theodp writes "The Telegraph reports that Google Chairman Eric Schmidt has lashed out at critics of Google's complex tax avoidance tactics in the wake of news that the search giant channeled revenues through Bermuda to avoid $2 billion of global income tax levies last year. 'We pay lots of taxes,' said Schmidt. 'We pay them in the legally prescribed ways. I am very proud of the structure that we set up. We did it based on the incentives that the governments offered us to operate. It’s called capitalism. We are proudly capitalistic. I’m not confused about this.' Schmidt's stance seems to present a dilemma for tax revenue-seeking governments. Invoking Supreme Court Justice Potter Stewart's famous common sense definition of ethics ('Ethics is knowing the difference between what you have a right to do and what is right to do') is unlikely to sway a company whose Chairman sends the message that tax avoidance is the right thing to do and something to be proud of. And a Code of Conduct which requires Googlers to follow 'the letter and spirit' of doing no evil is equally unlikely to discourage tax avoidance if the Chairman suggests the practice embodies the letter and spirit of capitalism. So, to paraphrase The Sound of Music, 'How Do You Solve a Tax Problem Like Google'? Might reminding the company of another famous capitalism quote from Enron CEO Jeffery Skilling ('My job as a businessman is to be a profit center and to maximize return to the shareholders.') help spark a compromise?"