Why Google and Eric Schmidt really don't care about tax The group may meet its legal obligations but it fails to be a good corporate citizen In common with other titans of the digital age, Google's Eric Schmidt has faced a lot of questions of late as to why a company that makes so much money seems to pay so little tax. British politicians have been particularly exercised. The Google executive chairman has a stock answer for the critics. The web search giant meets its legal obligations. It also respects its fiduciary duty to shareholders. Its behaviour therefore is beyond reproach. This argument owes more to sophistry than reason. I have no problem with the first two of Mr Schmidt's propositions. It would take a small army of forensic accountants to check that Google always stays on the right side of the law in the multiple tax jurisdictions in which it operates. But there is no evidence that it has crossed the line between aggressive tax avoidance and illegal tax evasion. Likewise, to say that company directors have to safeguard the interests of shareholders is to state, well, the blindingly obvious. Where Mr Schmidt gets its wrong - and conveniently so - is in concluding that, as a consequence, Google can hold its head high as good corporate citizen. This is what might kindly be called a non sequitur. As the Google boss will be well aware from his personal as well as his professional life, thriving societies depend on more than strict adherence to the letter of the law. Communities work because citizens, institutions and, yes, even companies observe norms, conventions and mutual obligations that are nowhere on the statute book. There is nothing new about this. If Mr Schmidt has any doubts, he should read the excellent new biography of the 18th-century philosopher Edmund Burke written by Jesse Norman, the Conservative MP. To suggest that each and every responsibility and duty must be codified in statute is to invite a lurch towards totalitarianism - the micromanagement by an overmighty state of every dimension of our myriad relationships. There is no law (in Britain at least) that obliges me to join the back of a queue for, say, theatre tickets or a restaurant table rather than infiltrate myself at the front. I suspect, though, that Mr Schmidt would agree that queue-jumping is pretty antisocial. To be legal, in this instance, is not to be right. Or would he suggest that the government should legislate? Then there is that fiduciary duty. Of course, companies should not pay "voluntary" tax. But they do not face the binary choice posited by Mr Schmidt. Somewhere between charitable giving to the tax authorities and the setting up of Byzantine pyramids of shell companies in every tax haven known to man and womankind, there is what my lawyer friends call the wholly justifiable use of the tax code to protect shareholders. The odd thing is that, at times, Google seems to understand that it ought to look beyond the letter of the law. The company boasts about its many "good works" in local communities. Presumably these are consistent with its fiduciary duty? Yet when the company says that the billions in revenues garnered every year by its sales force in Britain are not liable to local tax because technically, the business is "closed" in Dublin, it frankly looks sleazy. Someone, somewhere at Google headquarters would do well to apply the "what would any reasonable person" think test? Google is not alone in its elaborate tax-avoidance planning. Amazon, Apple and others have faced searing scrutiny from US politicians. My suspicion is that there are cultural - let's say, libertarian - forces at work here. These masters of the digital universe really don't much like government. Rather they see the state as an unreasonable obstacle to their version of progress. Why should they pay for it? That, though, is just a suspicion. Where I have some sympathy with Google is in the hypocrisy of governments who boast of special tax breaks to attract investment and in the next breath take up the populist cry against those who take them at their word. For his part, Mr Schmidt says he is "puzzled" by the furore. After all, the only enforceable duty on Google is to obey the law. Where he is wrong is in expecting others to agree that this makes it a decent corporate citizen. The honest thing to say on this reputational point would be that he really doesn't much care.