Tuesday, January 25, 2011

US public radio explores the UK UnCut movement

We recently asked whether the time is ripe for a US equivalent of the UK UnCut movement. We now note that American Public Radio has explored the UnCut phenomenon in a programme titled UK austerity protesters target businesses.

As the programme notes from the outset, a large part of the reason why the UnCut protesters have received such widespread public support (something we can attest to from our own experiences of participating at their events) is that they are hitting a very sensitive nerve: the Conservative-led UK government talks the talk of fairness - "we are all in this together" - but walks an entirely different walk. The public is not fooled by the rhetoric. As UK UnCut's Danielle Wright puts it:

"The poorest are being disproportionately hit by the austerity measures and the cuts, and rich business and rich individuals are getting away with not contributing to the society of which they are a part."

Nor are the British public easily taken in by the lazy arguments of right-wingers like Philip Booth of the Institute of Economic Affairs, a pro-tax haven lobby organisation, who claim the rich only cheat on taxes because the rates are so high:

"Very large numbers of households on quite low incomes do arrange their tax affairs to save themselves tax, obviously not as much as Philip Green saves through his schemes, but then they're earning less in the first place."

Most normal households in Britain pay their income tax on a pay as you earn basis and very, very few will incur an inheritance tax liability. Philip Booth's idea of what constitutes a low income household is probably quite out of synch with reality.

But the question remains: is there scope for a similar movement in the US? The circumstances in the USA are similar to those in the UK; decades of public services cuts, a massive shift of the tax charge from rich people onto middle and low income households, and wholesale tax cheating by larger businesses and the wealthy elites. As TJN's John Christensen puts it, the tax avoidance industry has been responsible for an extraordinary shift of the tax burden:

"It's shifted the tax charge away from corporates and away from rich individuals onto the backs of middle income and poorer people. This has greatly increased inequality here in Britain and arguably in the United States and elsewhere."

Last year the Tea Party movement dominated American politics with its anti-tax agenda. But with its widening deficit, the serious risk of major cities going bankrupt, and levels of inequality and social immobility that put paid to the idea of the American Dream, the time seems ripe in the US for a totally different agenda based on tax justice.

You can listen to the programme here.


Blogger DarkHorseSki said...

Haven't we already seen that communism and socialism are not the best types of government for humanity? The root argument for this movement is incredibly flawed.

6:15 pm  
Anonymous TJN said...

Dark Horse - perhaps you'd like to explain what on earth you are talking about. Um, er, what is the connection between socialism, communism, and protests against the corruption of markets and the ability of large corporations to get ordinary folk to pay their taxes for them? I know, I know, "communism" and so on are Foxy smear words that don't actually mean anything, but still, what exactly are you saying here? Do explain.

6:30 am  
Blogger Gerard said...

Companies that operate in the UK pay tax upon their UK profits, they pay VAT, they pay national insurance on their UK staff's salaries

and those staff pay income tax. They will pay local business rates on their premises.

Where the company is headquartered if it is a multinational determines what happens to their earnings once taken out of each country

they do business in. It is generally a good thing to have multinational headquarters as you will gain extra tax revenue, but also

because they use lots of other expensive goods and services, and employ the well paid staff. If the headquarters of a firm is in the

UK then they will likely use a UK law firm, a UK accountant, UK IT consultants etc etc

The issue many people have is with tax rules that basically allow you to massively reduce your tax liability in the UK (and elsewhere)

by various methods, often involving loans. Loan interest payments aren't taxed (quite sensibly) but this can be abused by using an

offshore headquarters. So the owning company is based in the British Virgin Islands "lends" lots money to its UK subsidiary which

makes regular interest payments back to the owning company. Those interest payments happen to coincide with the profits the British

subsidiary makes, which basically reduces its profits to 0 and therefore reduces its tax liability massively. The BVI company has very

healthy profits but in a country that doesn't tax them. It gets much more complicated but that is basically the idea. Google "sold"

various technology rights to their European subsidiaries and receive interest payments back, hence their low tax rate.

The real kicker is that these Headquarters that are making all the profits and pay zero tax are often held under nominee

directorships, so you cannot find out the real private owners..

The bank address for the offshore Headquarters company can be anywhere. It does not have to also be in the off shore country.
The company nominee directors have direct access to this bank account to do what they want.
This is because the offshore havens do not require the accounts to be audited or even for accounted to be submitted in general.

Ironically the "EU Tax savings directive" passed in 2008 stopped the ability of private individuals to do this a few years ago. They

did this by forcing al countries banks to expose all persons accounts everywhere to the othr governemnts. This was lead by the main

progrssive tax countries ofcourse to stop personal tax liabilities moving off shore.

Its painfully ironic what is going on.

Talk to any London accountant you have know for 5 or more years and they will tellyou this in detail. If you dont have a long standing

relationship with them then they are unlikely to dicuss this dirty laundry witah you.

3:23 pm  

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