No one needs to tell workers how difficult it is to get by in today’s economy. Despite the so-called “recovery,” living becomes more precarious every year.
Not so for the wealthiest one percent, who in the U.S. now control 40 percent of the wealth.
One of the tricks to expand their fortunes is non-payment of taxes — on a massive, global scale. Those at the top not only don’t pay their “fair share,” they tuck their money away in sophisticated, legal and quasi-legal rat holes. Politicians, in typical double speak, express “shock” at how little corporations pay in taxes, yet legislate more breaks and credits to lure business to their locale. Dealing with receipts for tax purposes can be the biggest hurdle for small business tax discrepancies, but a great way to stay organised is by using receipt scanners. You can find the best ones on this page if you are interested in finding out more.
Spanning the globe, the uber-rich and large corporations put significant resources into taking full advantage of every angle, scheme, and loophole, however complicated, and put money into buying politicians to keep things this way.
Avoidance vs. evasion: two sides of the same coin. “Avoiding” taxes is generally considered “legal” — a method by which financial losses or profits are relocated or reclassified to not pay taxes, whereas “evasion” is considered a crime. But looking past the labels to the facts, there is practically no difference.
The Tax Justice Network, an independent non-profit organization of accountants, former consultants, and tax attorneys, estimates that 50 percent of all world trade passes through — financially speaking — the world’s tax havens. These are tax-light or tax-free zones and include not only Switzerland, the Bahamas and Cayman Islands, but also Singapore, Hong Kong, and the Netherlands, pillars of commercial “legitimacy.” There are 80 known tax havens globally, that handle an estimated U.S. $21-32 trillion. The exact number is not known because those elite who move their money through havens need secrecy. These techniques can be so complex and secretive, the best CPA firm in Los Angeles may not know about them!
“Tax competition” is a benign phrase for the cancerous practice of industries playing cities, states, provinces and countries against each other. The goal? To extract ever lighter or tax free (and union-free) benefits to maintain or bring in new business. Organizations such as the International Monetary Fund encourage developing countries to “liberalize” their tax systems to make their countries more competitive.
There are other roads to lower taxes, such as “Accelerated Depreciation,” whereby the value of a fixed asset (such as a piece of machinery in a manufacturing plant, or an airplane purchased by an airline) is reduced at a faster rate than its actual life. There is “Trade Mispricing” that involves two parts of the same company selling to each other, at deliberately reduced prices.
The myth of corporate responsibility. The list of companies jumping on the “corporate responsibility” bandwagon grows longer every day. But their professed concern for the environment or labor conditions is more a marketing angle than anything else.
When it comes to paying taxes, there is a gigantic silence. Evidently, paying taxes to fund health, education and social services isn’t part of the responsibility package.
Starbucks, with its touchy-feely rhetoric about respect for “associates” (workers), and sustainable practices for growing coffee, overstated losses in its U.K. operations to minimize tax payouts.
Apple claims to be a “proud American corporation” but stows US $100 billion in an Irish subsidiary to avoid taxation. Microsoft Chairman Bill Gates Jr. heads one of the largest philanthropic foundations in the world, the Gates Foundation. In addition to doing things like pushing genetically-modified seeds in Africa, the foundation serves as a fabulous tax deduction for Gates. Meanwhile, Microsoft saved U.S. $18 billion last year alone in tax havens.
The example of a “Double Irish with a Dutch Sandwich,” pioneered by the tech companies, shows us the creativity and lengths to which big business will go to avoid taxes.
In this scheme, a company sends profits first through one Irish company, then to a Dutch company and finally to a second Irish company headquartered in a tax haven!
Workers pay the bill. The winners in this tax shell game are clear: the global capitalist class. The working classes around the world are losing badly. If endless wars fought for oil, gas, water and markets haven’t already drained public coffers, tax avoidance and evasion will do it.
Since the amount of money written off, deducted, shifted and otherwise hidden by capitalists is hard to pin down, the amount of deprivation caused is equally hard to estimate.
But taxes are usually levied on profits. Based on a conservative 3 percent profit margin, the estimated tax kept from world governments is U.S. $250-$300 billion annually.
There are a variety of estimates of revenue lost by tax havens alone. For example, in 2011, states in the U.S. lost $39 billion, and the federal government lost $150 billion. Again, these are conservative estimates, based on low rates of profit.
Reversing the tide. Reformers around the world like to say that capitalism just needs tinkering and international cooperation, so that the rich and big business can be made to pay their fair share. “Transparency” and “country by country” reporting will make the placement of wealth around the world visible at least, so the theory goes.
To say this is a slow, tedious process with barely recognizable impact is an understatement. Meanwhile, public coffers are bled dry, services are cut, schools are closed, the cost of healthcare climbs, and no light awaits the tunnel’s end.
What reformers overlook is that under capitalism, tax systems are designed to benefit the elite because their class rules.
And as they amass ever more political and economic power, things are only getting worse. See the chart at the top of this article.
The system is so rigged that only fundamental change — socialist revolution — can alter its trajectory.
A big step forward will be achieved when the overtaxed workingclass majority comes to the conclusion that no relief will ever come from the U.S. Democratic Party, British Labor Party or politicians of any similar stripes worldwide. They are part of the problem, spiders weaving a web of tax breaks and loopholes.
Convincing workers to stop believing these fakes is essential. Any cut or outsourcing of a public service anywhere is an affront to all, but also an opportunity to oppose and expose all the tax breaks going to big business.
Building movements based on international solidarity is the future. Economic recovery plans that call for workers to compete against each other for some vague, nationalistic purpose must be trounced upon with such ferocity as to make the global elite and their bourgeois politician buddies shake in their boots.
Tax the rich and corporate profits! End all tax credits and loopholes for big business — and shut all the havens!
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