big corporations, no matter their behavior. Saying that they should be rewarded for tax dodging is simply another part of his pattern.