New Report: Multinationals Avoid Taxes

[Omaha Steve]

Full article: http://blog.aflcio.org/2006/08/01/new-report-multinationals-avoid-taxes/

Corporate Greed

Aug 1

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New Report: Multinationals Avoid Taxes

In the financial equivalent of the race to the bottom for low-wage jobs, large corporations are avoiding paying their fair share of taxes by registering or incorporating in tax havens, according to a new report by the world’s largest trade union federation.

These corporations seek out tax havens—countries that compete to attract investors with low tax rate and lax enforcement—to be able to underreport their profits at tax time.

The report, Having Their Cake and Eating It Too: The Big Corporate Tax Break, was produced by the International Confederation of Free Trade Unions (ICFTU), a global federation that represents 241 union organizations in 156 countries, including the AFL-CIO.

Unless the world’s governments stop this race to attract business with lower taxes, industrialized and developing countries will be forced to cut back on vital public services such as education and health care, the report claims.

Guy Ryder, ICFTU general secretary, says corporate tax avoidance jeopardizes the future of stability society:

Governments must stop this tax competition craze if they are serious about ensuring a sustainable future of their societies. They must also start cooperating with each other … in closing the legal loopholes that have allowed companies to get away with the kind of behavior that would land an ordinary citizen in jail for many years.

The jaw-dropping figures on the extent of corporate tax avoidance jump out in the report:

* Each year, the amount of money lost to tax havens from developing countries is six times the amount that could fund universal primary education throughout the world.
* The average corporate tax rates in industrialized countries have fallen from 45 percent to 30 percent in two decades, due to tax competition.
* If corporate taxation keeps dropping at the current rate, corporate tax rates will hit zero percent by the middle of the century.
* Conservative estimates show developing countries lose $50 billion annually due to tax havens.
* Of the 275 largest corporations in the United States, 82 paid no tax or received a tax refund in at least one of the years between 2001 and 2003.
* The number of Export Processing Zones (EPZs)—which often pay workers low wages and benefits, but offer corporate tax dodges—rose from 850 in 1998 to more than 5,000 around the world in 2004.
* As a share of total taxation, corporate taxes have dropped by 53 percent in the U.S. since the late 1960s.