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Gimme Shelter (From the Tax Man)
By Nomi Prins
Source: TomDispatch.com
May 6, 2016
As Oxfam reports, the biggest burden of tax havens falls on the poorest people. In the process, they only increase already oppressive levels of inequality globally.
Missing Money Costs
As of 2014, according to Gabriel Zucman, University of California economist and author of The Hidden Wealth of Nations, at least $7.6 trillion, or approximately 8% of global financial wealth, was missing somewhere offshore. His analysis demonstrates that the sorts of tax-dodging practices weve been discussing put governments across the planet in the red by approximately $200 billion annually. Tax avoidance by major U.S. companies costs governments an additional $130 billion per year since nearly a third of their profits are hidden offshore.
The U.N. estimates that tax dodging by multinational companies costs developing countries $100 billion a year, an amount equivalent to what it would cost to provide basic life-saving health services or safe water and sanitation to more than 2.2 billion people.
There are, in other words, harrowing costs to tax dodging. When the wealthy and powerful hide money from governments or speculate with it in sneaky ways, it destabilizes economies and enables the commission of crimes that place a further burden on ordinary people. When money flows from the economic necessities needed by the less privileged to the top fraction of a percent of the worlds population and is then hidden offshore, essentially disappeared, its a net drain on and a blow to the world economy. This impacts jobs and the quality of our future. Unfortunately, the leading candidates in this election year arent championing a major change for the better.
As of 2014, according to Gabriel Zucman, University of California economist and author of The Hidden Wealth of Nations, at least $7.6 trillion, or approximately 8% of global financial wealth, was missing somewhere offshore. His analysis demonstrates that the sorts of tax-dodging practices weve been discussing put governments across the planet in the red by approximately $200 billion annually. Tax avoidance by major U.S. companies costs governments an additional $130 billion per year since nearly a third of their profits are hidden offshore.
The U.N. estimates that tax dodging by multinational companies costs developing countries $100 billion a year, an amount equivalent to what it would cost to provide basic life-saving health services or safe water and sanitation to more than 2.2 billion people.
There are, in other words, harrowing costs to tax dodging. When the wealthy and powerful hide money from governments or speculate with it in sneaky ways, it destabilizes economies and enables the commission of crimes that place a further burden on ordinary people. When money flows from the economic necessities needed by the less privileged to the top fraction of a percent of the worlds population and is then hidden offshore, essentially disappeared, its a net drain on and a blow to the world economy. This impacts jobs and the quality of our future. Unfortunately, the leading candidates in this election year arent championing a major change for the better.
Nomi Prins, a TomDispatch regular, is the author of six books, a speaker, and a distinguished senior fellow at the non-partisan public policy institute Demos. Her most recent book is All the Presidents Bankers: The Hidden Alliances That Drive American Power (Nation Books). She is a former Wall Street executive. Special thanks go to researcher Craig Wilson for his superb work on this piece.
(bbm)
https://zcomm.org/znetarticle/gimme-shelter-from-the-tax-man/
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Gimme Shelter (From the Tax Man) (Original Post)
polly7
May 2016
OP
polly7
(20,582 posts)1. The cost of tax dodging in poor countries
The US political dialogue tends to focus on the role of offshore tax havens in reducing revenue to the US Treasury. But less discussed in America is that big companies, many of which are headquartered in the US, use the exact same mechanisms to avoid tax payments in some of the poorest places on earth. The UN estimates that tax dodging by multinational companies costs developing countries $100 billion every year.61
It is not surprising that tax dodging hurts poor countries in particular. Earnings stripping techniques rob the source country, where the income is earned, for the benefit of the corporations owners who are usually in the United States or another wealthy country.
Taxes paid, or unpaid, by multinational companies in poor countries can be the difference between life and death, poverty or opportunity. $100 billion is four times what the 47 least developed countries in the world spend on education for their 932 million citizens.62 $100 billion is equivalent to what it would cost to provide basic life-saving health services or safe water and sanitation to more than 2.2 billion people.63
Some multinational companies operating in poor countries take advantage of loopholes to reduce their tax bills while simultaneously negotiating tax exemptions from governments desperate to attract investment and spur growth. Governments in developing countries give away an estimated $138 billion each year in statutory corporate income tax exemptions.64
Take, for example, Bangladesh. Poverty in the country is deep and widespread; almost half of the population lives on less than one dollar per day.65 It is ranked 142 out of 188 countries on the UNs Human Development Index and is in desperate need of investments to help improve conditions for its people.66 The National Board of Revenue of Bangladesh estimates that multinational companies siphon off about $1.8 billion from the country each year through transfer mispricing, a widespread technique in which corporations manipulate the price of internal company transfers of goods and service between subsidiaries to dodge taxes.67 As a result, the government has been deprived of around $310 million every year in tax revenue. This sum could pay for around one-fifth (20.4%) of the primary education budget in Bangladesh vital resources in a country where there is only one teacher for every 75 primary school-aged children.68
In Peru, an audit by the countrys tax administration of just 27 cases of transfer mispricing in 2013 revealed undeclared earnings of $350 million, representing an estimated $105 million in evaded taxes. If authorities could monitor and audit all transfer pricing operations the Peruvian government could collect an estimated $3.36 billion in additional tax revenues at that rate, equivalent to 84% of the countrys education budget.69
African leaders, including former UN Secretary General Kofi Annan, have pointed out that Africa loses more money each year to tax dodging than it receives in international development assistance. He has made vocal appeals to the international community for reform saying, Africa has lost its tolerance for exploitation by the rest of the world. Africa's people expect a fair share of the wealth beneath their soil and territorial waters.70
From the Oxfam report. (pdf).