Ocasio-Cortez: how to
pay for Social Programs? same as for Space Force, $2 trillion Tax Cuts
Newsletter published on January 11 2019
(1) Ocasio-Cortez:
how to pay for Social Programs? same as for Space Force, $2 trillion Tax
Cuts
(2) Across the globe,
taxes on corporations plummet
(3) Amazon Tax cf
Profit
(4) EU Aims at City
of London’s Tax-Haven Empire
(5) The tax haven in
the heart of Britain - Nicholas Shaxson
(6) World’s Worst Tax
Haven Threatens to Expand its Operations
(7) US multinationals
dodge $180 billion in taxes on foreign profits per year
(8) Half of US
foreign profits booked in tax havens: paper
(9) Steve Keen
highlights flaws in the Euro, as noted by Wynne Godley
(10) Juncker
celebrated Marx
(1) Ocasio-Cortez:
how to pay for Social Programs? same as for Space Force, $2 trillion Tax
Cuts
Alexandria Ocasio-Cortez Struggles to Explain How to Pay for
$40 Trillion in Government Programs
Rep. Alexandria Ocasio-Cortez (D-NY) struggled to explain how
she would pay for her $40 trillion new federal government programs during a
Sunday interview with Anderson Cooper on CBS’s 60 Minutes.
Cooper asked Ocasio-Cortez, a self-described Democratic
Socialist, how she would pay for the
trillions of dollars in government programs she supports. But instead of
laying out a plan for how she would pay for the programs, Ocasio-Cortez
deflected Cooper’s question.
“No one asks how we’re gonna pay for this Space Force. No one asked how
we paid for a $2 trillion tax cut,” Ocasio-Cortez said.
The 29-year-old deflected further, saying the government
would pay for social programs the same way the government would fund the Space
Force — all while refusing to break down how much taxpayer money would go
towards each of her policy proposals.
“We only ask how we pay for it on issues of housing, health
care, and education,” Ocasio-Cortez said. “How do we pay for it? With the same
exact mechanisms that we pay for military increases for this Space Force, for
all of these ambitious policies.”
“We pay more per capita in health care and education for
lower outcomes than many other nations,” she added. “And so for me, what’s
unrealistic is — is what we’re living in right now.”
Despite not giving any specifics on how she would pay for the
expansive government programs she had proposed, Ocasio-Cortez suggested at
another point during the interview that the government should raise the tax rate
to as high as 70 percent to fund climate change programs.
The 60 Minutes interview is not the first time Ocasio-Cortez
has struggled to explain how she would fund $40 trillion in entitlement programs
she is proposing.
In September 2018, Ocasio-Cortez deflected CNN host Jake
Tapper’s question about how she would pay for $40 trillion in government
programs like “Medicare for All.”
The freshman Democrat also reportedly dodged a reporter’s
question recently about whether she would take a salary during the government
shutdown, simply telling the reporter, “I’ve gotta run!” ==
Comment (Peter M.): This young woman has guts, and is not
intimidated. She will be President one day.
(2) Across the globe,
taxes on corporations plummet
By Jeff Stein
The Washington Post
July 24 at 5:15 PM
Taxes on corporations are plummeting across the globe as
countries struggle to keep up with multinational firms shifting their profits to
foreign tax havens, economists say in a new paper.
The average corporate tax rate globally has fallen by more
than half over the past three decades, from 49 percent in 1985 to 24 percent in
2018, the study found.
"Corporate taxes are going to die in 10 to 20 years at this
rate," Ludvig Wier, an economist at the University of Copenhagen and a co-author
of the study, said in an interview. "Without drastic collective action, you can
see we’re nearing the end of it."
The international
decline in corporate taxes threatens to drain governments of a source of funding
for health care and other social welfare programs, while already leading
many European countries to adopt larger regressive sales taxes on goods, Wier
said.
Proponents of tax cuts have maintained that lower corporate
rates spur capital investment and business growth, improving worker productivity
and wages. But the academics say the falling tax rates instead reflect a race to
the bottom as nations try to prevent multinational firms from "artificially"
shifting their profits overseas through accounting gimmicks.
About 40 percent of
profits earned by national firms — or more than $600 billion — was shifted to a
handful of tax havens such as Bermuda and Ireland in 2015, the latest year
for which data were available, the researchers found.
"This massive tax avoidance — and the failure to curb it —
are in effect leading more and more countries to give up on taxing multinational
companies," the authors wrote in a summary of their research published by the
Centre for Economic Policy Research on Monday. (Wier wrote the paper, released
last month, with University of California at Berkeley professor Gabriel Zucman
and Thomas Tørsløv, also of the University of Copenhagen.)
Some economists doubted the paper’s conclusion, as some
research shows that a country’s tax rate
can significantly affect the amount of "real investment" for major
countries, said Eric Toder, co-director of the Tax Policy Center, a
nonpartisan think tank.
In the United States,
taxes on corporations fell from about 50 percent in 1980 to 24 percent this
year, using a measure that factors in average state taxes on businesses.
Last fall, Republicans in Congress slashed the U.S. federal corporate tax rate
from 35 percent to 21 percent. (Democrats have criticized the law as a giveaway
to the wealthy but have largely stopped short of calling for the rate to be
returned to 35 percent.)
By cutting the rate, the United States was joining a crowded
party. In Japan and China, corporate tax rates have fallen by about a quarter
since 2003. Rates are down about 30 percent over the same period across all of
Europe, by 36 percent in Israel and by 27 percent in Canada.
And that’s not even getting to the most dramatic examples,
such as Hungary, which has lowered its corporate tax rate from 18 percent to 9
percent, or existing tax havens with no corporate taxes, such as Bermuda and the
Marshall Islands. Corporate tax rates have dropped similarly in parts of Africa
and South America.
The falling corporate tax rate represents a "collective
action problem," Wier argued, as each country has a strong incentive to lower
its own tax rate, although when that is done the globe suffers.
The moves can pay big dividends for the tax-sheltering
countries. More than $100 billion in multinational profits was shifted to
Ireland alone in 2015, far increasing what that country would have seen in
corporate tax revenue had it not become a tax haven, the researchers said.
But the overall trend has suppressed corporate tax rates
globally, and the consequences of the loss of revenue may be rising. Throughout
the 1980s, multinational profits amounted to only 4 percent of all profits
earned by companies among "economically advanced" nations. From 2010 to 2018,
they accounted for 16 percent of all business profits in those countries.
"There is nothing natural in the decline of corporate income
tax rates," the paper’s authors said. "Profit shifting, more than tax
competition for productive capital, is the key driver of this decline.
(3) Amazon Tax cf
Profit
Amazon Cuts Its UK Taxes in Half as Profits Triple
The Associated Press
3 Aug 20182
According to a disclosure filed this week, Amazon paid less
than £4.6 million on taxes in the United Kingdom last year — dropping by almost
half from 2016 — even as profits in the country tripled. Amazon managed to slice
its corporate tax payment nearly in half in the United Kingdom last year,
according to documents filed this week. In 2016, Amazon paid £7.4 million in
British taxes. In 2017, the company paid only £4.6 million. In the same time,
the company’s profits jumped from £24.3 million to almost £72.4 million.
As the corporate level, Amazon claims to have a net income of
$2.5 billion. Additionally, the company has now posted $1 billion in profits for
three consecutive quarters. Because of this, many still believe that Amazon
should be paying more in corporate taxes. The Tax Justice Network, an anti-tax
avoidance advocacy group based in the U.K., said that Amazon’s tax bill is an
"insult," especially given their growth.
"It clearly shows that our global tax system is fundamentally
broken and needs urgently fundamental reform," the group said in a comment to
CNBC. "Otherwise, small and medium enterprises will be ruined at the expense of
global players who are most aggressive in pushing down their tax rates and
controlling ever more market share."
An Amazon spokesperson defended their lower tax payment,
arguing that taxation is based on profit, not revenue. According to the
spokesperson, the amount that Amazon paid is fair given their level of profit
between 2016 and 2017. "Corporation tax is based on profits, not revenues, and
our profits have remained low given retail is a highly-competitive, low margin
business and our continued heavy investment."
(4) EU Aims at City
of London’s Tax-Haven Empire
In Brexit Tug-of-War, EU Aims at City of London’s Tax-Haven
Empire
But the EU keeps tripping over its own tax havens.
By Don Quijones, Spain, UK, & Mexico, editor at WOLF
STREET.
Jan 17, 2018
The European
Commission last year published its first ever tax-haven black list. On it
was an eclectic mix of 17 far-flung jurisdictions including Panama, South Korea, the United Arab Emirates,
Macao, Bahrain, Barbados, Namibia and Trinidad and Tobago, though eight of
them, including Panama, have already been removed.
Conspicuously absent from the list were EU countries accused
of facilitating tax avoidance, such as Luxembourg, Ireland, and the Netherlands.
Also not included were British Overseas Territories or Crown Dependencies,
despite them being named in earlier EU lists and some being implicated in the
Paradise Papers scandal. But that could be about to change.
According to a new report by The Independent, the screening
process is set to restart in “early spring” for British territories including
Anguilla, the British Virgin Islands and the Turks and Caicos Islands:
Other British territories – Bermuda, the Cayman Islands,
Guernsey, the Isle of Man and Jersey – promised to try and address EU concerns
to stay off the list, which will now be reviewed annually.
The Independent has been informed that as things stand it
looks like Bermuda will be given a clean bill of health by the EU, but that
outstanding questions remain for the Turks and Caicos Islands and Anguilla.
According to one recent study by Berkeley academic Gabriel
Zucman, there is £1.4tn of “off shore
wealth” located in the UK, Isle of Man, Jersey, Guernsey, Bermuda and Cayman
Islands alone.
The City of London
is not just a place where the infinite threads of global finance meet, it is
also the center of a vast, secretive web
of tax havens cast across the globe. The “City of London Corporation” itself
has functioned for centuries as an offshore island inside Britain, even inside London, a tax haven in its own right.
Each of the sprawling financial web’s sections – the individual havens in the
Caribbean and elsewhere (all of them Crown dependencies) – trap passing money
and business from nearby jurisdictions and feed them up to the City of London.
This is arguably the central plank of its post-colonial business model.
But now that could be at risk. The timing of the EU’s threat
to blacklist British tax havens is politically convenient, coming less than two
months before crucial Brexit trade talks are scheduled to begin. According to
spokespeople at the European Commission, decisions on which jurisdictions to
blacklist are taken according to a strict and public criteria and are not
subject to any political pressure or consideration in Brexit negotiations. But
as The Independent points out, some officials privately acknowledge that the
dynamic is shifting, with the EU seemingly willing to use the process as
leverage and vowing to pursue the territories for revenue post-withdrawal.
A European Commission source said it was “significant” that
none of the territories were mentioned in the joint EU-UK report setting out the
phase one Brexit agreement last month. They went on: “The UK has always
protected them in the past. That is not going to happen in future. We will go
after them.”
The EU’s efforts to stamp out tax havens, in particular those
connected to the City of London, would be laudable if it weren’t for the
inconvenient little fact that three of the world’s 10 worst corporate tax havens
identified by Oxfam are in the EU: The Netherlands (3rd), Ireland (6th) and
Luxembourg (7th), most of whose tax-avoidance structures were put in place
during EU Commission president Jean-Claude Juncker’s 18-year reign as
Luxembourg’s prime minister.
In December the European Parliament agreed that none of these
countries, or Malta, could be considered as tax havens. A Socialist group
amendment identifying the four EU member states specifically by name was put to
a vote but the proposal obtained 327 votes against, 327 in favor and 24
abstentions, which means it could not be adopted since there was no
majority.
As such, according to the EU’s own lopsided criteria, the EU
is not home to tax havens, despite the fact that the very text compiled by the
parliament’s Committee of Inquiry into Money Laundering, Tax avoidance and Tax
Evasion concedes that foreign direct investment in Malta amounts to “1,474% of
the size of its economy,” while Luxembourg and the Netherlands combined have
more inward investment than the US.
According to a team of researchers at the University of
Amsterdam, the Netherlands is not just a corporate tax haven but one of the
world’s largest, serving as a conduit for a staggering 23% of corporate
investments that end in a tax haven. That compares with 14% for the UK, 6% for
Switzerland, 2% for Singapore and 1% for Ireland. It is estimated that since
2005, nearly half a trillion dollars of U.S. corporate profits have been safely
stashed in the Netherlands by household brands like Nike, Heinz, Caterpillar,
General Electric, Time Warner and Foot Locker.
This inconvenient fact didn’t prevent the former deputy prime
minister of the Netherlands, Lodewijk Asscher, from threatening a year ago to
block any post Brexit trade deal if the UK doesn’t “firmly tackle” tax
avoidance. The threat came just as the UK government announced that in the event
of a hard Brexit, it was considering extending the City of London’s low-tax,
light touch regulation regime to the rest of the UK.
But to what extent is the Netherlands itself tackling its own
fiscal transgressions — the same transgressions that won it 3rd place in the
Oxfam survey, just behind Bermuda and the Cayman Islands? The answer is likely
to be “very little,” especially given that the EU doesn’t even consider the
country to have transgressed.
Just as they’ve done for years, the EU’s four non-tax havens
will do everything they can to frustrate concerted EU action and protect their
own tax regimes. And therein lies the crux of the EU’s crusade against the
world’s tax havens: until it’s willing to get its own house in order, Brussels
is in no position to preach to other countries, let alone police them. By Don
Quijones.
(5) The tax haven in
the heart of Britain - Nicholas Shaxson
POLITICS 24 FEBRUARY
2011
The tax haven in the heart of Britain
There is an institution with a murky history and remarkable
powers that acts like a political and financial island within our island nation
state. Welcome to the Square Mile and the City of London Corporation.
BY NICHOLAS SHAXSON
On 7 October 2002, an Anglican priest, William
Campbell-Taylor, and an English-Jewish academic, Maurice Glasman, came to the
law lords to challenge a parliamentary bill. It was the start of an episode that
anyone worried about tax avoidance - or, for that matter, about the fate of the
NHS, about economic inequality, about student loans, about capital flight from
Africa, about global financial deregulation or about the political might of the
financial sector - ought to know about. Yet there was little media interest.
The bill concerned the City of London Corporation, the
local-government authority for the 1.2-square-mile slab of prime real estate in
central London that is the City of London. The corporation is an ancient,
semi-alien entity lodged inside the British nation state; a "prehistoric monster
which had mysteriously survived into the modern world", as a 19th-century
would-be City reformer put it. The words remain apt today. Few people care that
London has a mayor and a lord mayor - but they should: the corporation is an
offshore island inside Britain, a tax haven in its own right.
The term "tax haven" is a bit of a misnomer, because such
places aren't just about tax. What they sell is escape: from the laws, rules and
taxes of jurisdictions elsewhere, usually with secrecy as their prime offering.
The notion of elsewhere (hence the term "offshore") is central. The Cayman
Islands' tax and secrecy laws are not designed for the benefit of the 50,000-odd
Caymanians, but help wealthy people and corporations, mostly in the US and
Europe, get around the rules of their own democratic societies. The outcome is
one set of rules for a rich elite and another for the rest of us.
The City's "elsewhere" status in Britain stems from a simple
formula: over centuries, sovereigns and governments have sought City loans, and
in exchange the City has extracted privileges and freedoms from rules and laws
to which the rest of Britain must submit. The City does have a noble tradition
of standing up for citizens' freedoms against despotic sovereigns, but this has
morphed into freedom for money.
A few examples illustrate the carve-out. Whenever the Queen
makes a state entry to the City, she meets a red cord raised by City police at
Temple Bar, and then engages in a colourful ceremony involving the lord mayor,
his sword, assorted aldermen and sheriffs, and a character called the
Remembrancer. In this ceremony, the lord mayor recognises the Queen's authority,
but the relationship is complex: as the corporation itself says: "The right of
the City to run its own affairs was gradually won as concessions were gained
from the Crown." The modern ceremony strikingly marks the political
discontinuity at the City's borders.
The Remembrancer, whose position dates from the reign of
Elizabeth I, is the City's official lobbyist in parliament, sitting opposite the
Speaker, and is "charged with maintaining and enhancing the City's status and
ensuring that its established rights are safeguarded". His office watches out
for political dissent against the City and lobbies on financial matters. Then
there is the City's Cash, "a private fund built up over the last eight
centuries", which, among many other things, helps buy off dissent. Only part of
it is visible: the Freedom of Information Act applies solely to its mundane
functions as a local authority or police authority. Its assets are beyond proper
democratic scrutiny.
The City Corporation is different from any other local
authority. Here, hi-tech global finance melds into ancient rites and customs
that underline its separateness and power with mystifying pomp. Among the City's
108 livery companies, or trade associations, you will find the
WorshipfulCompanies of Loriners (concerned with stirrups and other harnesses for
horses) and Fletchers (arrow-makers) as well as the Worshipful Company of Tax
Advisers, among whose four prime aims is "to support the Lord Mayor and the City
of London Corporation", and the Worshipful Company of International Bankers,
whose heraldic "supporters" are the griffins, guardians of treasure.
The carve-outs that the City's grandees have created are
astonishing. One of the biggest relates to the bill that came before the law
lords on a chilly day in October 2002. Sitting in the Café Churchill on
Parliament Street, Glasman used sugar sachets and teaspoons to reconstruct the
scene for me. Apart from a couple of brave, independent-minded Labour MPs,
notably John McDonnell, nobody supported Glasman and Campbell-Taylor to
challenge the bill. Such is the fear that the corporation inspires in
parliament.
Campbell-Taylor - a handsome and articulate Oxbridge-educated
priest - probably felt more at home than Glasman in front of the assorted City
scriveners, aldermen and barristers. Glasman has thick, tousled black hair,
horn-rimmed glasses and an easy, slightly dishevelled charm. Born in 1961, a
grandchild of eastern European refugees from the Holocaust, he was educated at a
rough north London comprehensive but won an exhibition to read history at
Cambridge. He bunked off lectures, took up the trumpet and joined a band, the
Ashtrays, though the big break never came. "I had to do a reckoning with who I
was," he told me. "I thought for a long time that it was women I was interested
in. But I was having a lot of anxiety: I thought it was because I was with the
wrong women. Eventually I realised it was political work and academic engagement
that made me happy. I had made a simple category error."
He took on various academic posts and wrote a book called
Unnecessary Suffering, about the Solidarity movement in Poland. In 1995, he took
a job at Guildhall University, where he made friends with Campbell-Taylor, the
chaplain. Campbell-Taylor first properly encountered the corporation through a
campaign called Spitalfields Market Under Threat (Smut), confronting a property
development on the fringes of the City. They were astonished to find that the
corporation was a big shareholder in the development - a public authority acting
as a private company, outside its jurisdiction. They resolved to find out more.
Campbell-Taylor got himself elected as a City ward councillor, running on a
campaign to save a school. Once inside, he discovered the matter that would take
him to the law lords.
The slavery franchise
Over the centuries, reformers in Britain have tried, and
failed, to have the corporation merged into a unified London authority. The
political landscape heaved and shifted around it, but the City stood immune. As
the Times noted in 1881, "The City Corporation is sacred although nothing else
is."
For much of the 20th century, the Labour Party had a pledge
in its manifesto to abolish the corporation. In 1917, Peter Mandelson's
grandfather Herbert Morrison, a rising star in Labour ranks, put the party's
antipathy plainly. "Is it not time London faced up to the pretentious buffoonery
of the City of London Corporation and wipe it off the municipal map?" he asked.
"The City is now a square mile of entrenched reaction, the home of the devilry
of modern finance."
Clement Attlee took up the baton in 1937. "Over and over
again we have seen that there is in this country another power than that which
has its seat at Westminster," he said. "Those who control money can pursue a
policy at home and abroad contrary to that which has been decided by the
people." Freedom for money can lead to bondage for ordinary people. Labour never
did abolish the corporation; instead, the Greater London Council was abolished
in 1986 under Margaret Thatcher. In 1996, Tony Blair got Labour to replace its
pledge to abolish the corporation with a promise merely to "reform" it. This was
the suggestion before the law lords in 2002 - and it was an astonishing gift to
the corporation.
Like any other local authority, the City of London is divided
into wards. These elect candidates to serve on the Court of Common Council, the
City's principal decision-making body. Unlike any other local authority,
however, individual people are not the only voters: businesses can vote, too.
Political parties are not involved - candidates stand alone as independents -
and this makes organised challenge to City consensus all but impossible.
Before 2002, the 17,000 business votes (only business
partnerships and sole traders could take part) already swamped the 6,000-odd
residents. Blair's reforms proposed to expand the business vote to about 32,000
and to give a say, based on the size of their workforce in the Square Mile, to
international banks and other big players. Voting would reflect the wishes not
of the City's 300,000 workers, but of corporate managements. So Goldman Sachs
and the People's Bank of China would get to vote in what is arguably Britain's
most important local election.
The City called the reforms "radical change that is essential
to keep a world-class financial centre". Glasman called it the "biggest
retrograde step since Magna Carta". These workers did not have control of their
own votes - the reform programme was comparable, he said, to the voting rights
of chattel owners in the pre-war American South: the slavery franchise.
When the reforms came before the Lords, Tom Simmons, chief
executive of the corporation, outlined the heft and the outlandish nature of
this primeval quasi-British institution. "The corporation emerged from a 'missed
time' and there is no direct evidence of it coming into existence," he said.
"There is no charter that constituted the corporation as a corporate body." City
people joke that it dates its "modern period" from 1067, the year when William
the Conqueror "came friendly" to the City and let it keep its ancient rights as
he subdued the rest of the country.
This "missed time" is significant, Glasman says, because it
means the City's rights pre-date the construction of modern political Britain,
and this has placed it outside parliament's normal legislative remit. The City
evolved as an institution not so much subordinate to parliament, or the church,
or the Crown, but adjacent to and intertwined with them in complex
relationships. It is the carve-out again.
The offshore City
The corporation's part-escape from Britain is just one
element of the offshore story. It is no coincidence that the capital of what was
once the world's greatest empire - with the City as "governor of the imperial
engine", as the historians P J Cain and A G Hopkins put it - has become the
centre of a big part of the modern global offshore system.
As my book Treasure Islands describes in detail, the Bank of
England, lodged in the heart of the City (but not, it has to be said, regulated
by it), in effect encouraged tax havenry in British outposts of the Caribbean
and elsewhere. By the 1980s, the City was at the centre of a great, secretive
financial web cast across the globe, each of whose sections - the individual
havens - trapped passing money and business from nearby jurisdictions and fed
them up to the City: just as a spider catches insects. So, a complex
cross-border merger involving a US multinational might, say, route a lot of the
transaction through Caribbean havens, whose British firms will then send much of
the heavy lifting work, and profits, up to the City.
The Crown dependencies of Jersey, Guernsey and the Isle of
Man, which focus heavily on European business, form the web's inner ring. In the
second quarter of 2009, Jersey alone provided £135bn in bank deposits upstreamed
to the City. Jersey Finance, the tax haven's promotional body, puts the
relationship plainly: "Jersey is an extension of the City of London."
The next ring of the web contains the British overseas
territories, such as the Cayman Islands and Bermuda. Like the Crown
dependencies, they have governors appointed by the Queen and are controlled by
Britain in myriad ways, but with enough distance to allow Britain to say "There
is nothing we can do" when it suits.
The web's outer ring contains an assortment of havens, such
as Mauritius in the Indian Ocean, Hong Kong and the Bahamas, which Britain does
not control but which still feed billions in business to the City from around
the world.
So, the corporation has two main claims to being a tax haven:
first, as a semi-alien entity, floating partly free from Britain (just as the
Cayman Islands are), and second, as the hub of a global network of tax havens
sucking up offshore trillions from around the world and sending it, or the
business of handling it, to London. These are possibly the biggest reasons for
the City's wealth and power - yet how many Britons understand this?
“Don't tax or regulate us or we'll move to Switzerland," the
bankers and hedgies cry; and all too often the politicians quail and cut taxes
on the wealthy, deregulate finance further, and hand yet more freedoms to the
City.
Nearly every multinational corporation has offshore
subsidiaries (not counting those in London) - and the biggest users of offshore
finance are banks. Financial Mail recently counted over 550 offshore
subsidiaries just for Barclays, RBS and Lloyds - each of which far outstrips any
other multinational. This isn't just about tax: banks go offshore to escape
certain financial regulations, and can grow faster as a result. So, offshore is
a big part of the Too Big To Fail story - another element strengthening the
City's power through the grip these banks have on our elected leaders and
boosting the breathtaking chutzpah of the Barclays chief executive, Bob Diamond,
who told the UK Treasury select committee on 11 January that he didn't know how
many offshore subsidiaries his bank had, and that the "period of remorse and
apology" for banks should now end.
The corporation loves financial deregulation - globally.
Deregulation is a bit like shaking (or, perhaps more accurately, removing a net
from) a tree full of insects: the more you do it, the more business floats
around, ready to be caught in the nearby web. As such, it is hardly surprising
that the Lord Mayor of London is evangelical about it. In fact, his role is
officially, as the City explains, to "expound the values of liberalisation" and
provide "support for innovation, proportionate taxation and regulation". (On his
20-odd foreign trips a year, he makes clear that "proportionate" means
"limited".) Not only that, but the Lord Mayor and colleagues promise to "take up
cudgels on behalf of the City anywhere in the world on any subject which is of
concern to the City".
Thus, the role of the City of London Corporation as a
municipal authority is its least important attribute. This is a hugely resourced
international offshore lobbying group pushing for international financial
deregulation, tax-cutting and tax havenry around the world.
Divided capital
In the end, the bill on extending the corporate vote passed,
carried on a Labour majority. Glasman's and Campbell-Taylor's challenge failed,
although they won a small victory - that the process for choosing business
electors be "open and clear". Campbell-Taylor now works in a small parish in
north London; Glasman has risen from relative obscurity to become a leading
thinker for the Labour Party - and was recently ennobled for this by Ed
Miliband.
It is easy to be daunted by the City and the offshore system.
Some reviewers of Treasure Islands were so disturbed by the scale of it - Peter
Preston's defeatist review in the Guardian is a case in point - that they
advocated, in effect, capitulation. Given that the financial services sector has
just been exposed as having provided over half of the Conservative Party's
funding last year, and that the Chancellor of the Exchequer, George Osborne, has
just urged Britain to move from "retribution to recovery" over the banks, reform
looks distant.
But the doubters are wrong. Yes, we still need a vision of
how to confront the corporation and its offshore satellites. Few people in
Britain can see the corporation, let alone understand its importance. However,
widespread public education, a precursor to reform, can now begin. One of the
biggest, most silent players behind so much offshore activity has been
identified: a Teflon-like, medieval institution, wrapped around the neck of
Britain and dedicated to keeping finance strong and free.
Already I see efforts around the world to constrain the
offshore system that feeds the City. UK Uncut, the spontaneous protest movement
opposing offshore tax avoidance by multinationals, has had an impact and now
pledges to move against the banks. A big "One London" campaign to merge a
divided capital into a single democratic entity may seem far off, but groups
such as London Citizens are now thinking about the fairer division of London.
The Tax Justice Network, and others, are helping build an intellectual edifice
for understanding tax havens. Some of their goals - such as country-by-country
reporting by multinationals - are already being partly met. The unions, too, and
big NGOs, especially those working in international development, are engaging
with the matter. An anti-haven mobilisation is under way in France; something
similar may be starting in the US. The IMF, the Organisation for Economic
Co-operation and Development, the EU and other agencies are now at least
debating issues they ignored before. Around the world, legislators, regulators
and ordinary people are starting to see the toxicity of Britain's role in
protecting offshore business that drains billions out of developing countries
each year.
The City of London Corporation - this heart cut out from the
body of our vibrant, multicultural metropolis - is no longer so invisible. Now
we must figure out what to do about it.
Nicholas Shaxson's book "Treasure Islands" is published by
Bodley Head (£14.99)
(6) World’s Worst Tax
Haven Threatens to Expand its Operations
https://wolfstreet.com/2017/01/18/uk-to-become-tax-haven-like-city-of-london-worlds-worst-tax-haven/
“What they sell is escape: from laws, rules, and taxes of
jurisdictions elsewhere, with secrecy as their prime offering.”
by Don Quijones
Jan 18, 2017
By Don Quijones, Spain & Mexico, editor at WOLF
STREET.
The UK chancellor, Philip Hammond, recently suggested that if
the EU fails to budge over granting the UK market access after Brexit, Britain
could transform its economic model into that of a corporate tax haven. In other
words, in the event of a so-called “Hard Brexit”, which is the only option that
would offer the UK any hope of self-rule in the foreseeable future, the British
government would extend the City of London’s business model to the rest of the
UK.
Unbeknownst to even many Brits, the “City of London
Corporation” has functioned for centuries as an offshore island inside Britain,
even inside London, a tax haven in its own right, as Nicholas Shaxson, author of
Treasure Islands, writes in the New Statesman:
The term “tax haven”
is a bit of a misnomer, because such places aren’t just about tax. What they
sell is escape: from the laws, rules and taxes of jurisdictions elsewhere,
usually with secrecy as their prime offering.
Provided you have fat bundles of cash, you get to enjoy
rights and privileges offered by no other jurisdiction on Planet Earth. The City
of London’s legal system takes US-style corporate personhood to a whole other
level.
Unlike any other UK local authority, individual people are
not the only voters: businesses can vote, too. Political parties are not
involved – candidates stand alone as independents – and this makes an organized
challenge to City consensus all but impossible. More than 70 percent of the
votes cast during council elections are cast not by residents, but by
corporations – mostly banks and financial firms. And the bigger the corporation,
the more votes they get, with the largest firms getting 79 votes each.
Not only is the City of London paradise on earth for
rights-seeking corporations; it is also the rotten, beating heart of a vast,
secretive financial web cast across the globe. As Shaxson points out, each of
the Web’s sections – the individual havens in the Caribbean and elsewhere (all
of them Crown dependencies) – trap passing money and business from nearby
jurisdictions and feed them up to the City, just as a spider catches a fly.
That Theresa May’s conservative government is considering
extending this model across the whole of the United Kingdom should come as no
surprise, despite the gaping hole it’s likely to leave in the government’s own
coffers. After all, it is a whole lot easier for a government to build a
national economic model based on undercutting the corporate tax regimes of
neighboring states in a frantic race to the bottom than one based on supporting
the emergence — or in the case of the UK, reemergence — of a globally
competitive business sector.
But there is also a clear tactical purpose behind the UK
government’s latest move. It’s the classic ruse of divide and conquer, something
that Britain has long excelled at.
Right now an epic, albeit quiet, battle is being waged in
Europe over who gets to set the region’s future fiscal policy: national
governments, as has been the case for centuries, or the European Commission? For
years, the Commission has been seeking to use the popular canard of corporate
tax avoidance as justification for expanding its own powers through the
homogenization of taxation rules and practices across the 28-member Union.
Suffice to say, not every country is happy about it.
The Commission is even in the process of drawing up a tax
haven black list — deeply ironic for an organization that is led by a man who,
as prime-minister of Luxembourg from 1995 to 2013, did everything he could to
frustrate concerted EU action on corporate tax in order to protect Luxembourg’s
own tax regime. As the Lux Leaks scandal showed, that regime included ultra-low
tax rates on corporate profits, often less than 1%.
The purpose of the Commission’s black list is clear: to set
common standards for European (and perhaps even global) tax regimes and shame
those that fail to make the grade into complying with them.
One country that is almost certain to make the black list is
Ireland, whose low corporate tax rate (12.5%) and special tax deals have
attracted many of the world’s biggest corporations to set up mailbox offices
there, which have in turn attracted the opprobrium of the EU’s growing army of
tax inspectors.
Last year they slapped Apple with a €13 billion retroactive
tax bill, apparently owed to the government of Ireland, its decades-long partner
in one of the biggest tax-avoidance schemes of living memory. The Commission
argued that the arrangements represented illegal state aid. Ireland’s finance
minister Michael Noonan warned that the Commission, with the support of both
Germany and France, is “opening a back door through state aid to influence tax
policy in European countries.”
But not everyone’s on board. Countries like Austria, with its
chronically opaque banking system; the Netherlands, a fiscal paradise that is
second home — albeit in the form of a mailbox — to 48% of the Fortune 500;
Luxembourg; and, of course, Ireland, will hold as fast as they can to their
current tax models. A couple of months ago Hungary’s government raised the
stakes by unveiling plans to cut its corporate tax rate to 9%, significantly
lower than Ireland’s 12.5%.
The race to the bottom is already on. The fiercer it becomes,
the more damage it risks doing to European unity on fiscal matters. By
announcing that it, too, is considering becoming a corporate tax haven, the UK,
Europe’s third largest economy, just put the cat among the pigeons. By Don
Quijones, Raging Bull-Shit.
(7) US multinationals
dodge $180 billion in taxes on foreign profits per year
By Barry Grey
10 November 2018
US multinational corporations are plundering the populations
of the United States and the world to the tune of trillions of dollars by
driving down and evading taxes on profits booked overseas. This is the
conclusion that emerges from a recent study by University of California at
Berkeley economist Gabriel Zucman and British economist Thomas Wright.
Their paper, titled “The Exorbitant Tax Privilege,” points to
the use of US military violence to drive down taxes on American oil
multinationals by oil-producing states and a massive expansion of non-oil US
firms booking their overseas profits in tax haven countries to generate huge tax
savings and increased profits. The statistics the authors provide translate into
$180 billion a year in tax savings on US multinationals' overseas
operations.
This is money diverted from government revenues in the US and
around the world and funneled into the bank accounts and stock portfolios of the
global financial oligarchy. In what amounts to an international extortion racket
and swindling operation, the US government and both big business parties
function as the enforcers of the American corporate elite.
Zucman and Wright note that oil-producing states in the
Middle East and elsewhere slashed their tax rates on US oil companies from an
average of 70 percent between 1966 and 1990 to an average of 45 percent
following the first US-led Gulf War in 1990-1991.
They write: “The foreign tax rates of US oil multinationals
fell significantly after the first Gulf War, during which the United States (and
a number of other countries with significant investments in oil) intervened to
protect Kuwait, a major oil producer.
“Although it is not possible to know for sure what caused
this decline, a possible interpretation of the fall in the taxes collected by
oil-producing countries… is that they reflect a return on military protection
granted by the United States to oil-producing States.”
This is diplomatic language to suggest that the United States
used its destruction of Iraq through military violence and deadly sanctions to
extort foreign governments to lower their tax rates on American multinationals.
To put it more bluntly, the super-profits obtained by ExxonMobil and other
mega-monopolies are based in significant part on the blood and bones of millions
of men, women and children killed and injured in Iraq, Libya and other Middle
Eastern oil-producing countries, as well as tens of thousands of US
soldiers.
Non-oil US multinationals have effected a dramatic reduction
in taxes paid on overseas investments primarily by accelerating the shift of
profit bookings to tax haven countries. Zucman and Wright report that American
multinationals’ profits booked in offshore tax havens increased from 20 percent
of total US overseas profits in the first half of the1990s to 50 percent
today.
The write: “The effective foreign tax rate of US
multinationals in sectors other than oil has collapsed since the mid-1990s.
While part of this decline is due to the fall of corporate tax rates abroad, by
our estimates almost half of it owes to the rise of profit shifting to tax havens.” These
havens include countries such as Ireland, Luxemburg, the Netherlands,
Switzerland, Singapore, Bermuda and Caribbean tax havens.
The authors note that US multinationals face effective
corporate tax rates in non-haven countries of 27 percent as compared to 7
percent in haven countries. Since the late 1990s, the effective overseas tax
rate for US non-oil multinationals has fallen by nearly half, from about 35
percent to 20 percent.
The sharp increase in the shift of overseas profit bookings
to tax haven countries began with the removal in 1996 of US Treasury
restrictions on tax avoidance by such means. The fact that the change took place
under the Democratic Bill Clinton administration underscores the bipartisan
character of the systematic reworking of tax laws to effect an ever-greater
transfer of wealth from the working class to the financial elite.
Zucman and Wright point out that US multinationals use tax
havens far more than multinationals based in other countries. They estimate that
half of all global profits booked in tax havens are shifted by US
multinationals. The practice is considerably less widespread in other major
economies that comprise the Organization for Economic Cooperation and
Development (OECD), where anti-tax avoidance laws remain in place. About 25
percent of profits from tax havens go to European Union countries, 10 percent to
the rest of the OECD, and 15 percent to developing countries.
The $1.5 trillion tax cut signed into law last December by
President Trump, the benefits of which go overwhelmingly to corporations and the
rich, provides additional windfalls for US multinationals that have parked
trillions of dollars in profits in foreign tax havens to evade US taxes. Besides
cutting the legal corporate tax rate from 35 percent to 21 percent (the real, or
“effective,” rate is much lower), the law allows companies such as Apple and
Google to repatriate their overseas profits at a discounted tax rate of 8
percent to 15 percent, depending on the nature of the assets.
That law has already sharply reduced the amount of taxes
being collected by the federal government from major corporations, leaving their
rich shareholders wealthier and the government deeper in debt. Just between
January and June of this year, government revenues from corporate taxes dropped
by almost $50 billion from the previous year, a decline of one-third.
The cynical claim that corporations would use their tax
savings to create more decent-paying jobs has already been exposed by record
rates of corporate stock buy-backs and dividend increases. US big business is
using its tax boondoggle to reward the bankers, big investors and CEOs with
billions in additional wealth—to buy more and bigger yachts, private islands and
personal jets—while squandering more resources produced by the labor of the
working class on parasitic financial operations.
The estimated $180 billion a year in reduced taxes on foreign
earnings by US multinationals is five times the $30 billion per year needed to
eradicate world hunger.
These statistics shatter the lie, constantly recited to
justify cuts in social programs and workers’ wages and benefits, that “there is
no money” to pay for such things. They underscore the fact that no progress can
be made in meeting elementary social needs without a frontal attack by the
working class on the fortunes of the US and international oligarchs.
(8) Half of US
foreign profits booked in tax havens: paper
September 10, 2018
US companies are by far the biggest users of tax havens,
where they face effective tax rates of just seven percent, according to the
study by economists Thomas Wright and Gabriel Zucman
About half of all the
foreign profits of US multinationals are booked in tax havens with Ireland
topping the charts as the favorite, according to a new economic study on
Monday.
And the benefits for the increase in profits have gone to
shareholders, the paper showed.
US companies are by far the biggest users of tax havens,
where they face effective tax rates of just seven percent, according to the
study by economists Thomas Wright and Gabriel Zucman.
"Ireland solidifies its position as the #1 tax haven," Zucman
said on Twitter. "US firms book more profits in Ireland than in China, Japan,
Germany, France & Mexico combined. Irish tax rate: 5.7%."
The research was made possible by the US tax cut in December
2017 that contained a mandatory repatriation of profits, which allowed
researchers to calculate the final tax bill for the companies.
Because the 2017 law "allows these firms to repatriate their
foreign earnings at a low rate...we now know that US multinationals have really
had a high after-tax profitability on their foreign operations over the last
decades."
This is phenomenon referred to as the "exorbitant tax
privilege," and as a result "it has redistributed income to the benefit of their
shareholders (some of which are foreigners)."
No other developed economy—except tax havens—has as high a
share of foreign profits booked in tax havens as the United States, most
prominently in Ireland (18 percent), Switzerland, and Bermuda plus Caribbean tax
havens (eight percent – nine percent each).
The report shows non-oil multinationals "have seen their tax
rates on foreign earnings fall from about 35 percent in the first half of the
1990s (close to the statutory US federal corporate tax rate) to about 20 percent
in recent years."
The tax reform dropped the top US corporate rate to 21
percent from 35 percent, taxing only profits earned on US territory.
Businesses have to make a one-time payment of eight percent
or 15.5 percent, on repatriated foreign profits, depending on whether the assets
are cash or investments.
US corporations, notably in the tech and pharmaceutical
sectors, have for years accumulated
profits offshore to avoid the comparatively high nominal US tax rates.
The stockpile of cash
hit about $2.5 trillion at the time the tax bill was passed, according to
the congressional Joint Committee on Taxation.
(9) Steve Keen
highlights flaws in the Euro, as noted by Wynne Godley
Steve Keen Exposes The Delusional 'Leaders' Of The
Eurozone
Authored by Steve Keen,
Wed, 01/02/2019 - 05:00
I was looking forward to chilling with family and friends in
Sydney this New Years Day, but Phil Dobbie ruined it for me with this tweet:
I had forgotten that this was the 20th anniversary of the start of the
Euro. But the Eurocrats in Brussels hadn't. Some hours before the New Year
commenced, Juncker and friends put out a press release extoling the virtues of
the Euro. Virtues such as "unity, sovereignty, and stability … prosperity".
Well so much for New Year cheer. With this one tweet, the EU
put 2019 on track to be even worse than 2018. Using any of those words to
describe the Euro—apart perhaps from "unity", since the same currency is used
across most of continental Europe now—is a travesty of fact that even Donald
Trump might baulk at.
Sovereignty? Tell that to the Greeks, Italians or French, who
have had their national economic policies overridden by Brussels. Stability?
Economic growth has been far more unstable under the Euro than before it, and
Europe today is riven with political instability which can be directly traced to
the straitjacket the Euro and the Maastricht Treaty imposed. Prosperity? Let's
bring some facts into Juncker's fact-free guff.
I'll start with Phil's point about Greece. Greece's GDP has
fallen at Great Depression rates since the Eurozone imposed its austerity
policies on it, and nominal GDP today is more than 25% below its peak.
Figure 1: Greek GDP and economic growth rate
Now of course that could be blamed on the Greeks themselves,
so let's look compare economic growth in the entire Eurozone to the USA (minus
Ireland and Luxembourg, since in the former case their data is massively
distorted by data revisions, and the latter has highly volatile data as well,
and is so small—under 600,000 people—that it can safely be ignored).
Figure 2: Real economic growth rates
Before the Euro, economic growth averaged 2.5% per year,
versus 2.4% in the USA. After the Euro but before the Global Financial Crisis,
growth in the Eurozone averaged 2.6%--a 0.1% improvement over pre-Euro levels;
but the USA's growth rate rose to 2.7%, so in comparative terms, the Eurozone
fell compared to the USA. So Europe's tiny improvement over it's pre-Euro growth
rate may be due to factors other than the Euro itself, and its improvement was
substantially smaller than the USA's.
This raw comparison still flatters the Eurozone, since most
of the high growth between the start of the Euro and the crisis reflects the
bubble-growth of Spain and Greece. Population-weighted figures would look even
worse.
But the real comparison is with growth since the crisis. The
USA's average post-crisis growth rate has been anaemic at 1.4%, but this is
positively dynamic in comparison to the entire Eurozone's average post-crisis
growth rate of 0.2%. Europe has basically been stagnant for a decade, thanks to
the Euro and the austerity policies that are inseparable from it, courtesy of
the Maastricht Treaty that Juncker is so proud to have signed.
In reality, the Euro has brought low growth, economic
instability, and political discord to Europe. Yet Europe's unaccountable leaders
spin it as an unbridled positive, at a time when ordinary citizens of Europe are
donning Yellow Vests and bemoaning their plight.
As Wynne Godley
argued so eloquently when the Maastricht Treaty was signed in 1992, the
strictures that it and the Euro would impose on Europe would lead to its
impoverishment, not its prosperity.
Godley presciently concluded that:
If a country or
region has no power to devalue, and if it is not the beneficiary of a system of
fiscal equalisation, then there is nothing to stop it suffering a process of
cumulative and terminal decline leading, in the end, to emigration as the only
alternative to poverty or starvation. (Wynne Godley, 1992)
If this coordinated spin from the Eurozone's bosses—I refuse
to call them "leaders", because that implies they can be removed—is the best
they can do, then 2019 will be every bit as politically unstable as 2018.
(10) Juncker
celebrated Marx
Jean-Claude Juncker
... President of the European Commission since 2014
On 4 May 2018, Juncker attended and spoke at a celebration
of Karl Marx’s 200th birthday, where he defended Marx's legacy and unveiled an eighteen-foot bronze statue of
Marx donated by the Chinese government.[65][66][67][68][69] Critics accused
Juncker of insulting victims of communism.[70][65] MEPs from Hungary’s ruling
Fidesz party wrote: "Marxist ideology led to the death of tens of millions and
ruined the lives of hundreds of millions. The celebration of its founder is a mockery
of their memory."[71]
Last edited on 3
January 2019, at 22:59
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