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Ocasio-Cortez: how to pay for Social Programs? from Peter Myers

(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 towars 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


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.


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

“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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