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$1 trillion in unpaid corporate taxes sparks UN tussle on November 1, 2023 at 10:00 am Business News | The Hill

Published

1 year ago

November 1, 2023

The IRS is cracking down on domestic tax evasion by going after wealthy individuals and complex private partnerships, but some of the biggest tax evaders — U.S. multinational corporations — are still exploiting legal gray areas to stash money overseas and keep it out of the government’s reach.

Fed up with a stalled international effort at the Organization for Economic Cooperation and Development (OECD) to rein in the use of tax havens and put a global corporate minimum tax into force, African countries at the United Nations are now leading a charge for greater transparency and fairness in international tax.

$1 trillion a year lost to tax havens

In 2022, profits stowed in tax havens by giant companies totaled $1 trillion, amounting to about 35 percent of foreign profits, according to the EU Tax Observatory’s 2024 global tax evasion report, published this week.

“Foreign profits are the profits made by multinational companies outside of their headquarter country – they include, for instance, the profits booked by Apple outside of the United States, by BMW outside of Germany, and by Toyota outside of Japan. In 2022, according to the best available estimates, profits shifted to tax havens totaled $1 trillion globally,” the report’s researchers found.

“The corporate tax revenue losses caused by this shifting are significant, the equivalent of nearly 10 percent of corporate tax revenues collected globally,” they noted.

The findings back up a 2021 study by the U.K.-based International Centre for Tax and Development (ICTD) that found multinationals moved about $1 trillion to tax havens in 2016.

U.S. companies do more of this profit shifting compared to their international peers, both groups of researchers found, with about half of all U.S. foreign profits being slid into tax havens, as opposed to 30 percent for non-U.S. multinationals.

“[Multinational corporations] headquartered in the United States and Bermuda are the most aggressive at shifting profits towards tax havens, while [those] headquartered in India, China, Mexico and South Africa the least,” ICTD researchers found, calling out the Cayman Islands, Luxembourg, Bermuda, Hong Kong and the Netherlands as among “the most important tax havens.”

New push to track down tax dodges

Earlier this month, Nigeria filed a draft resolution at the General Assembly on behalf of the U.N.’s group of African states to set up an intergovernmental committee on global tax rules that could effectively supplant the rich countries in the OECD as the global coordinating tax authority.

The resolution stresses “the need for all countries to work together to eliminate tax evasion, tax base erosion and profit shifting, and to ensure that all taxpayers, including multinational companies, pay taxes to the governments of countries where economic activity occurs and value is created.”

Experts say the resolution could go to a vote in mid-November, building on the momentum of a similar resolution that passed by surprise consensus in the General Assembly at the end of last year.

That resolution resulted in a report from the secretary-general that recommended that the U.N. offered the most “viable path” for actually getting a global tax agreement signed, sealed and delivered.

“Enhancing the UN role in tax-norm shaping and rule setting, fully taking into account existing multilateral and international arrangements, appears the most viable path for making international tax cooperation fully inclusive and more effective,” the report found.

The EU bemoaned the U.N. push in September, warning of a duplication of efforts and wasted time.

“It could imply reopening negotiations, potentially on issues for which promising outcomes already exist,” the European Council said. “This would be time consuming for all jurisdictions.”

Pillar One sputters in Luxembourg

Moving money around to skimp on taxes takes a significant bite out of the domestic governmental revenues of countries where multinationals operate but pay minimal tax.

That is why experts say it’s no surprise that less well-off countries should be pushing for an alternative to the OECD’s hollowed out framework, known as Pillar One.

“Pillar One, which was supposed to deal with profit shifting, has now become very, very narrow, only addressing a small part of the profits of less than 100 multinationals. Everything else is left on the old rules, which we know don’t work,” Alex Cobham, economist and chief executive of the Tax Justice Network, an international tax advocacy organization, told The Hill.

“The instruments the OECD has put forward can’t come into effect unless the United States ratifies it, and we know that the United States doesn’t have political agreement to be able to ratify,” he said. “Pillar One is pretty much dead in the water.”

Treasury Secretary Janet Yellen said during a meeting of finance ministers in Luxembourg last week that the process of agreeing on Pillar One could drag on into next year.

“Much of the treaty has been agreed to. … There are some matters that are important to the United States and other countries that remain unresolved,” she told reporters, as reported by Politico.

The matters “need to be resolved before the treaty can be signed, so these processes will take into next year,” she said.

No market for ‘intangibles’

The entities actually doing the work of shifting profits internationally include the “big four” accounting firms, which are statistically correlated with the use of tax havens, according to research carried out in part by Cobham.

He and his fellow researchers found a “strong correlation and causal link between the size of an [multinational enterprise’s] tax haven network and their use of the Big 4,” comprising KPMG; Deloitte; Ernst and Young; and Price Waterhouse Coopers.

The growth rate of tax haven subsidiaries is 2.9 percent higher for multinationals that employ one of the big four to file accounts compared to those firms that do not, they found.

KPMG declined to comment on the findings. Ernst and Young, Price Waterhouse Coopers and Deloitte did not respond to request for comment for this story.

The current techniques of international tax avoidance really exploded in the early 1990s, Cobham said, when the big accounting firms started playing with transactions among company subsidiaries, which happen entirely inside a given legal structure and are not subject to market forces such as price discovery.

These techniques got more advanced when applied to “intangible assets,” such as brands and intellectual property, the true value of which is known only to its owner.

“They discovered intangibles. It’s very difficult for anybody to put a price on the Google brand being sold by Alphabet to a Google subsidiary. There is no open market for this. The transaction only happens within the multinational,” he said.

The United States Mission to the United Nations, the Nigerian Mission, and the White House declined to comment.

Business, Energy & Environment, International, News, Technology, african union, corporations, international tax, Nigeria, OECD, pillar one, tax evasion, United Nations, United Nations General Assembly The IRS is cracking down on domestic tax evasion by going after wealthy individuals and complex private partnerships, but some of the biggest tax evaders — U.S. multinational corporations — are still exploiting legal gray areas to stash money overseas and keep it out of the government’s reach. Fed up with a stalled international effort…

Business

The Cities Bracing for Trump’s Immigration Crackdown

Published

2 weeks ago

November 8, 2024

Bolanle Media Staff

In the wake of Donald Trump’s recent election victory and his promise of “the largest deportation operation in American history,” several major U.S. cities are bracing for potentially seismic shifts in their economic and social landscapes. As the nation grapples with the implications of this proposed policy, urban centers that have long been havens for immigrant communities find themselves at the epicenter of a looming storm.

Los Angeles, often dubbed the “City of Angels,” stands to lose more than its celestial nickname suggests. As a primary gateway for immigrants, the city’s vibrant tapestry of cultures and its economic engine could face significant disruption. From the bustling streets of Koreatown to the sun-drenched orchards of the Central Valley, the absence of undocumented workers could leave gaping holes in the city’s workforce and cultural identity.

Across the country, New York City, with its iconic skyline and melting pot reputation, faces its own reckoning. The Big Apple’s 5.9 million immigrants, many of whom are undocumented, form the backbone of industries ranging from construction to healthcare. The potential exodus could transform neighborhoods like Jackson Heights and Flushing, altering the very essence of what makes New York a global city.In the Sunshine State, Miami’s tropical allure belies the turbulent times ahead. Home to 2.5 million immigrants, the city’s economy relies heavily on sectors like tourism and hospitality – industries where undocumented workers often fill crucial roles. The potential deportation of these workers could send shockwaves through Miami’s economic ecosystem, from South Beach’s glitzy hotels to the agricultural heartlands of South Florida.

Chicago, the “City of Big Shoulders,” may find those shoulders significantly weakened. With 1.7 million immigrants in its metropolitan area, the Windy City’s diverse neighborhoods and industries face an uncertain future. From the meatpacking plants to the tech startups, Chicago’s economic resilience could be tested like never before.

In the Lone Star State, Houston and Dallas stand as twin testaments to the complexities of immigration policy. These Texas titans, each home to large immigrant populations, could see their booming economies stumble. The construction sites that dot their ever-expanding skylines and the service industries that keep these cities humming could face unprecedented labor shortages.

Out West, the San Francisco Bay Area’s reputation as a bastion of innovation and progress could be challenged. The region’s tech industry, often reliant on immigrant talent, might find itself grappling with a new reality. From Silicon Valley’s coding campuses to the agricultural expanses of the Central Valley, California’s economic powerhouse could face a reckoning. Phoenix, rising from the Sonoran Desert, could see its growth trajectory altered. As Arizona’s urban center, it stands at the forefront of the immigration debate, potentially facing not just economic impacts but social and political upheaval as well.

These cities, along with others like San Diego and Las Vegas, are not just facing potential economic disruptions. They are staring down the barrel of profound social change. Family separations, community fragmentation, and the erosion of cultural enclaves built over generations are all possible consequences of mass deportations. Moreover, the fiscal implications are staggering. Undocumented immigrants contribute billions in taxes annually, often without receiving the full benefits of their contributions. Their sudden absence could leave gaping holes in city budgets, potentially affecting public services and infrastructure projects.

As these urban centers brace for impact, the debate rages on. Supporters of stricter immigration policies argue for the need to enforce laws and protect American jobs. Critics warn of economic devastation and the unraveling of America’s urban fabric. What’s clear is that America’s cities stand at a crossroads. The coming months and years will likely reshape urban landscapes in ways both visible and invisible. From the foods we eat to the services we rely on, from the neighborhoods we call home to the very character of our cities, the impacts of this proposed immigration crackdown could be far-reaching and long-lasting. As the nation watches and waits, these cities – vibrant, diverse, and economically vital – find themselves on the front lines of a policy that could redefine what it means to be an American city in the 21st century.

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Business

How Trump’s Deportation Plans Could Reshape Major Cities

Published

2 weeks ago

November 8, 2024

Bolanle Media Staff

In the wake of Donald Trump’s recent election victory, his ambitious plans for mass deportations have thrust America’s urban centers into the spotlight. As the nation grapples with the potential implications of what Trump calls “the largest deportation operation in American history,” cities across the country are bracing for significant changes that could reshape their economic, social, and cultural landscapes.

The stakes are particularly high for metropolitan areas like New York, Los Angeles, Houston, Dallas, and Miami, which host the largest populations of unauthorized immigrants. These cities, along with other major urban hubs such as Chicago, Washington D.C., and San Francisco, stand at the forefront of a looming transformation that could reverberate throughout the nation.

Economic Tremors

Economists warn that the proposed deportations could send shockwaves through urban economies. Mark Zandi, chief economist at Moody’s, cautions that businesses would face “significant challenges” if a substantial number of immigrants were removed. Industries such as construction, hospitality, and healthcare—pillars of urban economies—could face severe labor shortages.

Joe Brusuelas, chief economist at RSM, emphasizes the potential ripple effects: “The native-born workforce cannot meet current labor demands.” This labor gap could lead to increased wages, potentially rekindling inflation—a concern that looms large over city planners and policymakers alike.

Community Fabric Under Strain

Beyond economic considerations, the social fabric of cities hangs in the balance. Elena, a Nicaraguan immigrant in Houston, voices a fear echoed in immigrant communities across the nation: “I’m scared… This is my home.” The threat of family separations, particularly in mixed-status households, casts a long shadow over urban neighborhoods.

Immigrant advocacy groups like FIEL are mobilizing, advising clients to prepare for “anything that can happen.” This atmosphere of uncertainty could lead to decreased community engagement and cooperation with local authorities, potentially impacting public safety and community cohesion.

Cities at a Crossroads

As the debate intensifies, cities find themselves at a crossroads. Some, like New York and Los Angeles, have historically positioned themselves as “sanctuary cities,” often at odds with federal immigration enforcement. The impending clash between federal policy and local governance promises to be a defining feature of this new political landscape.

Meanwhile, the logistical challenges of implementing such a massive deportation operation remain daunting. Questions abound regarding detention facilities, transportation networks, and the sheer manpower required to carry out Trump’s vision.

Looking Ahead

As America’s urban centers brace for potential change, the full impact of Trump’s deportation plans remains to be seen. Legal challenges are all but certain, and the resilience of America’s cities will be put to the test.

What is clear is that the coming months and years will be pivotal for urban America. As Jason Miller, a senior Trump adviser, puts it, the plan is to “immediately reinstate” immigration policies from Trump’s first term. For America’s cities, this could mean a period of unprecedented change, challenge, and, potentially, transformation.

As the nation watches and waits, the story of America’s cities in the face of this ambitious deportation plan is just beginning to unfold. The outcome will undoubtedly shape the future of urban life in America for years to come.

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Business

Donald Trump Wins 2024 USA Election

Published

2 weeks ago

November 6, 2024

Bolanle Media Staff

Based on the election results, Donald Trump has indeed won the 2024 U.S. presidential election, defeating Vice President Kamala Harris. Here’s an analysis of the key statistics and implications:

Electoral College Victory

Donald Trump has secured the presidency by winning crucial battleground states and flipping some key states that were previously held by Democrats. The final Electoral College tally is still being determined, but Trump has surpassed the 270 electoral votes needed to win.

Battleground State Performance

Trump’s victory was largely secured by winning several critical swing states:

Wisconsin: Trump’s win here was pivotal in securing his path to victory.
Pennsylvania: This state flipped back to Republican control.
Georgia: Another key state that Trump managed to win back.
Michigan: Trump successfully flipped this traditionally Democratic stronghold.

Popular Vote and Voter Priorities

While the final popular vote tally is still being calculated, exit polls provide insight into voter priorities:

Economy and democracy were top concerns for voters.
Abortion and immigration also played significant roles in voter decision-making.

Congressional Control

The election results extend beyond the presidency:

Republicans are set to take back the Senate majority, securing at least 51 seats.
Control of the House of Representatives remains undetermined.

Media Implications

The outcome of this election could be seen as a challenge to mainstream media narratives for several reasons:

Polling Discrepancies: Many pre-election polls suggested a tight race or even a slight Harris advantage in key states. Trump’s victory, particularly in battleground states, may indicate that polls underestimated his support.
Narrative Shifts: Throughout the campaign, much of the mainstream media focused on Trump’s legal challenges and controversies. His victory suggests that these issues may not have resonated with voters as much as economic and policy concerns.
Voter Priorities: The emphasis on issues like the economy and immigration in voter decision-making may indicate a disconnect between media focus and voter concerns.
Electoral Predictions: Many mainstream outlets were cautious about predicting a Trump victory, even as results began to favor him. This hesitancy could be seen as a reflection of broader media skepticism about Trump’s chances.
Underestimation of Trump’s Base: The results suggest that Trump’s core support remained strong and potentially grew, despite negative coverage in much of the mainstream media.

It’s important to note that while the election outcome may challenge some media narratives, it doesn’t necessarily invalidate all mainstream reporting. The complex factors influencing voter behavior and the challenges of accurate political forecasting remain subjects of ongoing analysis and debate.

As the dust settles on this historic election, both the media and political analysts will likely engage in extensive reflection on the factors that led to Trump’s victory and the implications for future political coverage and analysis.