Paul L. Caron

Thursday, March 2, 2023

Corporations Are Laughing At The Idea Of Paying Taxes As Nearly $1 Trillion Goes Offshore Every Year

Fortune Op-Ed:  Corporations Are Laughing at the Idea of Paying Taxes as Nearly $1 Trillion Goes Offshore Every Year, Researchers Say, by Ludvig Wier (University of Copenhagen; Google Scholar) & Gabriel Zucman (University of California, Berkeley; Google Scholar):

About a decade ago, the world’s biggest economies agreed to crack down on multinational corporations’ abusive use of tax havens. This resulted in a 15-point action plan that aimed to curb practices that shielded a large chunk of corporate profits from tax authorities.

But, according to our estimates, it hasn’t worked. Instead of reining in the use of tax havens – countries such as the Bahamas and Cayman Islands with very low or no effective tax rates – the problem has only gotten worse.

By our reckoning, corporations shifted nearly $1 trillion in profits earned outside of their home countries to tax havens in 2019, up from $616 billion in 2015, the year before the global tax haven plan was implemented by the group of 20 leading economies, also known as the G-20. ...

In 2019, the total government tax loss globally was $250 billion. U.S. multinational corporations alone accounted for about half of that, followed by the U.K. and Germany.


[T]he root cause of profit-shifting is the incentives involved, such as generous or lenient corporate tax rates in other countries. If countries could agree on a global minimum corporate tax rate of, say, 20%, the problem of profit-shifting would, in our estimation, largely disappear, as tax havens would simply cease to exist.

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