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How Offshore Tax Havens Save Companies Billions

Google, Forest Laboratories and other companies shave billions off their taxes by shifting their revenue through countries with lower income tax rates, Bloomberg News reporter Jesse Drucker says.


Other segments from the episode on March 17, 2011

Fresh Air with Terry Gross, March 17, 2011: Interview with Jesse Drucker; Interview with Greg Mottola.


Fresh Air
12:00-13:00 PM
How Offshore Tax Havens Save Companies Billions


This is FRESH AIR. I'm Dave Davies, in for Terry Gross.

Today's St. Patrick's Day, and our first guest is going to tell us about
the double Irish. That's not a stout but the name given to a clever
financial maneuver that companies like Google, Forest Laboratories and
others are using to legally avoid billions in U.S. corporate taxes.
Ireland's corporate tax rate is about a third of the U.S.'s.

Jesse Drucker is a reporter for Bloomberg News, who's written
extensively about offshore tax havens over the past year. By one
estimate, the U.S. Treasury is losing $60 billion a year to corporations
who use paper transactions among their foreign subsidiaries to reduce
their tax bill. That's at a time when the federal deficit is ballooning,
and government at every level is starved for revenue. I spoke to Jesse
Drucker yesterday.

Well, Jesse Drucker, welcome to FRESH AIR. Let's talk about one of these
techniques that you've written about for - which companies use to
shelter their taxes overseas, which has the colorful name of the double
Irish. Google uses it, others. How does it work?

Mr. JESSE DRUCKER (Reporter, Bloomberg News): Well, basically Google,
like a lot of other companies, it has very valuable intellectual
property. In 2003, in a transaction that was signed off on by the IRS a
few years later, shifted all of the rights, all the non-U.S. rights to
its intellectual property to an Irish subsidiary.

In other words, all of the sales it does outside the U.S. that are based
on its intellectual property would at that point get credited to its
Irish subsidiary rather than to the U.S. parent. And that transaction
meant that the Irish subsidiary had to pay the U.S. for those rights.

But ideally, if you're a company, you want to pay as little as possible
because the more you pay, the more income there is coming into the U.S.
You want to allocate as much income as possible into Ireland, where the
corporate income tax rate is only 12 and a half percent compared to the
U.S., where it's 35 percent.

DAVIES: Right. And then this also connects to Bermuda, right?

Mr. DRUCKER: Yeah. Well, so what happens from there is that the Irish
subsidiary that now controls Google's intellectual property rights
outside the U.S. established an office in Bermuda.

It doesn't really have an office. It's actually - it's essentially an
address at a law firm in Bermuda. But what happens is that Irish
company, technically headquartered in Bermuda, then sublicenses those
rights to an Irish operating company.

And so the result of that is that the Irish company, say, sells ads to,
you know, anyone in Europe or Asia, and those revenues and ultimately
those profits come in to the Irish operating company. But it reduces
those profits in Ireland by paying fees to the Irish company
headquartered in Bermuda.

So it's essentially shifting income. You have Google shifting it from
the U.S. into Ireland and then from Ireland into Bermuda. This is what's
called the double Irish. It's two Irish companies. One is Irish resident
for tax purposes. The other is non-resident for tax purposes.

Now, there's an additional step here that makes it more complicated. The
Irish company actually doesn't make those payments directly into Bermuda
because if it did that, it would get stuck with an Irish withholding

Instead, the payments make another step to an additional Google
subsidiary, this one in the Netherlands, and those payments go - so the
payments go from Ireland to Holland to Bermuda. The kind of insertion of
that Dutch subsidiary, which has no employees, is what's known as the
Dutch sandwich.

(Soundbite of laughter)

Mr. DRUCKER: It's essentially a Dutch subsidiary sandwich by these two
Irish companies. So you have, you know, an Irish operating company is
out there selling ads. They actually have real employees in Dublin.

They make payments to a Dutch subsidiary with no employees, which in
turn makes payments to a Bermuda-headquartered Irish company with no
employees. And the result of all of this is that it's all helped to cut
about $3 billion off of Google's income taxes over the last three years.

DAVIES: Wow. Let's just talk about the transaction between Google and
its Irish subsidiary. Unless I'm missing something, Google runs - it's
on both sides of the bargaining table, right? I mean, can this be
regarded as a fair price?

Mr. DRUCKER: Well, you're asking a kind of very fundamental question
about this. I mean, this is - you know, transfer pricing is the law of
the land, not just here in the U.S. but in countries throughout the

It's the mechanism for allocating income through various subsidiaries
around the world and every major country in the world. And it
essentially relies on the assumption that two subsidiaries of the same
company can bargain with each other and strike a price that's equivalent
to an arm's length transaction that goes on between two unrelated
companies out in the real world. That is the term that you hear over and
over again in transfer pricing: these are arm's length transactions.
It's the arm's length method for allocating income.

And there are a number of people out there who think that fundamentally,
that that makes this an unenforceable system, that you cannot have two
subsidiaries of the same company dealing with each other at arm's
length. In other words, there's no way that two subsidiaries could
interact with each other the way two unrelated parties at arm's length
would deal.

And perhaps even more fundamentally, the transactions that go on in
transfer pricing world are transactions that in the real world - forget
about the actual price for a minute - that the transactions themselves
would never exist. You would never have a company like Google allocating
all of its intellectual property rights to all of the world outside the
U.S. to an unrelated subsidiary, that that would never happen. And
therefore, kind of fundamentally, the system is unenforceable.

There's an attorney named Michael Durst, who was for years an advisor to
companies on transfer pricing, worked for one of the big accounting
firms and for several big corporate law firms. And he's really emerged
as one the, perhaps the leading critic of transfer pricing for precisely
this reason. He said it's an unenforceable system.

DAVIES: And all this is perfectly legal?

Mr. DRUCKER: Yeah, all this is perfectly legal. I mean, it's a slightly
complicated question because the system of transfer pricing is legal. I
mean, it's more than legal. It's required. This is what companies are
required to do. They are required to use arm's length transactions,
quote-unquote, "arm's length transactions."

The actual price that they pick is up to them. So it's always a little
bit misleading to say the system is perfectly legal. It is perfectly
legal, but there's an incredible amount of wiggle room as far as kind of
what price the companies pick.

And there's no one that forces a company to say, okay, you are shifting
income out of the U.S. into Ireland. Now go an additional step and shift
it into a mailbox in Bermuda.

Now, companies will make the argument these transactions are legal. And
their competitors are doing it, and so they have an obligation to
shareholders to do it, as well.

DAVIES: Now, you've also written about how Forest Laboratories has used
this even more effectively, right?

Mr. DRUCKER: Yeah, I mean, Forest has a nearly identical arrangement.
They manufacture their drugs in Ireland. What makes Forest a little -
what makes them a little bit different is that Forest, for its most
valuable drug, an antidepressant called Lexipro, which is one of the
bestselling antidepressants of all time, they're actually licensing
those rights from an unrelated company.

They didn't come up with that drug, or they didn't largely come up with
it. They contributed a little bit to it. But what's so interesting about
Forest is that Forest kind of demonstrates how transfer pricing really
just kind of removes real-world economics from the world of taxes for

I mean, Forest is a company that does almost 100 percent of its sales
here in the U.S. They have almost 100 percent of their employees in the
U.S. They're headquartered in New York City, and yet the majority of
their profits show up overseas, most of them attributed to a mailbox in

DAVIES: Does anybody know how much money the U.S. Treasury is missing
because of companies that have taken advantage of these techniques?

Mr. DRUCKER: Well, that's a very good question. I mean, the most recent
estimate is from an economist at Reed College, who estimated that the
U.S. is losing about $60 billion a year in federal tax revenue. But she
actually is in the process of increasing that estimate and actually has
now arrived at a figure of closer to $90 billion.

I mean, the reality is that there are many different ways - there are a
lot of different variables that would obviously go into trying to
measure something like that. I mean, there are essentially sort of three
scholars who have devoted a lot of time to doing that, all using totally
different methodologies, and they all arrive at figures in the tens of
billions of dollars.

I mean, Kim Clausing, an economist at Reed College, is the one who kind
of has the most recent estimate, and she puts it at about $90 billion a

DAVIES: If companies are successful in moving enormous profits to
subsidiaries offshore, like Ireland or Bermuda, doesn't that mean a lot
of their money is going to get piled up in those countries and
inaccessible to them unless they want to ship it back, in which they'd
pay American corporate tax rates?

Mr. DRUCKER: Right, well, the way the rules work is that, you know,
technically you're not permanently avoiding U.S. tax when you shift
income into tax savings. You're merely deferring it. You're deferring it
for as long as you essentially keep it outside the U.S. The term of art
is these are indefinitely reinvested earnings. They're indefinitely
reinvested in your non-U.S. operations.

And so when you bring it home, then you're supposed to pay U.S. tax.
You're supposed to pay U.S. tax minus a credit for the income taxes
you've already paid overseas.

Now, there's a couple things that go on there. One is that companies
have a number of techniques for bringing back profits without paying the

These often have kind of very colorful nicknames like the deadly D and
the killer B. They're kind of named after sections of the tax code.
There's a columnist at the trade publication Tax Notes named Lee
Sheppard, who has come up with some of these nicknames over the years.
So she should get credit for that.

But, you know, kind of what also goes on is a few years ago, in 2004,
Congress passed the American Jobs Creation Act, which permitted
companies to bring back profits from offshore one time at a reduced tax
rate, paying 5.25 percent instead of 35 percent.

And companies brought back about $312 billion that qualified for the
break, and, you know, there's a fair amount of academic literature that
shows that very little job creation investment went on as a result of
that. And in fact, most of that money was used to buy back stock.

And companies right now are lobbying for essentially a repeat of that
break. You know, John Chambers, the CEO of Cisco, has been kind of the
most vocal person leading this charge. And so we may see a reprise of

DAVIES: We're speaking with Jesse Drucker. He's a reporter for Bloomberg
News. We'll talk more after a short break. This is FRESH AIR.

(Soundbite of music)

DAVIES: If you're just joining us, our guest is Jesse Drucker. He's a
reporter for Bloomberg News, and he's been writing recently about
techniques that corporations use to transfer profits to offshore

One of the arguments that corporations make for a tax holiday, for the
government permitting corporations to bring back profits from offshore
at a discounted rate, is that it would be in effect a free, non-
government-sponsored stimulus plan. You know, you get, what, as much as
a trillion dollars, perhaps, that would come back to U.S. companies and
that would be available to, you know, invest in new jobs and
productivity. What about that argument?

Mr. DRUCKER: Well, it sounds reasonable. I mean, I think there are two
important things to say about that. Number one is that companies, as we
speak, according to the most recent data from the Federal Reserve, are
sitting on a record pile of cash: $1.9 trillion. So to the degree the
economy is challenged right now, it's not because of lack of cash at the
disposal of companies.

I think the second thing is that in 2004 - I mean, actually the money -
the break was in '04, but the money came back in '05. There's a fair
amount of academic research on what happened. And the result is that
there was very little hiring and very little investment that went on as
a result of the $300-some-odd billion that came back the last time. Most
of that money seemed to go to buy back stock.

You know, kind of one the most interesting examples of this was Hewlett-
Packard, which in 2005 under the tax holiday brought back $14.5 billion
and that same year announced it was laying off over 14,000 people.

So, you know, kind of both the evidence of the last time and the reality
of how much cash companies are sitting on right here in the U.S. would
seem to raise serious questions about how stimulative that would be.

DAVIES: You know, it's interesting that it's something that you observe
in tax law generally, is that, you know, tax laws are enacted with
presumably laudable public policy goals in mind, fairly taxing those for
what they - people for what they should pay and then also providing the
right incentives that you want.

And then what always happens is that, you know, high-priced lawyers and
accountants get busy, and they're smart and creative, and they think of
avenues, ways, you know, loopholes to take advantage of them. And I'm
sure other countries lose tax revenue to this particular activity,
transfer pricing, just as the United States does. Have other countries
figured out - anybody else figured out a way to get a handle on it? Do
you know?

Mr. DRUCKER: Well, I mean, there's a kind of - it's a great question.
It's ultimately a very complicated question. I mean, you know, there are
many different aspects to different countries' tax systems that are
different from our own that kind of make income-shifting more difficult
in some other countries.

You know, I think a very easy thing to understand is that a lot of these
other countries that have what are called territorial systems for tax
and corporate income - the U.S. taxes corporate income on a worldwide
basis. Pretty much every other country in the world taxes just what goes
on within that country. It's not quite that simple. I mean, they all
have some form of taxing income outside the country, but basically
that's what they're doing.

A lot of those countries have much higher marginal income tax rates on
individuals. I mean, you know, if you were a multimillionaire in, you
know, France, Germany or the U.K., I mean, you're looking at marginal
rates, you know, sometimes close to 50 percent. A lot of these countries
also have value added taxes, basically what's effectively a national
sales tax.

So, you know, a lot of these other countries kind of have other sources
of tax revenue. You know, and the U.S. should probably explore some of
these other avenues. I mean, at the very least, the U.S. should probably
be exploring kind of some way to deal with the fact that we're losing
$90 billion a year to this.

I mean, we're in a situation right now - you know, Camden, New Jersey,
is in the process of laying off nearly half its police force. And we can
see kind of what is going on with kind of called for cuts to teachers'
salaries and laying off teachers around the country when there are tens
of billions of dollars in tax revenues being pushed into mailboxes

DAVIES: Well, you know, President Obama, I believe in his last State of
the Union address, talked about simplifying the corporate tax code and
lowering the rate. I mean, when you look at what he's doing, does - do
his proposals get a handle on this?

Mr. DRUCKER: Well, they had - you know, it's funny. In the first - in
the very first Obama budget proposal in early 2009 - they've had a
number of proposals dealing with kind of various problems around
transfer pricing and around shifting profits into tax havens.

Probably the most significant one was something that would repeal
something called check the box, which, kind of without getting into the
details of that, would have made it much more difficult for a company
like Google to shift income out of Ireland into Bermuda.

And after intensive lobbying both to Congress and the Treasury
Department, they dropped that. The Obama administration dropped that

A lot of experts would say that would be a very effective - short of
changing the entire system, that would have been a very effective tool
for mitigating the loss of income, profits being shifted outside the
U.S., that they have other proposals out there to try to deal with this.

I mean, so far, none of them have really gone anywhere. That's not
totally true. There was one around so-called foreign tax credits that
did become law, but for the most part, they haven't really advanced.

DAVIES: And is that...

Mr. DRUCKER: And one of the problems also is that the president talked
about lowering the tax rate and closing some of the quote-unquote
"loopholes." Now the problem with that is that there are so many special
interest provisions in the tax code that it's very difficult to get a
united front even within the business community on kind of how to
approach it because, you know, if you're going to get rid of something
that benefits domestic manufacturers, well, they're not going to like
that, even if you keep something that benefits, you know, intellectual
property, heavy industries like pharmaceuticals.

So there are a lot of things that narrow the tax base, a lot of the
special interest provisions, but kind of getting unanimity on which ones
you should keep and which ones you get rid of is obviously incredibly

DAVIES: You know, the other issue that comes up in these discussions is
the notion that in an international economy, you have to be competitive.
And you see this even among states and cities that will spend, you know,
hundreds of millions in tax dollars to lure, you know, sports teams and
convention centers, you know, essentially handing money to private
interests because they fear that if they don't, the next city or the
next state will get the business.

What about the argument that the United States needs to accommodate, you
know, international corporations, and if they don't make it possible for
them to hold on to their earnings, they'll lose them?

Mr. DRUCKER: Well, obvious - that's absolutely true that the U.S. and
other countries need to create climates that are conducive to business.
That's absolutely true.

And as long as this system exists where companies have the ability to
shift profits, they're going to take advantage of that. I mean, I guess
the question is: Do we want to have a system where your taxable income
has so little relation to where the real-world economic activity takes

And kind of more broadly, I mean, the question it raises about the
fairness of the tax system is kind of - the result of this is that it
shifts the tax burden to the people that don't have the ability to do
this, you know, i.e., the 99 percent of Americans that don't have access
to sophisticated tax advisers and also to the companies that aren't
multinational. I mean, not every company which employs people and
creates jobs is a multinational company with access to this sort of tax

So, you know, kind of especially in this time of kind of really severe
fiscal straits, I think we want to ask the question of who is it that
should bear the brunt of the problems here? And should it really only be
the 90 percent or 99 percent of Americans who can't afford to send their
kids to private schools and can't afford private security and can't
afford, you know, cars and drivers, the people who rely on public
schools and public transportation, should the debate only be about
cutting their services? Because by and large, that is the only way the
debate is framed.

And should the debate be enlargened to encompass - well, what about the
profits that are being shifted into a mailbox overseas by companies that
are located here in the U.S.

I mean, the situation with Google, also, obviously, is very interesting
because, you know, Google, as we know, is a company that has its start
because of U.S. taxpayer funding. I mean, both the original grant at
Stanford University and the scholarship that sent one of its founders,
Sergey Brin, to Stanford, those were both funded by you and me, by the

And so the question is: Should we have a system where taxpayers
essentially help to fund success and create profitable companies but
then don't fully share in the thing that they need to pay when they make
profits, which are their taxes?

DAVIES: Well, Jesse Drucker, thanks so much.

Mr. DRUCKER: Thank you.

DAVIES: Jesse Drucker is a reporter for Bloomberg News. I'm Dave Davies,
and this is FRESH AIR.
Fresh Air
12:00-13:00 PM
Greg Mottola: Making 'Paul' Realistically Alien


This is FRESH AIR. I'm Dave Davies in for Terry Gross.

Our next guest is writer and director Greg Mottola. He directed the hit
teen comedy "Superbad" written by Seth Rogen and Evan Goldberg, and he
wrote and directed two critically-acclaimed films, "Daytrippers"
released in 1996 and the 2009 film "Adventureland" set in an amusement
park in the '80s and starring Jesse Eisenberg. Mottola also directed
several episodes of the TV series "Arrested Development," ‘Undeclared"
and "The Comeback."

Mottola's new film, "Paul," premiered at the South by Southwest Film
Festival on Sunday and opens at theaters tomorrow. It's written by and
stars Simon Pegg and Nick Frost, the English duo best known for the
comedies "Shaun of the Dead" and "Hot Fuzz." In Paul, they play a pair
of English science fiction buffs who are touring UFO sites in the
American West when they encounter a real alien named Paul, who ends up
traveling with them in their rented RV. The creature is a computer-
generated graphic that has the voice and attitude of Seth Rogen.

In this scene, Pegg's character is driving the RV and the alien Paul is
up front eating pistachios. Frost's character, who passed out upon
meeting Paul, wakes up in the middle of the scene and attacks the alien.

(Soundbite of movie, "Paul")

Mr. SETH ROGEN (Actor; Writer): (as Paul) I love pistachios. Alien can
eat a closed one, right?

Mr. SIMON PEGG (Actor; Writer): (as Graeme Willy) I usually just bite

Mr. ROGEN: (as Paul) No. You don't do that at all. There's nothing on
there anyway.

Mr. PEGG: (as Graeme Willy) Throw them away. I like mussels.

Mr. ROGEN: (as Paul) No, I like pistachios.

(Soundbite of screaming, fighting)

Mr. PEGG: (as Graeme Willy) Nick, stop. He's okay. He's actually
friendly. His name is Paul.

(Soundbite of coughing, heavy breathing)

Mr. PEGG: (as Graeme Willy) Alien called Paul.

Mr. NICK FROST (Actor; Writer): (as Clive Gollings) With that Klingon?
You psychotic nerd.

Mr. PEGG: (as Graeme Willy) Listen, Paul is from a small M Class planet
in northern spiral arm of the Andromeda galaxy.

Mr. ROGEN: (as Paul) Thank you.

Mr. FROST: (as Clive Gollings) He looks too obvious.

Mr. ROGEN: (as Paul) There's a reason for that, Clive. Over the last 60
years the human race has been dripped-fed images of my face on lunch
boxes and T-shirts. In case our species do meet, you don't have a spaz

Mr. FROST: (as Clive Gollings) I do not have a spaz attack.

Mr. PEGG: (as Graeme Willy) Don't do it again.

DAVIES: Well Greg Mottola, welcome to FRESH AIR. This film is a weird
road trip with an alien, and it doesn't work if the alien doesn't work
visually and isn't funny. Talk a little about creating Paul, the alien,
his look, his personality.

Mr. GREG MOTTOLA (Director): Well, that was one of the reasons I wanted
to make the film because I liked the challenge of making a CGI character
that gave a kind of naturalistic comedy performance. We've seen CGI
characters do a lot of things, but not so much that. You might see that
in an all CG film but not so much in a mixed live-action CG character
who's photo real and has to have a kind of, you know, consistent,
believable psychology.

In the beginning, When we decided we wanted to Seth to do this, one of
the caveats was that Seth would not be available for the actual filming.
He was going to go make "The Green Hornet," so we knew we wouldn't have
him on set. Hence, the lead actors Simon Pegg, Nick Frost and Kristen
Wiig would be acting to a stick with ping-pong balls for eyes and a
script supervisor reading lines. And I thought well, that's problematic.

DAVIES: Yeah. That's one of the first things I wondered because in the
film, I mean the alien, it totally works. You totally believe he's in
the RV with them and everywhere and I'm sitting there thinking how do
you act if this is blank space?

Mr. MOTTOLA: You know, I went back and looked at "ET." Obviously, I
studied a lot of Spielberg films and other sci-fi films from the period
because they're referenced throughout the movie. So I was watching "ET"
and I was thinking well, you know, a big part of what sells this are the
performances of those kids. You know, Drew Barrymore really makes you
think she's meeting an alien for the first time. The creature design is
amazing in "ET" but, you know, I knew the actors had to sell it.

So I turned to one of the costars in the film, Joe Lo Truglio, who plays
O'Reilly. He and Bill Hader have paired up as these two ridiculous,
comical federal agents who are in pursuit of Paul, and I asked him if
he'd be the voice of Paul during the filming and he said yes. And thank
God, and he was - he took it very seriously. He would study tapes of
Seth Rogen rehearsing the character so he could see what Seth was doing
with it. And then he'd bring his own improvisations to the actual
filming, which I think just made an enormous difference for Simon and
Nick and Kristen.

And to have someone they could play against, someone they could
improvise with. And then later, in post production, Seth recreated some
of Joe's ideas and lines and improvs and, you know, this very strange
theater troupe's, you know, vibe, where people are trading the character
back and forth. It's like the - you know, sometimes there will be a play
where two different actors play the same part on different nights of the

DAVIES: Yeah. I'm picturing you doing this job of directing and, you
know, and directing it's an artistic endeavor, but it's also this huge
management thing, because you have production schedules and big crews
and budgets and all that. And so you've got this, you know, you've got
this pre-recorded lines of Seth Rogen. You're trying to simulate with
this computer-generated guy is going to look like on the set, manage all
the other actors, not to mention the fact that this movie also includes
bar fights, explosions, car crashes. Gosh. That's a lot to manage isn't

(Soundbite of laughter)

Mr. MOTTOLA: Well, and it was done on a budget. There are comedies where
people are just sitting around a restaurant, talking, that have bigger
budgets than this film. You know, they were places where the limitations
were frustrating for sure. For instance, we had action scenes, car
chases and explosions and we had no second unit which, you know, for the
listener, most action films tend to have a second unit where a stunt
coordinator is off simultaneously shooting the action bits so the main
production can be focusing on acting and so forth. We just had to kind
of work it into our schedule and cram it in somehow. And I guess the fun
part of that is I got to run around in the little car that goes super
fast and has a camera strapped to it, although I feared for my life a
few times.

You know, it's, I started out in indie films. This is quite different
than shooting a 16 millimeter film in 15 days like I did way back in the
mid-90s on my first film "The Daytrippers." And I also, you know, my
heroes are people like Woody Allen. I kind of thought I would only work
exclusively in the world of naturalistic comedy drama, but there is this
side of me that also loves Hollywood and I wanted to see what that felt
like. I wanted to see what it felt like to do special effects and I
don't think I'm going to dive right into a special effects movie next.
My agents have asked me that. So I think I need two people sitting in a
restaurant talking. But I certainly learned a lot.

DAVIES: You've done a lot of sort of character driven stuff. I mean your
earlier film "Daytrippers" was, you know, it was this relationships
among family members, and here you've got this sophisticated computer-
generated alien. Kind of interesting that you're directing that kind of

Mr. MOTTOLA: Well, when I read a script I always - the first question I
ask myself is, is there something that I could bring to it that maybe
the next guy wouldn't. Because I've read a lot of very good scripts and
thought there are people who could do this better than I. What I liked
about this challenge was that in my mind, Paul should give a
naturalistic comedy performance. So I felt that it needed to be played
like a real actor would play it. He is a character in a road movie. He
is Jack Nicholson in "Five Easy Pieces." He just happens to be one of
these people in the car.

In fact, Simon said to me when I - I asked him point blank when we first
met on this, are you sure I'm somebody you'd want to have do this? And
he said, look, I saw your first film "Daytrippers" in London in a
theater, and in a way, this could be like that in places. It could be
people driving around in a car and one of them just happens to be an

(Soundbite of laughter)

DAVIES: An extraterrestrial.

Mr. MOTTOLA: Yeah, just happens to be. You know, we've all had that

DAVIES: Our guest is Greg Mottola. He directed the new film "Paul."

We'll talk more after a break.

This is FRESH AIR.

(Soundbite of music)

DAVIES: If you're just joining us, our guest is film director Greg
Mottola. His latest movie is "Paul." It's a comedy involving an alien on
a road trip starring Simon Pegg, Nick Frost and others.

You had a big success with "Superbad," the film with Jonah Hill, Michael
Cera and others. And I thought we'd listen to a clip here. I mean this
is folks who saw the film will remember this. This is three high school
seniors played by Jonah Hill, Michael Cera, and their buddy Fogell who
is played by Christopher Mintz-Plasse. And they want to get booze and in
this scene Fogell, their nerdy friend, has gotten a fake just made. It
happens to be a Hawaiian driver's license and they're discussing whether
it will work. Let's listen.

(Soundbite of movie, "Superbad")

Mr. MICHAEL CERA (Actor): (as Evan) All right, that's good. That's hard
to trace, I guess. Wait. You changed your name to McLovin?

Mr. CHRISTOPHER MINTZ-PLASSE (Actor): (as Fogell) Yeah

Mr. CERA: (as Evan) McLovin? What kind of a stupid name is that, Fogell?
What, are you trying to be an Irish R&B singer?

Mr. MINTZ-PLASSE: (as Fogell) Naw, they let you pick any name you want
when you get down there.

Mr. JONAH HILL (Actor, Writer): (as Seth) And you landed on McLovin...

Mr. MINTZ-PLASSE: (as Fogell) Yeah. It was between that or Muhammed.

Mr. HILL: (as Seth) Why don't you just pick a common name like a normal

Mr. MINTZ-PLASSE: (as Fogell) Muhammed is the most commonly used name on

Mr. CERA: (as Evan) Fogell, have you actually ever met anyone named

Mr. MINTZ-PLASSE: (as Fogell) Have you actually ever met anyone named

Mr. HILL: (as Seth) No, that's why you picked a dumb (bleep)name.

Mr. MINTZ-PLASSE: (as Fogell) Gimme that.

Mr. HILL: (as Seth) All right, you look like a future pedophile in this
picture, number one. Number two: it doesn't even have a first name, it
just says McLovin.

Mr. CERA: (as Evan) What? One name? One name? Who are you? Seal?

Mr. HILL: (as Seth) Fogell, this ID says that you're 25 years old. Why
wouldn't you just put 21, man?

Mr. MINTZ-PLASSE: (as Fogell) Seth, Seth, Seth. Listen up, (bleep).
Every day, hundreds of kids go into the liquor store with fake IDs, and
every single one says they're 21. How many 21-year-olds do you think
there are in this town?

Mr. CERA: (as Evan) Let's stay calm, okay? Let's not lose our heads.
It's a fine ID; it'll, it's going to work. It's passable, okay? This
isn't terrible. I mean, it's up to you, Fogell. This guy is either going
to think here's another kid with a fake ID or here's McLovin, a 25 year-
old Hawaiian organ donor. Okay? So what's it going to be?

Mr. MINTZ-PLASSE: (as Fogell) I am McLovin.

DAVIES: And that's from the film "Superbad," directed by our guest Greg

Mr. MOTTOLA: Yeah, there weren't that many bleeps. I was wondering how

DAVIES: Yeah. I will be going to do that on the radio, right?

(Soundbite of laughter)

DAVIES: Right. These characters are, you know, decent adolescent guys
but they are completely assessed with getting some sexual experience and
getting alcohol as a route to getting sexual experience. How much like
these guys were you when you were in high school?

Mr. MOTTOLA: I'm gauging the likelihood my parents are listening to

(Soundbite of laughter)

Mr. MOTTOLA: When I read the script I thought I completely relate to
them. They are entirely in that. They don't know anything about women.
It's rather sad. And I thought that's, you know, if we can make this
feel real and psychologically accurate maybe this movie will have some
life to it. Yeah, I was a bit like those guys. I was an art student. I
was kind of like; I became the forger of IDs because I had the best art
skills so I was like Donald Pleasence in "The Great Escape." I was
always making fake IDs for people, which is, I'm sort of embarrassed to
admit that, but...

DAVIES: I think the statute of limitations has expired. This was the
'80s you were making fake IDs?

(Soundbite of laughter)

Mr. MOTTOLA: Yeah. Yeah. So, yes, I had some of my moments like that.

DAVIES: Oh gosh. And, you know, Judd Apatow, is a producer of this film
and in a lot of his stuff there's an enormous amount of improvising and
these were very young actors. They do a lot of riffing? Were you
comfortable with that?

Mr. MOTTOLA: They did. I think maybe, maybe slightly less than a normal
Judd film just because the script was so specific and Seth Rogan and his
co-writer, Evan Goldberg really wrote from their own experiences. There
are some rather disgusting things that happened in the movie that were
actually based on true stories. But having said that, these are some
fairly remarkable young people, Michael Cera, Jonah, Christopher Mintz-
Plasse, they are really inventive funny young men.

A lot of stuff that Fogell I always want to call him McLovin.


(Soundbite of laughter)

Mr. MOTTOLA: I know. Christopher Mintz-Plasse, who had never acted
before in his life, was an amazing improviser. We read hundreds of kids
for that part. Many of them are, you know, who were working actors and
then I wasn't satisfied with anyone that I'd seen. Everyone was kind of
giving me the stock nerd character and so we started to look for
nonprofessional actors and we put up flyers in high schools and all
these kids came in and most of them seemed like people who had never
acted before. And then Chris came in and played the character with this
kind of wonderful arrogance that made it come to life and a lot of the
strained little phrases that Fogell says, all inventions of Chris.

DAVIES: Well, I want to talk about "Daytrippers," which is I think a
terrific film and it was worth preparing for this interview just to be
able to watch it again. And let me just kind of mention the plot and
we'll listen to a clip. It's about a family that lives in the suburbs.
They are two grown daughters, one played by Hope Davis and Hope has
found a romantic note on the floor which might have been meant for her
husband Louis who works in New York City. This is a suburb of New York
and Louis works in the publishing world. He's already headed off for
work and she sits down with members of her family. They say, oh my gosh,
what does this note to mean? Is he having an affair? And they all decide
to pile into the family station wagon for a trip into New York to ask
Louis about it. And there begins a remarkable road trip movie. And what
we're going to hear here is some conversation along the road to New

One of the sisters played by Parker Posey has her boyfriend along. He's
sort of a pseudo-intellectual named Carl and he gets into a conversation
about his work that also brings an Anne Meara who plays the mom of the
family. Let's listen. It begins with Parker Posey

(Soundbite of movie, "Daytrippers")

Ms. PARKER POSEY (Actor): (as Jo Malone) Carl, tell mom and dad about
your novel. Carl wrote a novel everyone. It's great. It's, it's this far
out. It's brilliant.

Mr. STANLEY TUCCI (Actor): (as Louis D'Amico) I don't think your parents
want to hear my novel.

Ms. POSEY: (as Jo Malone) Mom and dad, you want to hear about Carl's

Ms. Anne MEARA (Actor): (as Rita Malone) Oh, yeah. Sure, Carl.

Mr. TUCCI: (as Louis D'Amico) Well, Rita, it's an allegory about
spiritual survival in the contemporary world. The main character is this
freak of nature. He's this man who doesn't have a normal head. He was
born with the dog's head.

Ms. MEARA: (as Rita Malone) A dog's head?

Mr. TUCCI: (as Louis D'Amico) Yeah. You know, sort of a fantastical

Ms. POSEY: (as Jo Malone) It's like a fable.

Mr. TUCCI: (as Louis D'Amico) Yeah. Like "Master and Margarita" or...

Ms. POSEY: (as Jo Malone) "Animal Farm."

Mr. TUCCI: (as Louis D'Amico) "Animal" - yeah. Exactly. Very Kafka-

Ms. MEARA: (as Rita Malone) Carl, I'm not an educated woman.

(Soundbite of laughter)

Ms. POSEY: (as Jo Malone) It's Dr. Seuss for adults, mom.

Ms. MEARA: (as Rita Malone) Oh. Oh, yeah.

Mr. TUCCI: (as Louis D'Amico) So, everyone else will look as normal,
except for the man with the dog's head, who really only wants...

Mr. PAT MCNAMARA (Actor): (as Jim Malone): What kind of dog?

Ms. POSEY: (as Jo Malone) Dad, it's not important.

Mr. TUCCI: (as Louis D'Amico) No, no. No, no, no, no. It is important.
Actually, that's very important. It's a German Shorthaired Pointer. You
see, it's actually especially important that it's a Pointer, because
that's a crucial metaphor. Because in the book, he's sort of a
visionary, you know? You know - pointing the way to salvation?

Ms. MEARA: (as Rita Malone) Jo loves dogs. Remember Pepper? We had to
put him to sleep.

Ms. POSEY: (as Jo Malone) Mother.

(Soundbite of laughter)

DAVIES: And that is from "Daytrippers," written and directed by our
guest Greg Mottola. Fun to hear that again, isn't it?

Mr. MOTTOLA: I have not watched the film in over a decade, so it's -
yeah. A lot comes back.

DAVIES: Right. You know, as I read about this, it's amazing that you got
- and, I mean, this is an impressive cast, you know, Liev Schreiber,
Parker Posey, Stanley Tucci, Hope Davis, Anne Meara, Campbell Scott and
Marcia Gay Harden. And from what I've read it, it sounds like you paid
them, like, tortilla chips and subway tokens. I mean, how did you get -
I mean, these people were better known later than they are - now than
they are then. But how did you get a cast like that with such a
miniscule budget?

Mr. MOTTOLA: Well, one of the advantages of being in New York City and
trying to get a career off the ground is that you're in a city filled
with some very creative, talented people, and I got to meet some of them
socially. I became friends with Campbell Scott, and he introduced me to
Hope Davis. Another friend of mine from school had worked on a movie,
"Dazed and Confused," and knew Parker Posey, and Parker introduced me to
Liev. And I just did a lot of begging.

You know, the truth is, good actors are always looking to do something
different. They are dying to play slightly odder characters or work on
movies that aren't straight down the middle. So I took advantage of
that, and, you know, we designed the film in a way that if it ever got
sold, we'd pay everyone back. So the upfront costs were incredibly low.
We shot the whole thing for about 60,000 bucks. And, you know, in a
weird way - because no one was telling me what to do - of course, it's
an experience I want to recreate again, because it's a little trickier
when you're - you know, when someone else is footing the bill and
millions of dollars are at stake.

DAVIES: Yeah. What were some of the obstacles that you faced in shooting
this thing in what, like, 16, 17 days?

Mr. MOTTOLA: There are scenes in the film where there's just one single
take on every person, where we didn't even get to do a take two because
we had, you know, 12 pages of dialogue to do in one day. The first day
of shooting, our camera had been stolen. We were unloading the truck,
and we had no camera. So by the time we scrambled and found one, we had
two hours left. So, you know, I shot everything I needed from that
location - because it was a location we couldn't come back to - in two
hours. It was, you know, not ideal, but in a way, it taught me something
about resourcefulness.

DAVIES: Right. And the scene that we heard was inside a car. And it
occurred to me as I watched it that it seems the camera was actually
inside the car, as opposed to, you know, traveling next to it with - on
a mount, or something.

Mr. MOTTOLA: Yeah. I mean, that was one of the things we had to resort
to, to do it. I'm actually hiding in the back of the station wagon
underneath a blanket with the sound man in all those scenes. Actually,
the set - in that particular scene, the sound was so bad because of the
Long Island Expressway. We had to loop the entire scene. Everyone's
voice had been replaced, which, as a filmmaker, as I listen to it, I can
tell. But I think we got away with it. It was - that was very
challenging. But, you know, it taught me some technical skills.

DAVIES: Yeah. You did a lot of directing in television for some really
great shows - I mean, "Undeclared" and "Arrested Development." You want
to just tell us a little how you got into that and what that experience
was like?

Mr. MOTTOLA: Well, when I came out of film school, I was hoping to
emulate heroes of mine like Woody Allen, and kind of writing direct my
own small movies. And then I realized that that's actually quite hard to
do. It's very hard to be Woody Allen. And I realized I just need to be
working, and I just need to work with good people. And Judd Apatow
called me and asked me if I wanted to direct an episode of his second
television series "Undeclared." And I think before he finished the
sentence, I yelled yes several times...

(Soundbite of laughter)

Mr. MOTTOLA: ...and essentially moved from Manhattan to Los Angeles
immediately, because I was dying to get experience. And it was one of
the better decisions I've made in my life.

DAVIES: Is there an episode or a particular moment that you really

Mr. MOTTOLA: Well, working with Judd is kind of like comedy boot camp.
He does have an amazing comedy mind, and, you know, Judd was one of the
first people who told me: You know, if a joke is funny, but it's not
moving the story forward, you have to cut it. You have to be
disciplined. You have to - you know, or if a joke is counter to the
character's psychology, you have to cut it. He has a real aesthetic
about storytelling and trying to balance comedy and psychology and
storytelling and plot, and all those things. So I took a lot away from

Judd also has a great kind of Mike Leigh, Cassavetes version of comedy
where part of the reason he loves improv so much is that it puts the
actors in a position where they don't know what the other actor's going
to do. You can kind of - you can get lightning in a bottle with that
technique, because an actor's waiting for a line sometimes, if it's in
the script, and something else comes, and they have to be on their toes.
And it elicits, often, a response that's quite surprising. And if your
actor's really in the moment and very inventive, surprising, funny,
wonderful things happen.

And I really admire Judd's techniques in that regard. In TV, you know,
the director is - it's not an auteur medium for directors. It really is
the producer-writer's medium. As such, it takes a lot of the heat off of
you, so you get to try things that are harder to try and features
because there's so much pressure and so much money at stake. It was
quite freeing to do television for a few years.

DAVIES: We're speaking with Greg Mottola. His new film is called "Paul."

We'll talk more after a short break. This is FRESH AIR.

(Soundbite of music)

DAVIES: If you're just joining us, our guest is film director Greg
Mottola. He has directed the new film "Paul." It's a science-fiction
comedy starring Simon Pegg and Nick Frost.

Well, there was a quite a stretch between "Daytrippers" - which you
wrote and directed, which I guess you finished making in '94 and opened
some years later - and then "Adventureland," which you also wrote and
directed in 2009. In between, you did a lot of directing in television.

But "Adventureland," it was a - I thought a really neat film. It's set
in a family-run amusement park. And I thought we'd hear a scene. This is
the central character, James, who's played by Jesse Eisenberg. And he's
coming to get hired, I guess, for a summer job here at this little
amusement park. They have jobs into categories, games or rides, and he's
speaking with the managers, played by Bill Hader and Kristen Wiig.

(Soundbite of movie, "Adventureland")

Ms. KRISTEN WIIG (Actor): (as Paulette) This is James. He's applying for
a games job.

Mr. BILL HADER (Actor): (as Bobby) Games. Oh, great. Good. Let's get you
set up.

Mr. JESSE EISENBERG (Actor): (as James Brennan) Actually, Bobby, I'd
prefer a rides job if it's still open.

Mr. HADER: (as Bobby) You look more like a games guy. Plus, I already
got out the games application. So, all right...

Mr. EISENBERG: (as James Brennan) Okay. Yeah...

Mr. HADER: (as Bobby) My name is Bobby. Okay. Rules: no freebies, no
free turns for your friends, no free upgrades. No free food.

Mr. EISENBERG: (as James Brennan) So, just, nothing is free here.

Mr. HADER: (as Bobby) Everybody has to pay for everything. And more
importantly, working in games, no one ever wins a giant-ass panda.

Ms. WIIG: (as Paulette) Yeah, we don't have that many left.

Mr. HADER: (as Bobby) Cool. Can you hand me a T-shirt, please?

Mr. EISENBERG: (as James Brennan) I have a resume. I don't know if you
still want to take a look at it.

Mr. HADER: (as Bobby) James? Am I pronouncing that right? James?

Mr. EISENBERG: (as James Brennan) Yeah.

Mr. HADER: (as Bobby) James. Yeah.

(Soundbite of clearing throat)

Mr. HADER: (as Bobby) OK. By you accepting this T-shirt, you are...

Ms. WIIG: (as Paulette) Hired.

Mr. HADER: (as Bobby) Well, usually, they - it's more of a ceremonial

DAVIES: And that's from the film "Adventureland," written and directed
by our guest, Greg Mottola.

This is a fun film. Where did the idea come from, setting this film in
the amusement park?

Mr. MOTTOLA: I did work at an amusement park one summer while I was in
college, and I think I wanted to do a film about - I think the amusement
park was kind of, in my mind, a bit of a metaphor for suburban life, you
know, the kind of hand one is dealt, the sort of run-down, not-very-fun
amusement park. It's kind of the best life has to offer for some people
- which, you know, I like bittersweet things. I like things that have a
tinge of sadness to them. I think amusement parks and places like that,
I mean, if you listen to any Bruce Springsteen songs, you'll know what
am talking about. They tend to gravitate towards that - or Tom Waits
songs, maybe.

DAVIES: Right.

Mr. MOTTOLA: And I came up with the idea for this film when I was
working on "Undeclared," and I was surrounded by all these very gifted
young actors and writers. And it started me thinking about my youth and
coming out of college in the '80s and not having any idea what I was
going to do with myself. And I just wanted to try and do - a short
story, like a little suburban, Chekhovian amusement park film.

(Soundbite of laughter)

DAVIES: You worked at an amusement park, I guess, in the Pittsburgh
area, right, when you were young? Oh, no, it was in Long Island, right?

Mr. MOTTOLA: Yeah, I grew up on Long Island. I originally wrote this
script to be set on Long Island, but that proved too expensive. So I
ended up going to Pittsburgh, where I'd gone to college, undergraduate.
I was an undergraduate student at Carnegie Mellon. I was an art student
there. And I remembered this place, and I remembered it was quite old-
looking, which was helpful, because we were doing a low budget period
piece, and it couldn't look like it was from, you know, 2006.

DAVIES: I want to ask you one other thing. I know you're a big fan of
Woody Allen, and you had a small part in his movie "Celebrity," I think.
And he told you that he really liked your film "Daytrippers." And I've
read in interviews that you can do a dead-on Woody Allen. Could you tell
us what he said to you?

Mr. MOTTOLA: My Woody is pretty much based on other people's Woody Allen
impression. But he did say to me - when I came in to audition for the
role, he said something like, you know, I saw your film "Daytrippers,"
and it was terrific. And then, at that point, my life could've ended
and I would have been fine, because I so worshiped Woody. And to have
them say that about, you know, a tiny little film I made - it was the
first film I made - I really, I would have died happy in that moment.

You know, the great thing is that I met my wife on another one of
Woody's films. I had a tiny part in the film "Hollywood Ending," and my
wife Sarah was Woody's assistant at the time. And we became friends and
we had a friendship for several years that eventually turned into a
relationship. And we're married and have three kids now. And we get to
have dinner with Woody on occasion. And it's about the most wonderful
thing - for anyone who is a Woody Allen fan, it's as great as you can
imagine it would. He's very happy to tell stories about his career, and
it couldn't be cooler.

DAVIES: Well, Greg Mottola, it's been fun. Thanks so much.

Mr. MOTTOLA: Oh, thank you so much, Dave.

DAVIES: Greg Mottola's new film "Paul" opens at theaters tomorrow.

Transcripts are created on a rush deadline, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of Fresh Air interviews and reviews are the audio recordings of each segment.

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