I take the newsletter of the US-based Patriotic Millionaires as one amongst the many sources I use for blogging. I don't always agree with it: the underlying assumption of the organisation is that we need millionaires tax to fund government spending and we known that is not true. But this comment published overnight is worth noting:
Key findings from the Pandora Papers Investigation by The Washington Post Staff
This week, the International Consortium of Investigative Journalists published the findings of their investigation regarding the hidden offshore dealings of millionaires and billionaires from around the world. It reported what many of us already knew: the rich will take advantage of any loophole they can in order to avoid paying taxes and provide anything back to society. Several US localities have been exposed in the Papers for enabling the wealthy in the concealment of their money. Needless to say, the US tax code is so geared towards benefiting the rich that they don't even have to go offshore to commit tax evasion.
The last point echoes the comments I made yesterday. The shift that this organisation notes did not, of course, happen under Biden. There was instead a big shift under Trump, and in Republican states that will be ongoing. What is clear is that the internal politics of the US are now a big threat to tax justice.
The tax justice movement has to decide how to react to that. It could turn on the US, as the Tax Justice Network has done, demanding amongst other things that it has its influence on international arrangements be taken away from it, despite the fact that those arrangements are very obviously working now. That's obviously not going to encourage the Biden administration. Nor will it help it sell its domestic agenda of tackling abuse by states. It won't even help tax justice by undermining the best international deal likely to be on the table for a long time to come, even if it is imperfect, as I acknowledge.
Alternatively, the tax justice movement could decide that it could support the Biden's administration desire for a global tax deal that could not have happened without its support and then go on to wholeheartedly support that same administration's plans to tackle domestic abuse issues in the USA.
One of those strategies might work. The one the Tax Justice Network is pursuing will not.
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Tax Watch are a bit sanguine about the developments
“ TaxWatch has undertaken an analysis of the formulae used to calculate the DST and the potential future tax liabilities under the G7 proposals, and concludes that with a digital services tax rate of 2%, the current UK DST rate, and a corporation tax rate of 19%, the current UK corporation tax rate, a company would have to have a profit margin of 62% in order to pay more in tax under the G7 proposals than under the DST. Historically tech companies have never achieved these profit margins.”
He had an opinion piece in the Guardian a few days ago:
“ As a result, the new plan represents a tax cut for big tech in the UK and many other European countries. I don’t think anyone thought making big tech “pay their fair share” meant cutting their taxes.”
https://www.theguardian.com/commentisfree/2021/oct/05/global-corporate-tax-deal-ripped-off-again-g7-uk-taxpayers
George Turner at Tax Watch has the slight problem of knowing nothing about tax and having never worked in it. Nor does he understand the most basic economics.
He once told me in all seriousness that a company borrowing money to buy an asset should get no tax relief for doing so because since they had borrowed the money they would never pay for the asset.
I’d take what he says with a very large pinch of salt. A man with that level of comprehension is not to be listened to.