What If Google Taxed Governments?

Executive Chairman Eric Schmidt says Google’s tax strategy is capitalism—and Google is “proudly capitalistic.”

Schmidt’s statement comes as tax authorities in Europe and a tax advocate here attack Google for not doing enough to fund government activities such as attacking Google. The company continues to face antitrust harassment both here and in Europe , and now officials are also complaining that its failure to pay its “fair share” of taxes imposes unfair burdens on governments and other taxpayers. As one British tax advocate put it, “People understand that if Google doesn’t pay, somebody else has to pay or services get cut.”

Granted, Google, like all of us, benefits from government enforcement of our rights against private criminals. But governments, like the rest of us, benefit immensely from Google . What if Google were to make them pay?

Imagine a Google tax on governments!

Here’s how it might work: Google would stop providing any service at all to governments. No more YouTube videos of the President, or of his foreign counterparts. No Google Analytics to help governments with their websites. And if you even try to search the Web from a government IP address—call it error code 1776. No results.

No results—until the government in question agrees to refund Google’s tax payments, and to pay Google 1 percent of all its tax revenues, to boot.

It would be more dramatic than Google’s current strategy, which is to look at various governments’ tax codes and find legal ways to avoid taxes. And unlike lawful tax avoidance, it might not be feasible or justified. (It also wouldn’t be a tax, since the governments would be free to do without Google’s services.) But if it succeeded, it might put an end to demands that Google pay more to support governments that are working against it. It might even raise exciting questions about the relative value of “proudly capitalistic” enterprises and governments that harass them .

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