Broken at the Top – The Oxfam Report
April 14, 2016 – How America’s Dysfunctional Tax System Costs Billions in Corporate Tax Dodging
Tax dodging by multinational corporations costs the US approximately $111 billion each year and saps an estimated $100 billion every year from poor countries, preventing crucial investments in education, healthcare, infrastructure, and other forms of poverty reduction. US policymakers and a broken international tax system enable tax dodging by multinational corporations, which contributes to dangerous inequality that is undermining our social fabric and hindering economic growth.
The gap between rich and poor is reaching new extremes. The richest 1% have accumulated more wealth than the rest of the world put together. Meanwhile, the wealth owned by the bottom half of humanity has fallen by a trillion dollars in the past five years. Just 62 individuals now have the same wealth as 3.6 billion people – half of humanity. This figure is down from 388 individuals as recently as 2010. These dramatic statistics are just the latest evidence that today we live in a world with dangerous and growing levels of inequality.
This inequality is fueled by an economic and political system that benefits the rich and powerful at expense of the rest, causing the gains of economic growth over the last several decades to go disproportionately to the already wealthy. Among the most damning examples of this rigged system is the way large, profitable companies use offshore tax havens, and other aggressive and secretive methods, to dramatically lower their corporate tax rates in the United States and developing countries alike. This practice is called “tax avoidance” or “tax dodging.” Ironically, these same companies, which retain a multibillion dollar army of lobbyists to influence federal policy, are among the largest beneficiaries of taxpayer funded support.
Tax dodging by multinational corporations costs the US approximately $111 billion each year. But these schemes do not just harm the US. The same tactics corporations use to dodge US tax sap an estimated $100 billion every year from poor countries, preventing crucial investments in education, healthcare, infrastructure, and other forms of poverty reduction. The harm done to Americans and people living in poor countries by corporate tax dodging are two sides of the same coin.
A new analysis by Oxfam of the 50 largest public US companies6 sheds light on just how rigged the tax system has become and shows that these same companies are using considerable political influence to push for even greater rewards in the forms of loans, bailouts and other government support. The analysis highlights the vast taxpayer-funded support the largest and most profitable US companies receive even as they engage in aggressive schemes to avoid paying taxes. Using corporate financial, lobbying and investor disclosures, Oxfam found:
- From 2008 – 2014 the 50 largest US companies collectively received $27 in federal loans, loan guarantees and bailouts for every $1 they paid in federal taxes.
- From 2008 – 2014 these 50 companies spent approximately$2.6 billion on lobbying while receiving nearly $11.2 trillion in federal loans, loan guarantees and bailouts.
- Even as these 50 companies earned nearly $4 trillion in profits globally from 2008–2014, they used offshore tax havens to lower their effective overall tax rate to just 5%8, well below the statutory rate of 35% and even below average levels paid in other developed countries. Only 5 of 50 companies paid the full 35% corporate tax rate.
- These companies relied on an opaque and secretive network of more than 1600 disclosed subsidiaries in tax havens to stash about $1.4 trillion offshore. In addition to the 1600 known subsidiaries, the companies may have failed to disclose thousands of additional subsidiaries to the Securities and Exchange Commission because of weak reporting requirements.
- Their lobbying appears to have offered an incredible return on investment. For every $1 spent on lobbying, these 50 companies collectively received $130 in tax breaks and more than $4,000 in federal loans, loan guarantees and bailouts.
To read in full please download PDF file – Broken at the Top: Tax Dodging by TNCs – The Oxfam Report, 14 Apr 2016
This article originally appeared on Transcend Media Service (TMS) on 18 Apr 2016.
Anticopyright: Editorials and articles originated on TMS may be freely reprinted, disseminated, translated and used as background material, provided an acknowledgement and link to the source, TMS: Broken at the Top – The Oxfam Report, is included. Thank you.
This work is licensed under a CC BY-NC 4.0 License.
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