Counterparties: Industrial-strength tax avoidance
Welcome to the Counterparties email. The sign-up page is here, it‚Äôs just a matter of checking a box if you‚Äôre already registered on the Reuters website. Send suggestions, story tips and complaints to Counterparties.Reuters@gmail.com.
Everyone loves corporate tax reform these days. In his state of the union¬†speech, Barack Obama called for closing corporate tax loopholes; the¬†G20 and OECD say they‚Äôre also on the case. The US and Switzerland are vowing to share more information, as a part of the 2010¬†Foreign Tax Compliance Act, which intends to do pretty much what its title suggests.
Tim Fernholz¬†cites a recent report that says the US lost between $57 billion and $90 billion in revenue in 2008 thanks to overseas tax shifting. That‚Äôs real money: the sequester of cuts Congress is arguing over are worth $110 billion.
But finding that money is easier said than done. Whether it‚Äôs John Paulson‚Äôs reinsurance company in Bermuda, Dell‚Äôs MBO, David Einhorn‚Äôs idea for extracting value from Apple, or even Starbucks classifying coffee-roasting as manufacturing, tax avoidance is an entrenched global industry, endemic to all multinational corporations.
The Economist‚Äôs new cover package reveals the magnitude of the problem globally: there‚Äôs a ‚Äúmissing $20 trillion‚ÄĚ stashed in offshore in a patchwork of 50-60 tax havens, ranging from Delaware (home of ‚Äúdodgy shells‚ÄĚ) to the Seychelles (‚Äúshadier‚ÄĚ and reportedly favored by Russians and Africans).
Amid all this heat, the tax-avoidance industry is working on a¬†rebranding: ‚Äú‚ÄėOffshore‚Äô is considered pejorative, ‚Äėtax havens‚Äô unmentionable‚ÄĚ,¬†the Economist writes. The preferred nomenclature is ‚Äúinternational financial centre‚ÄĚ. — Ryan McCarthy ¬†
On to today‚Äôs links:
Our historically weak recovery in three charts – Ezra Klein
The world’s developed nations need to start having more kids right now – WSJ
How robots are eating the world’s manufacturing jobs – Quartz
Horsemeat, brought to you by a Russian arms dealer – Guardian