Links May 5
Some reasons not to listen to the lobbyists: Corporations have already figured out how to bring back money and pay trivial tax rates; It is a bad idea that failed the first time - The money went to shareholders, not job creation; Instead of raising revenue, it raises costs. Conclusion: Giving corporations a repatriation holiday is bad for taxpayers, bad for the budget and will only serve the interests of corporate executives. Any attempt to bring back the lost revenue must at the same time permanently close the loopholes that enable and encourage the off-shoring of jobs and profits.
HSBC not necessarily liable for clients' alleged corruption Ahram Online
May 2 - Recent reports by news sources have accused the financial giant HSBC of providing assistance to land deals tainted by corruption from the Mubarak regime. Some parties are giving the old line that banks should not be policemen - but a bank should, absolutely, be aware of the main sources of its clients' wealth and not extend a helping hand to hide, disguise and expand illicit wealth.
The global economy's corporate crime wave The Daily News Egypt
May 1 - By Jeffrey Sachs - "We will need to light the dark corners of international finance, especially tax havens like the Cayman Islands and secretive Swiss banks. Tax evasion, kickbacks, illegal payments, bribes, and other illegal transactions flow through these accounts. The wealth, power, and illegality enabled by this hidden system are now so vast as to threaten the global economy’s legitimacy, especially at a time of unprecedented income inequality and large budget deficits, owing to governments’ inability politically — and sometimes even operationally — to impose taxes on the wealthy. See our earlier blog: Jeffrey Sachs joins the tax justice movement, sort of.
The US needs to tell Switzerland precisely where it can shove its proposed tax deal Tax Research UK
May 1 - Switzerland has proposed it impose a final tax at the source on money held by US citizens in Swiss banks.
As Richard Murphy so pertinently notes: this arrangement means that the U.S. "Outsources tax collection to a country dedicated to promoting tax crime." See also our recent blog Dirty, Dark Sub-plots of Secrecy
Organizations Invited to Sign Letter Urging Congress to Close Corporate Tax Loopholes to Protect Public Services and Reduce Deficit Citizens for Tax Justice
Deadline May 13 - Lawmakers and officials in the Obama administration are discussing plans to reform the corporate tax in a way that is "revenue-neutral," meaning the U.S. would not collect any more tax revenue from corporations overall. While Congress is debating cuts in public services that working families rely on, there would be no attempt to get corporations to contribute more. See a PDF of the letter with the list or organizations currently signed on.
U.S. Business Has High Tax Rates but Pays Less New York Times
May 2 - The paradox of the United States tax code — high rates with a bounty of subsidies, shelters and special breaks — has made American multinationals “world leaders in tax avoidance,” according to Edward D. Kleinbard, a professor at the University of Southern California who was head of the Congressional joint committee on taxes.
How Goldman Sachs created the food crisis Treasure Islands
May 4 - Nick Shaxson on a naked display of the power that offshore grants to financial firms ... "And we must always, always, remember that Wall Street’s top offshore jurisdiction is not Cayman, but London."
2G scam: Offshore firms working overtime to cover tracks - India Economic Times
May 1 - As Mauritius prepares to receive Indian investigators, corporate lobbies, especially those associated with a 2G telecommunications scam in India are working overtime to cover their tracks so that Indian sleuths do not have much access to the island's banking details. "Some of them were approaching the Mauritian government through back-channels exerting pressure for not sharing of the information," senior officials speaking on the condition of anonymity said. Why is it, with big corruption investigations in India, that the trails lead so often to Mauritius?
The curious Dave Hartnett and Goldman’s sweetheart tax deal Treasure Islands
May 2 - Treasure Islands exposes how Dave Hartnett, boss of the UK's HM Revenue & Customs, would routinely reach right down into multinational tax cases and would settle them without consulting HMRC’s lawyers. The magazine Private Eye has exposed several such sweetheart deals and now has a new story, on that great “Vampire Squid of Capitalism,” Goldman Sachs.
Growing Income Inequality in OECD Countries: What Drives It and How Can Policy Tackle It? OECD
May 2 - Growing income inequality in OECD countries: what drives it and how can policy tackle it? The data is interesting, but stops just at the time of the financial crisis, when everything changed. The OECD makes some false prescriptions, some good ones, and a number drawn from www.bleedingobvious.com.
Jersey freedom of information law would 'cost too much' BBC
Apr 29 - Jersey's Council of Ministers said it could not support the freedom of information law because of how much it would cost to implement and run. The law would allow people to access information from public bodies such as the States and the parish. The freedom of information law will be debated on 3 May 2011.The problem with democracy on the cheap is that it turns out cheap and nasty.
Billions at stake in a giant VAT takeaway Daily Mail
May 1 - A recent European Court of Justice ruling states Value Added Tax should not be paid on food sold for immediate consumption - from a case brought by a German burger van owner, who protested after being forced to charge extra for food that customers ate while sitting on chairs by his van while those who ate standing up were charged less. It paves the way for all sorts of companies – from cafes to curry houses and fish-and-chip shops – to claim refunds.
The Tax Elasticity of Corporate Debt: A Synthesis of Size and Variations - IMF Working Papers
April 1 - We find that, typically, a one percentage point higher tax rate increases the debt-asset ratio by between 0.17 and 0.28. Responses are increasing over time, which suggests that debt bias distortions have become more important. Note TJN's very different perspective on the policy implications here.