Senator Karl Levin has led investigations into tax avoidance
The Price We Pay – Variety review
Senator Karl Levin has led investigations into tax avoidance
We don’t have time today to do this one justice, but it’s an important pair of articles on FT Alphaville – here and here, which are introduced, if not fully summarised, thus:
“The consensus among Western policymakers is beginning to shift, however. The IMF officially changed its tune in 2011 by suggesting how emerging market countries could best limit overabundant inflows. Continue reading “Financial globalisation not so great – Bank for International Settlements”
From Americans for Tax Fairness, a Tax Fairness Briefing Booklet.
They say:
“To win the fight for a fairer tax system, we’ve got to know how to talk effectively about the issues.
That’s why Americans for Tax Fairness published this briefing booklet. It contains guidance on the most effective ways to talk about the economy and taxes; key findings from polls conducted for Americans for Tax Fairness, other organizations and media outlets; and fact sheets on key topics like offshore corporate tax loopholes and the estate tax. Continue reading “How to talk about tax justice, U.S.-style”
A meeting to discuss the issues in Delaware. (photo via Global Witness)
In July we wrote a blog entitled Delaware corporate secrecy and crime: a long-awaited debate begins, with some welcome news about shifting attitudes in Delaware about its business of building state revenues by (among other things) welcoming international and U.S. criminal money.
Now, an update. Continue reading “Finally, financial crime begins to embarrass Delaware”
Neoliberals claim that shareholders are the owners of companies. This is nonsense, argues Austin Mitchell MP and Prem Sikka, Professor of Accounting, University of Essex in this joint paper published in Left Foot Forward. Continue reading “The nonsense of shareholder ownership”
ONE has launched a report and global campaign – The Trillion Dollar Scandal –ahead of the G20 summit in November in Australia:
“Our analysis shows that at least a trillion dollars each year is being siphoned out of developing countries. Wherever corruption is allowed to thrive, it inhibits private investment, reduces economic growth and increases the cost of doing business.
This convoluted web of corrupt activity uses shady deals and secret shell companies to steal money that could be used to fund the fight against extreme poverty, disease and hunger. It costs lives and undermines the efforts of developed countries’ aid commitments.”
ONE is calling on G20 leaders to commit to taking action in four areas:
The report is available here. For more information and to take action, follow the link here.
Way back then, when Britain and Switzerland had just signed a new so-called “Rubik” tax deal promising to “regularise untaxed assets”, the UK government was promising that the deal would reap £4-7 billion. OK, many people in Britain thought: it was rather corrupt and offensive, but that was a lot of money.
Eager tax advisers, aware of the lucrative advisory fees that might come in from the deal, began briefing journalists about what a great deal it was for Britain.
We didn’t like it one little bit, of course, for all these reasons – and another one. Here is what we predicted: the upper limit to revenues for the deal were £1 billion, and would likely come in at much less than that. Continue reading “UK-Swiss tax receipts slow to a trickle”
We’ve been emailed a paper entitled Public Pressure and Corporate Tax Behavior, Scott D. Dyreng of the Fuqua School of Business Duke University; Jeffrey L. Hoopes of Fisher College of Business Ohio State University; and Jaron H. Wilde, of Tippie College of Business University of Iowa.
The abstract notes:
“We examine whether public pressure related to compliance with subsidiary disclosure rules influences corporate tax behavior. . . . ActionAid International, a non- profit, conducted an investigation to identify which FTSE 100 firms were not complying with rules requiring firms to disclose the full list of their subsidiaries. ActionAid then petitioned the Companies House of the U.K. to enforce the disclosure rule.
The original ActionAid campaign is here.
And the results?
“This pressure resulted in nearly 100 percent compliance with the disclosure requirement. We find firms that were newly required to disclose a full subsidiary list decreased their tax avoidance and use of tax havens. We also find the decrease in tax avoidance for noncompliant firms in the post-pressure period is most pronounced in the subsample of firms that experience a decrease in the percentage of total subsidiaries located in small (“dot”) tax haven countries, which are generally considered tax havens that provide significant tax benefits but very limited operational benefits In combination, the evidence suggests that public pressure related to subsidiary disclosure can have a significant effect on the tax avoidance activities and subsidiary location decisions of large publicly-traded firms.”
This will encourage us and many others to keep the pressure up.
Endnote: one may think that this pressure may merely have made companies hide their tax haven activity, rather than stopping it. But the paper notes:
“In contrast to U.S. regulations that only require disclosure of significant subsidiaries, the U.K.’s Companies Act of 2006 (“Companies Act”) requires firms to disclose the name and location of all subsidiaries, regardless of size or materiality.”
The Laffer Curve. Which politician can resist the temptation? From www.and-smith.com, with permission
From the U.S. publication The New Republic, a timeless article entitled Feast of the Wingnuts:
“All sects have their founding myths, many of them involving circumstances quite mundane. The cult in question generally traces its political origins to a meeting in Washington in late 1974 between Arthur Laffer, an economist; Jude Wanniski, an editorial page writer for The Wall Street Journal; and Dick Cheney, then-deputy assistant to President Ford. Wanniski, an eccentric and highly excitable man, had until the previous few years no training in economics whatsoever, but he had taken Laffer’s tutelage.” Continue reading “Feast of the Wingnuts: on the origins of the Laffer Curve”
From the International Centre for Tax and Development:
A major obstacle to cross-country research on the role of revenue and taxation in development has been the weakness of available data. This paper presents a new Government Revenue Dataset (GRD), developed through the International Centre for Tax and Development (ICTD). The dataset meticulously combines data from several major international databases, as well as drawing on data compiled from all available International Monetary Fund (IMF) Article IV reports. Continue reading “Developing countries: a new government revenue dataset”
From Citizens for Tax Justice in the U.S.
“The idea of repealing the corporate tax seems to have just one virtue, which is that it’s simplistic enough to fit into a blog post or op-ed. In every other way this idea is terrible.”
We’ve written about this before, with more to come soon.
From Prem Sikka:
“The US$11 billion merger of Burger King and Canadian coffee and doughnuts chain Tim Hortons is the latest example of a tax inversion move. The deal will see BK transfer its company headquarters from the US to Canada and is clearly not driven just by a quest for control of the markets, but also by tax considerations.”
Rolling Stone has a good in-depth investigation of the issue, here.
From a 2013 paper by Thomas Rixen, another set of arguments why tax havens have helped generate financial risks. The paper itself argues that financial regulatory competition – core TJN fare – is much overlooked. He focuses on:
“an aspect that has so far been under-analyzed in the post-crisis literature – state or jurisdictional competition for financial activity as a serious obstacle to regulatory reform.”
And in the paper he notes five ways in which tax havens, or secrecy jurisdictions (he uses the term Offshore Financial Centres, or OFCs) generate financial risks: Continue reading “Shadow banking: why tax havens increase financial risks”
From ActionAid, a UK-focused campaign which could easily be done in other countries:
Love your community, hate tax dodging
All over the world people are taking action to end corporate tax dodging.
As political parties decide their priorities in the build up to the general election in May, now is the time to make sure they hear our call loud and clear for tax justice. Will you help get your town on board?
Get Involved
People all over the UK are taking action to get their towns on board with the campaign. Find out what’s happening in your local area and join the campaign.
If you’re in the UK, get started here. If you’re not in the UK, why not think about setting something up in your own country.
From Prof. Colin Mayer of Oxford’s Saïd Business School, author of the book in the image:
“The corporation is a rent extraction vehicle for the shortest-term shareholders.”
That’s quite a statement, and it comes via Martin Wolf in the Financial Times. The FT article discussing shareholder value is excellent, and right up TJN’s street. It contains introductory gems such as:
“Almost nothing in economics is more important than thinking through how companies should be managed and for what ends. Unfortunately, we have made a mess of this. That mess has a name: it is “shareholder value maximisation”.”
As we have remarked many times before, short-term shareholder maximisation has often been used as a justification for aggressive tax avoidance (which journalists routinely but incorrectly described as ‘perfectly legal’) and many other nefarious acts. We have also demonstrated, among other things, that corporate managers have no fiduciary duties to avoid tax.
But read the whole article: as we said, it’s another excellent piece by the FT’s chief economics correspondent.
Recently we wrote about a remarkable blog by Jolyon Maugham, a tax barrister, a view from the front lines, which we’ll repeat again today, because it’s so startling:
“I have on my desk an Opinion – a piece of formal tax advice – from a prominent QC at the Tax Bar. In it, he expresses a view on the law that is so far removed from legal reality that I do not believe he can genuinely hold the view he says he has. At best he is incompetent. But at worst, he is criminally fraudulent: he is obtaining his fee by deception. And this is not the first such Opinion I have seen. Such pass my desk All The Time.
The “he” in question, I shall not name. But the brief description in the above paragraph will be sufficient to enable that part of the tax profession that regularly uses tax Counsel to narrow the possibilities down to slightly under half a dozen names. These are the Boys Who Won’t Say No – the “Boys” for short – and we all know who they are.” Continue reading “Risk mining: what tax avoidance is, and exactly why it’s anti-social”
In the latest Tax Justice Network podcast:
August 2014, Edition 32: When was the last time you used a $100 bill, a 500 euro note or a 1,000 Swiss Franc note? We look at how Western banks and Treasuries are facilitating crime through high denomination bills. Also, tax haven reputation damage-management, Switzerland pulls a fast one on India, the European bankers raking in the bonuskis from sanctions against Russia and how the tax haven of Mauritius is…erm…expanding its portfolio.
Produced by @Naomi_Fowler for the Tax Justice Network.
“I think it’s a terrible public policy to facilitate organised crime”
Jim Henry
Featuring: John Christensen of the Tax Justice Network, author of The Laundrymen: Inside the World’s 3rd Largest Business and many other books on financial crime Jeffrey Robinson, Assistant US Attorney General Lanny Breuer, economist and asset recovery specialist Jim Henry. Presented and poduced by @Naomi_Fowler for the Tax Justice Network.
Home of the Taxcast (where you can also subscribe to the Taxcast RSS feed and you can find all the previous Taxcasts) www.tackletaxhavens.com/
You can download to listen any time from here:
In this half-hour
BBC interview with renowned lawyer Helena Kennedy, investigative judge Eva Joly (a great friend of TJN) talks about her life fighting corrupt activities at the highest echelons of business and politics. Continue reading “A Law Unto Themselves – Eva Joly discusses her fight against high level corrupt practices”
Are tax barristers enriching themselves by signing-off on dodgy legal opinions relating to tax avoidance? Surely not. The legal profession is a bastion of probity and wouldn’t tolerate such shenanigans. Or maybe they would. Continue reading “The Boys Who Won’t Say No”
Window dressing at best?
Both G8 and G20 have committed to tackling tax haven secrecy. In the past 18 months they have made specific commitments to create registers of beneficial ownership of companies, though we are far from convinced they are prepared to take every necessary step to prevent crooks from hiding behind offshore legal structures. Continue reading “Quote of the day – on trusts and public registries”
We have just heard that Harold Crook’s (Surviving Progress) new film, entitled The Price We Pay, is to receive its world première on 5th September 2014 at the Toronto International Film Festival (TIFF). Continue reading “Tax haven film world premiere at Toronto International Film Festival”