Tax dodging: Barclays paid 1% corporate tax last year
And with perfect timing, we get this story, which illustrates this concern all too well. In 2009 Barclays Bank made £11,600,000,000 in profits and yet paid only £113,000,000 in corporate tax - less than 1% rather than the legislated rate of 26%. Under such circumstances, the commonly expressed fear that closing loopholes and chasing tax dodging companies might make them up and leave, taxing their tax revenue with them, starts to look like a very small fig leaf. It was always a poor argument, akin to avoiding legal confrontation with the Mafia because they keep the local economy flowing.
"Pay to all what is due to them — taxes to whom taxes are due, revenue to whom revenue is due, respect to whom respect is due, honour to whom honour is due."
- Romans 13.7 (NRSV).
And in other news, the documentary Inside Job was released in the UK yesterday, investigating the role major banks played in fuelling the global financial crisis. It is currently at 98% on Rotten Tomatoes.
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28 comments:
Guardian: Today's protests.
I think setting up libraries, classrooms and other public spaces facing massive funding cuts in the banks is a creative and effective piece of public communication.
It doesn't have to be this way.
Barclays' attempts to hide their tax schemes through legal intimidation.
Tories get over 50% of funding from bankers.
Thanks for the heads-up about Inside Job. I hadn't heard anything about it, but I'll be buying my ticket for the first free evening.
We Remember, Mr Cameron - a piece on behalf of UK Uncut.
10 things you may not have known about RBS.
Rolling Stone: Why isn't Wall Street in Jail?
US Uncut launched: "According to US Uncut, nearly two-thirds of US corporations and 68% of foreign firms operating in the US pay no income tax. A study from the non-partisan US Government Accountability Office found that 83 of the top 100 publicly traded corporations in the US use corporate tax havens to minimise their tax bills.
""Bank of America paid no federal tax and we gave it $45bn in the bailout," said Alisa Harris, one of US Uncut's New York organisers."
Why is it a problem when rich people figure out legal ways to pay less taxes? Because you realize, this is legal, in almost all the big corporate instances of it. Generally only tiny businesses are foolish enough to use illegal tax evasion strategies; the big guys can figure out legal ways. (That's the difference between tax avoidance and tax evasion: one is legal, the other isn't.)
It's a strange situation. Tax is national and confined to strict borders, but global trade and commerce isn't. Where should a multi-national corporation's profits be taxed? The laws as they're currently written mean the rich have easy opportunities to pay less tax. Why not locate all their profits in an offshore tax haven? The only problem here that I can see is that the same opportunities aren't available for littler guys. The only thing putting the little guy at a disadvantage to the big guy in this equation is punitive national tax. Lower the taxes, and you level the playing field.
I realise there is a difference between avoidance and evasion (as I discussed here), but the fact that something is legal doesn't mean it is ethical.
Rather than lowering taxes so that the small guys have a level playing field, we could also close tax havens, as has been the goal of various international negotiations for years. This represents a far better solution than simply lowering corporation tax, which would increase the tax burden on everyone else. It would thus fail to reflect the fact that large corporations rely on huge government subsidies in all kinds of quite legitimate ways, since their wealth is generated through thorough reliance on public goods.
MWH: A new campaign against tax haven secrecy being run by an alliance that includes Christian Aid, Oxfam, ActionAid and The Tax Justic Network.
MWH: The illusion of banking reform.
Guardian: Bank of England governor blames spending cuts on bank bailouts
"Mervyn King has risked reopening the bitter argument over blame for the financial crisis by saying that government spending cuts are the fault of the City and expressing surprise there has not been more public anger.
"The governor of the Bank of England said that people made unemployed and businesses bankrupted during the crisis had every reason to be resentful and voice their protest. He told the Treasury select committee that the billions spent bailing out the banks and the need for public spending cuts were the fault of the financial services sector."
Superinjunction for Fred Goodwin revealed through parliamentary privilege. The use of superinjunctions to prevent damage to the reputations of the rich is a worrying development. I hope the committee looking at it comes to good conclusions.
Somehow, I missed the fact that Inside Job won the Oscar for best documentary this year.
Paul Krugman, NYT: Another inside job.
NYT: G.E.'s tax avoidance.
Can anyone tell me why corporate tax levels ought to be lower than personal tax levels? Seems crazy - if we want to treat corporations as legal persons (a crazy fiction in the first place), then why do these persons benefit from significantly lower tax rates than other persons (esp when they frequently have the resources to exploit loopholes).
I also note G.E.'s logic: "We are committed to complying with tax rules and paying all legally obliged taxes. At the same time, we have a responsibility to our shareholders to legally minimize our costs." The first sounds like a (ultimately negotiable) company value, the latter is their legal obligation. So ultimately, I'm not so much criticising G.E. as a stupid system that makes profit the only legally allowable motive and criteria for public companies. This is madness.
2/3rds of US companies pay no federal income tax. Why is there a deficit again?
For those who prefer their (US) tax debate as a cartoon.
CP: Exxon's tax schemes. Surprise, surprise...
Caroline Lucas (UK Greens MP) has put forward legislation to fight some forms of corporate tax avoidance. It will be interesting to see whether the rhetoric of saving money will be followed through by the government and Labour.
LA Weekly: 1,470 of the richest people in the US paid no tax at all.
AltWeekly: Nine things the rich don't want you to know about taxes. Some fascinating stats here and some debunking of common misleading claims.
Warren Buffet: Stop coddling the super rich.
The Conversation: An interview with Satyajit Das, one of the few experts to have largely predicted the GFC, in which he discusses the GFC and the current situation in Europe.
WMH: How Google avoids paying billions in tax.
The Conversation: Debunking the myth of our well regulated banks.
"Our" = Australian.
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