As long as the fear of migration remains high, the phantom money of the elites is safe

As long as the fear of migration remains high, the phantom money of the elites is safe

Thisis of course nothing new: the observation that our figures on global foreign investment are being seriously corrupted by the immense capital flows that multinationals are flowing through and into tax havens.

There have been several “leaks” from the International Consortium of Investigative Journalists (ICIJ) since the crisis – #luxleaks, #swissleaks, #panamapers, #offshoreleaks, #mauritiusleaks. They put the nose on the malicious facts of large-scale tax evasion by private individuals and tax avoidance by multinationals.

In 2017 there was the book The Hidden Wealth of Nations by Gabriel Zucman. Based on data from the IMF, he calculated that wealthy individuals had hidden about eight percent of global assets – about $ 8000 billion – in tax havens . It is more difficult to estimate the size of the amount that multinationals can withdraw from the tax authorities each year.

The missed corporation tax amounts to between 200 and 600 billion dollars a year globally.

Zucman showed that this must be huge, based on the case of the United States. American multinationals have roughly a quarter of their offshore profits deposited in tax havens. About half of that ends in certified European transit paradises such as Luxembourg, Belgium, the Netherlands and Ireland.

$ 15,000 billion a year

And there is no reason to assume that German, French, Dutch or Belgian multinationals are trying to avoid their tax obligations less aggressively. The shareholder is in charge here and there, and he wants high and fast price gains in particular. As a result, the missed corporate income tax worldwide amounts to between 200 and 600 billion dollars a year.

It implies that the gap between the nominal corporation tax rates (the percentages stated in the code) and the actually paid rates through the use of complex tax structures in which jurisdictions such as Belgium, Luxembourg, Ireland and the Netherlands specialize, is widening. In the American case that is more than half. While the nominal rate is 40 percent, multinationals actually pay only 15 percent.

Just as in the US, European multinationals turned out to be true masters in tax avoidance.

report by the European Greens published last year did the same for the Member States of the European Union.

The results were staggering. Just like in the United States, European multinationals – assisted by tidy service providers such as Deloitte, PwC, Ernst & Young and KPMG – turned out to be true masters in tax avoidance or, in the concealing jargon of the large company: tax optimization.

Here too there is more than a fifty percent difference between the rates in the code and the actually paid rates: 14 against 34 percent in Belgium, 10 against 25 percent in the Netherlands, and 2 (!) Against 29 percent in Luxembourg.

And this week, in collaboration with the University of Copenhagen, the IMF published the following nail in the coffin of European tax havens. Based on a further analysis of global investment flows, the authors concluded that a large and growing proportion of those flows has nothing to do with investments and everything with tax avoidance. They call it phantom capital .

Almost forty percent of the global investment flows go into the complex infrastructure of letterbox companies, holding companies and internal financing companies that were devised by the tax specialists of KPMG, Deloitte, PwC, Ernst & Young. They are based in Ireland, Belgium and – especially – Luxembourg and the Netherlands.

And then we are talking about the incredible amount of 15,000 billion dollars a year, that is. The Netherlands and Luxembourg stood head and shoulders above the other tax havens.

Nearly half of the world’s phantom capital is legally established in these two jurisdictions: $ 4000 billion in Luxembourg and $ 3500 billion in the Netherlands. That is a factor of four to ten greater than the other top ten tax havens that the IMF put together.

Shrugged on civilians

Over the past decade, governments have passed on a trillion-cost banking crisis to citizens through spending cuts and burdens. Against that background, it must be the corn on the political mill of the critics of global capitalism, that is, everything that Europe says to be left.

Corporate tax rates have been falling for forty years, while the burden on citizens has only increased.

The socio-economic consequences of globalization are considerable. They were positive for multinationals and largely negative for citizens. Against stagnating incomes, rising inequalities and growing poverty, there are record profits from large corporations, bursting spare greenhouses that are used to fill their own share price or make nonsensical takeovers, and unprecedented salary cuts for management.

In addition, politicians have continued to lower the burden on large corporations, and have recovered the lost income for the treasury from citizens.

Corporation tax rates have been falling for forty years. While in the late 1970s they were on average around fifty percent, forty years later they were halved almost everywhere. While the burden on citizens for the same period has only increased. The maintenance of national infrastructure – legal certainty, public health, education, roads, cables, pipes and pipelines – must be paid for.

And yet it remains silent. In fact, the left is complicit in creating an international tax order, in which citizens pay for the infrastructure that large corporations need most. While the same large corporation can choose more and more whether it pays taxes. With the motto’s: ‘well, the lusts, not the burdens’, and ‘a duty for us and a choice for them’.

For example, in 2014 the Dutch Social Democrats signed another motion that called on the government to fight against the title of the Netherlands as a tax haven.

And the Social-Democratic Minister of Finance, Jeroen Dijsselbloem, broke down the negotiations in Brussels that were supposed to lead to European agreements on combating tax avoidance by multinationals.

Although discontent with established political parties is rampant, it manifests itself politically primarily as racism, xenophobia and Islamophobia.

And in 2014, the Social Democratic Minister of Foreign Affairs, Frans Timmermans, defended a workshop of recognized tax avoiders such as DLA Piper (a provider of tax avoidance constructions) and Nova Trust BV (a manager of letterbox companies) at the Dutch embassy in Kiev, which was intended to to persuade rich Ukrainians to let their financial affairs go through the tax haven of the Netherlands.

The identification: it provides employment. For these neoliberal Social Democrats it apparently does not matter that it only benefits a handful of expensive taxpayers and that it costs hundreds of thousands of nurses and teachers to other jurisdictions.

So much for the international solidarity that the Social Democracy says it has so highly valued.

Misplaced fear, justified anger

In the Netherlands, meanwhile, it remains politically anxiously silent after the IMF media bomb in the Dutch tax haven.

The message was prominent on the front page of the Financial Times , reached the Dutch counterpart of the British newspaper, Het Financieele Dagblad , a day later , but otherwise it remained silent. No angry comments in the major Dutch newspapers, no heated discussions in the talk shows on TV, no angry parliamentarians calling the Protestant finance minister to account, and no civil protests in the squares and parks of the Netherlands.

Although discontent with established political parties is rampant, it manifests itself politically primarily as racism, xenophobia and Islamophobia.

The large business elite stands by, looks at it and then has nothing to fear: its phantom capital is safe, as long as the misguided fear of the refugee remains greater than the justified anger for the capitalist.

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