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posted by n1 on Thursday November 12 2015, @01:24PM   Printer-friendly
from the luxembourg-shuffle-fulfilled-by-amazon dept.

In 2012, something like US$80 billion worth of multinationals' profits worked on their suntans in Bermuda, according to an international report into profit-shuffling and tax avoidance.

Oxfam, the Tax Justice Network, the Global Alliance for Tax Justice, and Public Services International have put their heads and wallets together to fund a report into how multinationals are picking the pockets of G20 nations.

In one way, it's no surprise: the world's top economies are, pretty much by definition, the places where multinationals will make the most money. However, they also have the best resources to try and get companies to pay their taxes, and if the Oxfam et al report is accurate, they're getting gamed hand-over-fist.

The report says just twelve countries (the USA, Germany, Canada, China, Brazil, France, Mexico, India, the UK, Spain and Australia) account for 90 per cent of US multinationals' “missing” profits.

Those profits get processed through various implementations of the “Irish-Dutch sandwich” to be booked in low-tax countries like the Netherlands, Ireland, Luxembourg, Switzerland and Bermuda.

If the numbers are accurate (the report's authors put a number of caveats on the data), then between $500 and $700 billion gets shuffled around in this way, which is how Bermuda found itself home to $80 billion worth of profits in 2012 (its GDP in the same year was a paltry $5.47 billion).


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  • (Score: 2) by NotSanguine on Friday November 13 2015, @11:05AM

    by NotSanguine (285) <NotSanguineNO@SPAMSoylentNews.Org> on Friday November 13 2015, @11:05AM (#262585) Homepage Journal

    I would characterize the tax structure during those years as a resounding success.

    I would tend to agree. Thanks for the detail, Runaway. I appreciate it.

    I was confused since the U.S. economy was going through its largest expansion *ever* during this time. Apparently, huge growth and prosperity for more Americans than ever before constitutes a failure according to some. I wonder what criteria could be used to assess the effects (in part, the US industrial base being the only one really functioning during this time really helped, as did the the monumental projects of rebuilding Europe, Asia and creating the domestic infrastructure that's now crumbling) of really high taxes on the richest people (with investment in growth and infrastructure being strongly incentivized) during the Eisenhower administration as a failure.

    Hence my confusion as to AC's (apparently) unsubstantiated comment.

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  • (Score: 0) by Anonymous Coward on Friday November 13 2015, @04:45PM

    by Anonymous Coward on Friday November 13 2015, @04:45PM (#262733)

    Let's not be too sanguine.

    The post-war administration was running with some unusual blessings as well as some unusual problems. Extrapolation from that to today is difficult to the point of impossibility.

    Granted, the top marginal rate of income tax was very high, but it turns out to have been largely symbolic because that bracket actually didn't collect much money. It was a class warfare banner, not an actually significantly productive revenue plan.

    Also, most of the growth at the time came from the blessings of demobilisation and a massive increase in the workforce, in education of GIs, and return of productive capacity in a country which had the incredible benefit of an intact industrial infrastructure after the war, and the economic nimbleness to take advantage of it. The super-rich of the day didn't need their incomes to swell their pockets, because they were coining it in so many other ways.

    Today, we have a system much more based on financial instruments ranging from good ol' greenbacks through to exotic things like CDSes. Fewer people live in circumstances where they get much of anything except money (just look at the widespread urbanisation of the USA) and foreign competition for american industry is at an all-time high. Bracket creep has combined with various increased sales and other taxes applied by states and local authorities to take a much larger bite out of the grocery budget of many people who are struggling. People aren't complaining about being overtaxed because of the marginal rate they might pay on their last few dollars of total family income, but because of the totality.

    The post-war government had the incredible luxury of taxing the world's go-to manufacturer, when the main drag on profit was how many widgets could be cranked out in a given week. Sane tax policy then is froth-mouthed insanity today.