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#Post#: 47--------------------------------------------------
ESTIMATING THE COSTS OF TAX HAVENS
DIR By: thalia
Date: January 23, 2020, 11:19 am
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Nowadays, tax avoidance seems to be easier than ever. There is a
vast variety of ways in which the rich can get away with paying
taxes, a practice that has brought tax havens to its heyday.
Although most of us are familiar with the term “tax haven”, we
are likely to oversimplify it reducing its meaning to “a place
with little to no taxation”, when actually there is more depth
to it. In fact, their most salient characteristics, such as the
offer of secrecy, are often overlooked.
The entities’ refusal to provide information about their clients
potentially turn them into authentic refuges for illegally or
immorally gained wealth. On top of that, the lack of available
data has made the analysis of the consequences of tax havens
quite a difficult task. However, in recent years the fog
covering their activities has begun to gradually dissipate –
remember the Paradise Papers? – and the impact they leave is
clearer than ever – inequality; or at least is what Gabriel
Zucman defends.
Who is Gabriel Zucman? He is an acclaimed French economist
renowned for his research on tax havens and their impact on
economy, work for which he was rewarded with the Prize for the
Best Young Economist in France in 2018. At the present time
Zucman is assistant professor of economics at the University of
California, Berkeley, and one of his articles on The Guardian –
for which I’ll be leaving the link below – was what inspired
this post.
The article displays the information gathered by the economist
and his colleagues in order to justify his perspective on tax
shelters – a topic painstakingly explored on his well-known book
The Hidden Wealth of Nations: The Scourge of Tax Havens –. The
research shows that “six European tax havens alone (Luxembourg,
Ireland, the Netherlands, Belgium, Malta and Cyprus) siphon off
a total of €350bn every year. This is the amount of profit
generated in mostly EU countries, which ends up […] being taxed
at bargain rates, typically between 0% and 5%. Globally, their
data suggests more than €600bn is artificially shifted by
multinationals to the world’s tax havens each year.
Who loses? By and large, the US and the bigger European
countries, where most of the multinationals’ workers and
consumers are located. Tax havens deprive the EU of the
equivalent of a fifth of the corporate tax revenue it currently
collects. This represents a cost of €60bn per a year” (Zucman
Gabriel, 2017).
Without a doubt staggering data that quantifies how much we are
losing to tax havens. Let’s dig deeper into the matter picking
the illustrative example of Ireland to show how the countries on
the other side benefit from this type of economic policy.
“Thirty years ago, when its corporation tax rate was 50%,
Ireland collected less revenue from companies as a share of its
national income than the US or the EU as a whole. Since it cut
its rate to 12.5% in the 1990s it has collected much more than
high-tax countries. […] The Irish government thus gets more
income to spend on roads or hospitals”. So, effectively, we are
defraying foreigner welfare benefits and I agree with Zucman’s
statement on this: “nothing in the logic of free exchange
justifies this theft”.
Liberals preach about lowering taxes in order to prevent
companies and big fortunes from resorting to offshore centers –
subsequently discouraging growth – as one of the mainstays of
their economic policy. Nevertheless, the fact that Scandinavian
nations’ hefty taxation coexists with a scant tax dodging prove
them wrong. Fiscal pressure is not the leak through which wealth
is flowing out. In fact, taxes are the star measure if the
purpose is fostering equality – and ultimately enhancing growth
– through the redistribution of income and wealth. In other
words, money is better spent covering the expenses of a solid
welfare state rather than hoarded in the bank account of a tax
haven.
HTML https://www.theguardian.com/commentisfree/2017/nov/08/tax-havens-dodging-theft-multinationals-avoiding-tax
#Post#: 60--------------------------------------------------
Re: ESTIMATING THE COSTS OF TAX HAVENS
DIR By: Jonathan.perez
Date: January 23, 2020, 6:57 pm
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Hello Thalia,
I have to recognize that I am very afraid to answer you in
English. But I'm adventurous so let´s do it. It´s so incredible
how the countries get all money that they have got now with
their great taxes that we have too. However, like you have said,
that taxes allow us to get a very good and fantastic life level.
For example, we have got good places with a good aparence that
we can visit, a free sanity, a free teaching, a big security and
a lot of things that we usually forget ::). There are a lot of
countries like Venezuela that haven´t got taxes like Spain, but
there are not security, for example :'(.
It´s so sad to know that there are people that moved and they
are moving their money to a Tax Haven. That actuation does a
country less rich because it steals the money that belongs to
him.
I have noticed that you really like this french economist. I
remenbered the last Transport presentation that you mentioned
this person. I think it's normal that you like him because he is
so inteligent and he has done good things for the humanity. ;)
GG, 8)
Jonathan Pérez
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