Thank you, The Real News does an excellent job - FedupwithR
Log in and tell us why you support TRNN
James S. Henry is a leading economist, attorney and investigative journalist who has written extensively about global issues. James served as Chief Economist at the international consultancy firm McKinsey & Co. As an investigative journalist his work has appeared in numerous publications like Forbes, The Nation and The New York Times. He was the lead researcher of the recently released report titled 'The Price of Offshore Revisited.'
JAISAL NOOR, TRNN PRODUCER: Welcome to The Real News Network. I'm Jaisal Noor in Baltimore. And welcome to this latest edition of The Henry Report. Now joining us is James Henry. He's the chairman of the Global Alliance For tax Justice and senior economist at the Tax Justice Network. Thank you so much for joining us.JAMES HENRY, ECONOMIST, LAWYER, AND INVESTIGATIVE JOURNALIST: You're quite welcome.NOOR: So, James Henry, this week is the G-20 summit, and one of the topics that's going to be discussed is corporate tax avoidance and offshore tax havens. What can you tell us about the discussions that are going to be ongoing over the next couple of days and whether these discussions will actually address this problem?HENRY: Well, the world community has for the last year been focusing more and more on the problem of corporate tax avoidance using national tax havens, companies like Apple and Google offshoring intellectual property, and also major trading companies avoiding taxes in developing countries by hiding the profits offshore in places like British Virgin Islands the Cayman Islands. So this topic has gotten a lot of attention already from the G-8, the OECD. And the G-20 is now considering a series of recommendations to fix the problem of corporate tax avoidance specifically. These recommendations were formulated over the last six months by the Organization for Economic Cooperation and Development, and there's about 15 different proposals to kind of fix up the current system.NOOR: And can you talk about what you consider the most effective proposals? And to back up just a moment, just how big is this problem? And if there's any examples you think help highlight just the seriousness of this issue--.HENRY: Well, Tax Justice Network estimates that tax revenue lost by countries in total to corporate off-shoring is on the order of $200-$300 billion of revenue per year. In addition to that, there's another $21 trillion of offshore assets--a report last year--that belonged to individuals who are not paying taxes. That's not really the focus of the G-20 action. They're focusing on the corporate kind of evasion. Basically, you have about 81 countries in the world, offshore havens that are being used for essentially parking intellectual property and transactions of all kinds in low-tax jurisdictions and avoiding tax. And this is at a time when most countries, including the richest countries in the world, are really hurting for tax revenue. So there's a big drive now to fix the budget problem and to gather more revenue from these major tax evaders. We're talking about many of the largest companies in the world that have been using this system, figuring out ways to avoid corporate tax. Companies like Google and Microsoft and Apple have been in the news. You know, Apple parked, last three years, about 64 percent of their global profits in Ireland and Bermuda, paid less than 2 percent corporate income tax on all that. And, you know, many people think that it's just not fair. Apple only has about 1,000 to 2,000 full-time employees in Ireland, you know, so that they're essentially following this practice of avoiding tax on all this revenue by using offshore havens. So the G-20 is focusing on a list of proposals that are designed to fix some of the worst abuses in the system. Tax justice critics have been proposing a simpler set of recommendations to focus more on developing countries, things like banning transactions through tax havens, you know, preventing them from being recognized for tax purposes, and also taking a look at making it illegal for intellectual property and brands and software to be parked in very low-tax jurisdictions.NOOR: And this idea that the G-20 is pushing that there needs to be a specific kind of international framework to deal with tax avoidance--. But how much responsibility, discretion, and leverage do national governments have to deal with this problem?HENRY: Well, the problem is that they do have power to deal with the problem, but there's been the growth of what we call tax competition. So any individual government that decides to go after offshore evasion quickly sees companies moving offshore and taking their tax base with them. And this has led to a round of kind of a race to the bottom among major OECD countries, the United States the latest to join the movement to cut its corporate tax rate. Canada, the U.K., France, these countries have all been reducing their corporate tax rates. And so one of the basic problems that the G-20 is trying to address is to put an end to this kind of harmful tax competition and to have more collaboration among Western governments. Otherwise, we have a situation where most of the tax burden gets transferred to middle-class and working-class people who have no way to avoid tax by moving their assets offshore.NOOR: And can you talk more about what you hope comes out of the G-20, the concrete steps that can be made, and what kind of impact that will have a global economy and, as you mentioned, middle-class families and earners that are being squeezed by this the current tax set up?HENRY: Well, the first is the G 20 I think has an opportunity to put an end to this kind of tax competition. But more concretely, they can require what we call country-by-country reporting. That would be requiring major companies that are doing international business to declare exactly where their income is coming from so we can see the uses that they're specifically making of particular havens. Right now they're not required to report that. Secondly, to have minimum tax standards for international companies so that they actually have to pay something. Right now, the lower bound is zero or even negative in many cases, where they're getting subsidies. I was just in Peru. And in Latin America in general you find leading countries actually having negative corporate tax rates for some of their major companies, because, you know, they're demanding subsidies to be active there. And the same thing goes on in Africa. Some of the poorest countries in the world are subject to negative corporate tax rates.So policing up some of these extreme forms of behavior that are affecting developing countries in particular I think is the priority item for the G-20. I must say that we are not that optimistic about the G-20, this particular G-20 taking decisive action on this list of recommendations.NOOR: James Henry, thank you so much for joining us.HENRY: Thank you.NOOR: Thank you for joining us on The Real News Network.
DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.
Our automatic spam filter blocks comments with multiple links and multiple users using the same IP address.
Please make thoughtful comments with minimal links using only one user name.
If you think your comment has been mistakenly removed please email us at firstname.lastname@example.org