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Wednesday, August 1, 2012

Off Shore Tax Havens

More later, but for now, just read up on tax havens in James Henry's recent report, The Price of Offshore Revisited.  The link is to a summary of the report, which may or may not be available in full at the Tax Justice Network's website (I couldn't easily find it, although the summary says that all documents mentioned are at the website).

Bottom line is that $21-32 trillion dollars globally is being held in hidden, off-shore accounts.  While some of this money is doubtless the fair reward of enterprising capitalists like Mitt Romney, much of it is doubtless the ill-gotten gains of third world dictators and the like.  But the bottom line is that it should all be subject to taxation by somebody.  That's a LOT of money.

I heard him on the radio on Democracy Now explaining that part of the problem is US companies putting their intellectual property offshore.  Apparently, Google saved 3 billion dollars in taxes by parking its IP in Bermuda or somewhere.  Here's part of the transcript, which is available in full here:


AMY GOODMAN: What about large corporations? You talk about intellectual—moving intellectual property offshore—
JAMES HENRY: Yeah.
AMY GOODMAN: —corporations like Google and Pfizer.
JAMES HENRY: Right. Well, in our film, We’re Not Broke, which was a Sundance documentary, we discussed corporate tax evasion. And this is the latest trend in the software industry and also in the healthcare industry, drug industry. Pfizer, Google, Microsoft, companies like General Electric are parking their intellectual property, their brands and software, offshore in places like Bermuda and paying royalties to themselves and essentially parking the profits in these low-tax jurisdictions and not paying any taxes on it. So, Google last year saved about $3 billion by that. So if you have, you know, this core kind of value, intellectual capital, moving offshore to low-tax havens, where it’s never been produced, essentially is a kind of, you know, decapitalization of the U.S. And all of these countries [sic companies?] now also parked all these profits abroad to get tax breaks, and then they want a deal when they bring the money back. They want a repatriation tax cut, 5 percent.
AMY GOODMAN: So, what should happen?
JAMES HENRY: Well, we’ve tried this repatriation tax cut in 2004. It didn’t produce any jobs. And we shouldn’t—absolutely shouldn’t get in—the corporate—give in to this lobby. The corporate income taxes and personal income taxes have dropped steadily since the 1980s on high-income corporations. And, you know, at the same time, we’ve seen the growth of this offshore haven. So it isn’t driven by tax rates; it’s driven by greed.

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And yet, when companies like Pfizer, Google, Microsoft, and GE lobby, Congress listens.  Congress writes strong IP laws for these companies on the basis that strong IP somehow benefits the United States, but it is increasingly difficult to see where that benefit actually comes from.

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