Income inequality: the IMF calls for tax justice
Stop. Press. About turn. Reverse ferret. Thatcher, Reagan, Friedman, and the hundreds of others who followed and led the world into an orgy of efficiency and exuberance were wrong. Inequality, after all, matters. Policies of cutting taxes on the rich and deregulating everything can hurt the economy. Inequality retards growth.
That is the conclusion from a new report published by those renowned communist agitators at the International Monetary Fund (IMF). A new IMF working paper found:
- Government action to redistribute wealth does not hurt growth
- More equal societies grow faster
- So government action to redistribute is pro-growth.
In effect, the IMF report is calling for Tax Justice, which has a whole lot to do with income inequality. As demonstrated very clearly by the recent case of Zara, the High Street Fashion Retailer. (And as demonstrated by the likes of economic thinkers such as Thomas Piketty.)
Now watch this video of Margaret Thatcher in her last debate as Prime Minister, expounding the virtues of inequality – and getting a big cheer.
Red faces all round at the UK’s serious Fraud Office.
The government agency tasked with investigating serious economic crime has made rather a serious cockup on their taxes. The agency had to come cap in hand to the government for after being fined for not paying their VAT.
Still it could be worse. It isn’t like the agency sold the management of its buildings to a company based in Bermuda….
America’s got talent
One group of people who seem to have hired rather better bean counters are the chief executives of America’s largest companies. A new report by Citizens for Tax Justice has looked at the taxes paid by the Fortune 500 companies that turned a profit in every year from 2008 to 2012. It found that these companies paid an effective corporation tax rate of just 19% (US corporation tax on profits is 35%). Twenty six companies paid nothing at all – including global giants such as GE and Boeing.
Americans may wonder why their public debt is so large.
An atomic tax break
Niger, one of the world’s poorest countries is currently locked in a dispute with French nuclear energy giant Areva. For a great background on the dispute and the industry in Niger see this special report from Reuters. It found that the company had negotiated a raft of tax breaks and exemptions from the government of Niger.
These tax breaks have led some civil society organisations to claim that Niger has not benefitted at all from 40 years of uranium mining in the country. Worse still there has been a substantial environmental and health cost.
The government now wants to end this sweetheart deal and force Areva to pay the same taxes and fees other extractive industries have to suffer. But there has been deadlock in the talks and the latest deadline passed last week.
Arriva are claiming that increasing taxes will make mining in Niger uneconomic. It is worth thinking about what that means. France currently has some of the lowest energy prices in Europe, despite most of its energy coming from nuclear, one of the most expensive forms of energy. Is this not just a subsidy from the poor to the rich? And what could be more uneconomic than that?
As the Ukrainian crisis spirals out of control, it may be worth thinking about how the world’s tax havens and secrecy jurisdictions have played their role. Swissinfo reports that former President Yanukovych has had all of his assets frozen in Switzerland. An investigation has also been launched into accusations of “aggressive money laundering” by the former President and his son. One might ask the Swiss, how did the money get there in the first place? But here at the Offshore Wrapper we would not want to be accused of picking on the Swiss!
Indeed, as Global Witness reports, the Brits have their role to play too. The former President’s palace it seems was owned by an anonymous shell company in the UK. All for legitimate business purposes I am sure.
Oh, and there’s the small matter of these tax havens being a gigantic national security issue for the West.
Other TJN blogs this week
European MEP calls for hearing on Swiss banking scandals. Why can’t Europe have an equivalent to the U.S. Permanent Subcommmittee on Investigations?
Shadow banking and the offshore system. More on the incestuous links between so-called shadow banking and shady offshore banking.
Survey: The corporate tax debate is biting the corporations. Most large corporations feel their tax strategies have damaged their reputations; many have changed their behaviour in response.
Read our Lips: Ireland is a tax haven. As it if needed saying. But the hyperventilation and spin coming out of the Emerald isle continues apace.
The Credit Suisse scandal: echoes of Too Big to Jail. On the U.S. Permanent Subcommittee’s report after hauling Credit Suisse over the coals, exposing some ugly truths.
Tax havens and corruption: Lebedev and TJN in the New York Times. Using our $21-32 trillion figure to make some powerful points.
Guernsey milking and the offshore stock exchange. A media investigation prompts the resignation of the tax haven’s Chief Minister.
Ernst & Young: why Dubai’s first conflict gold audit was silenced. Another excellent investigation by our good friends at Global Witness.
Local innovators lament the City of London’s uselessness. Real UK businesses can’t get the finance they need. Which raises the question: what is the point of an oversized City of London?
Automatic Information Exchange: will Europe’s spoilers play ball? On Switzerland, Luxembourg and Austria. Are there signs of real progress?
Economists, bozos and bamboozlement. A wonderful little cartoon about the Trans Pacific Trade Partnership – which has wide resonance in other areas.