imc indymedia

Los Angeles Indymedia : Activist News

white themeblack themered themetheme help
About Us Contact Us Calendar Publish RSS
latest news
best of news




A-Infos Radio

Indymedia On Air

Dope-X-Resistance-LA List


IMC Network:

Original Cities africa: ambazonia canarias estrecho / madiaq kenya nigeria south africa canada: hamilton london, ontario maritimes montreal ontario ottawa quebec thunder bay vancouver victoria windsor winnipeg east asia: burma jakarta japan korea manila qc europe: abruzzo alacant andorra antwerpen armenia athens austria barcelona belarus belgium belgrade bristol brussels bulgaria calabria croatia cyprus emilia-romagna estrecho / madiaq euskal herria galiza germany grenoble hungary ireland istanbul italy la plana liege liguria lille linksunten lombardia london madrid malta marseille nantes napoli netherlands nice northern england norway oost-vlaanderen paris/Île-de-france patras piemonte poland portugal roma romania russia saint-petersburg scotland sverige switzerland thessaloniki torun toscana toulouse ukraine united kingdom valencia latin america: argentina bolivia chiapas chile chile sur cmi brasil colombia ecuador mexico peru puerto rico qollasuyu rosario santiago tijuana uruguay valparaiso venezuela venezuela oceania: adelaide aotearoa brisbane burma darwin jakarta manila melbourne perth qc sydney south asia: india mumbai united states: arizona arkansas asheville atlanta austin baltimore big muddy binghamton boston buffalo charlottesville chicago cleveland colorado columbus dc hawaii houston hudson mohawk kansas city la madison maine miami michigan milwaukee minneapolis/st. paul new hampshire new jersey new mexico new orleans north carolina north texas nyc oklahoma philadelphia pittsburgh portland richmond rochester rogue valley saint louis san diego san francisco san francisco bay area santa barbara santa cruz, ca sarasota seattle tampa bay tennessee urbana-champaign vermont western mass worcester west asia: armenia beirut israel palestine process: fbi/legal updates mailing lists process & imc docs tech volunteer projects: print radio satellite tv video regions: oceania united states topics: biotech

Surviving Cities africa: canada: quebec east asia: japan europe: athens barcelona belgium bristol brussels cyprus germany grenoble ireland istanbul lille linksunten nantes netherlands norway portugal united kingdom latin america: argentina cmi brasil rosario oceania: aotearoa united states: austin big muddy binghamton boston chicago columbus la michigan nyc portland rochester saint louis san diego san francisco bay area santa cruz, ca tennessee urbana-champaign worcester west asia: palestine process: fbi/legal updates process & imc docs projects: radio satellite tv
printable version - js reader version - view hidden posts - tags and related articles

Tax Avoidance: Drastic Consequences for the Public

by Philipp Gerhartinger Monday, Jul. 03, 2017 at 12:45 AM

Taxes are the most important foundation of all government activities and public services. Corporate economic activity and profits cannot be clearly assigned to individual nation states anymore. Founding offshore centers is child's play Tax avoidance and tax fraud lead to revenue crisis


By Philipp Gerhartinger

[This blog-article published on November 6, 2014, is translated from the German on the Internet,]

Taxes are the most important foundation of all governmental activities and public services. Tax sovereignty is the heart of nation-state sovereignty. Multinational corporations face many national regulations. Their economic activity and profits cannot be clearly assigned to individual nation-states anymore.


Many gaps and loopholes arose at the interface of national tax laws in the course of time encouraged by the increasing globalization. This enabled economic actors active worldwide to influence, plan, and minimize their global tax liabilities – without regard to the accompanying consequences.

Evading taxes becomes problematic when service and return favor are uncoupled, when for example real value creation and tax payment in a country are no longer plausibly related, when states do not receive any return favor or any proper return favor for providing the infrastructure with all its facets (developed industrial- and commercial areas, transportation connections, trained workers and legal security). Businesses are helped by these public services as a basis for their economic activity. The ones who suffer are the tax-paying workers, small- and medium-size enterprises and consumers who must compensate for the tax shortfall in the countries where the revenue is earned. These sufferers are disproportionately affected by cuts in state spending (and have only marginal possibilities for altering their own tax liability) and must struggle with unfair competitive conditions - in the case of small- and medium-size enterprises.


There is a great multitude of tax optimization practices. Several things are subsumed under the term "tax resistance." Those actions of tax subjects that run counter to the legislators' intentions are essential. All tax-optimizing actions are not illegal. However many that may be legal are not legitimate. In any case, the differentiation of legal "tax avoidance" and illegal "tax evasion" is central.


All unlawful forms of tax resistance should be understood as tax evasion. The criminal state of affairs of tax fraud occurs when (financial) authorities are informed incorrectly or incompletely about important fiscal facts or when they are left in ignorance. This mainly concerns private persons or smaller businesses (for example in the case of sales tax fraud).

On the other hand, tax avoidance includes "legally allowed forms of tax resistance through conscious omission of facts or taking advantage of differences between two or more tax systems to lower the tax burden." International corporations have the possibility of shifting their businesses to tax havens through mailbox firms. So corporations redirect their accounting profits to countries where they can pay lower taxes or no taxes and reduce their real profits in the countries where they are gained and would be taxed higher. The simplest way is shifting revenue to low tax countries, for example by awarding credits within corporate structures that increase the revenue from interests in the low tax country. Current regulations on "transfer pricing" between parts of corporations also offer possibilities for shifting profits, particularly when international goods, copyrights, or other goods are involved that are hard to access.


The theme tax avoidance is relatively new on the agendas of the EU and the OECD compared to fighting illegal tax fraud… Tax avoidance is the greater problem although only very meager information exists. Axel Troost (economist with DIE LINKE) says losses through non-taxation of business profits in Germany for example amount to 20-times what the state loses through private tax fraud in tax havens. The data on world trade is also alarming. Two-thirds of border-crossing trade occurs within multinational corporations and more than half of world trade flows – at least on paper – through tax havens.

For a long time, there were only vague estimates on the volume of evaded capital. In 2012, James Henry (ii) presented a robust calculation that financial wealth parked abroad amounted to between and trillion. According to his estimates, the home states of the tax evaders lose up to 0 billion annually in tax revenues.

In his work "Numbers," the economist Gabriel Zucman, a student of the renowned distribution researcher Thomas Piketty, estimated eight percent of private financial wealth (5.8 trillion euros) is in tax havens and 130 billion euros are lost annually in tax revenue. Thus his estimates are lower than those of James Henry. Zucman does not include cash assets, life insurances, and non-financial property assets (for example yachts, works of art, and the like registered offshore). He says these assets are not considerable and his estimate could rise to a maximum of 8 trillion euros.

These two calculations are based on fundamentally different approaches and measure different things. In the calculations of Henry – with foreign bank deposits as his basis -, assets are included that are completely legitimate, for example, business accounts of an Austrian business in Germany necessary for different payments in foreign countries. All of that is not connected with tax fraud. For Zucman, on the other hand, only those parts of foreign wealth are included that actually can be counted as tax fraud – on the basis of the gap between the active and the passive of worldwide asset balances.

Gigantic sums are lost annually through tax fraud. The larger part, business tax avoidance (for example, through profit-shifting), is not even included here although it amounts to many times more. In the European Union, the commissioner Algirdas Semeta said 1 trillion euros are lost annually in the EU through tax fraud and tax avoidance.


The offshore world is a "shrewd and coordinated system in which every island and every insignificant small state have its specific partial functions, where every jurisdiction creates the legal framework for very specific services from simple numbered accounts to very complicated interlaced tax structures […]. This is an extreme form of the international division of labor. The offshore world is not a geographical area. Rather it arises in the niches and gaps of colliding legal- and economic zones. So tax- and veiling oases are homes for the multitude of legal constructions for businesses, bank accounts, funds, and foundations. However, these are often only backdrops for the international capital streams. The real businesses take place elsewhere. Capital streams rarely end in shadowy oases. Many smaller states are much too unstable and economically insignificant. The real harbors of money are the great financial centers of the world like the City of London, Switzerland or Frankfurt. The legal constructions in the offshore world are merely roundabout ways of the money stream. As such, tax oases are only "the periphery of a system spanning the world at whose center sit powerful nation states and important world financial centers full of banks, tax experts, and lawyers." The whole offshore system would break down without this core.

The big banks active internationally are the prerequisites for the functioning of the offshore world. Their omnipresence first makes possible the border-crossing transport of money. Add to that an extensive industry of intermediaries. Lawyers, trustees, fiduciaries, property managers and tax consultants worry about the details, provide the know-how and ensure a smooth course. With their help, pseudo-businesses, foundations, and trusts are constructed all over the world. Swiss or Lichtenstein accounts, real estate, and other wealth are put in the ownership of these shell companies. The real owners are veiled and legal obligations circumvented.

Founding offshore partnerships is child's play. Often only a few minutes are needed to establish an offshore company with all the licensing procedures. The costs for that amount to 00 and upwards. For 00, a legal office in Panama can even create a firm through the Internet. A creation can be shifted within 24 hours to another oasis…

Different oases serve as bases for different operations. Oases with legal tax niches are emphasized for businesses while private persons are mainly involved in veiling tax fraud. States described as "tax oases" are useful for aggressive business tax planning. The IKEA example shows businesses do not need to be limited to one or two tax oases… The pressure exerted by tax havens on the corporate taxation of other countries resulted in a tax competition within the EU-27 and led to a drastic decrease of the nominal corporate tax rate between 1995 and 2013 from 35.3% to 23.2%. Austria also stands out in this race to the bottom.


International organizations like the OECD have the tax fraud theme on their agendas. Pressure is necessary to enforce far-reaching measures against business tax avoidance practices. This may not end with lip-service. Concrete and effective measures must be carried out. Many European fiscal problems would be solved if business tax avoidance and tax fraud were made difficult or prevented.

Multilateral agreements are necessary. Troost focuses attention on four essential points: 1) specific country reporting by businesses, 2) a common consolidated corporate tax base against business tax avoidance, 3) disclosure of economic authorization and 4) automatic information exchange against tax fraud. All these measures together have the potential of massively reducing the problem.

Report this post as:

Local News

Change Links September 2018 posted S02 10:22PM

More Scandals Rock Southern California Nuke Plant San Onofre A30 11:09PM

Site Outage Friday A30 3:49PM

Change Links August 2018 A14 1:56AM

Setback for Developer of SC Farm Land A12 11:09PM

More problems at Shutdown San Onofre Nuke J29 10:40PM

Change Links 2018 July posted J09 8:27PM

More Pix: "Families Belong Together," Pasadena J02 7:16PM

"Families Belong Together" March, Pasadena J02 7:08PM

Short Report on the Families Belong Together Protest in Los Angeles J30 11:26PM

Summer 2018 National Immigrant Solidarity Network News Alert! J11 6:58AM

Watch the Debate: Excluded Candidates for Governor of California M31 5:20AM

Change Links June 2018 posted M28 7:41AM

The Montrose Peace Vigil at 12 Years M22 8:01PM

Unity Archive Project M21 9:42AM

Dianne Feinstein's Promotion of War, Secret Animal Abuse, Military Profiteering, Censorshi M17 10:22PM

CA Senate Bill 1303 would require an independent coroner rather than being part of police M10 9:08PM

Three years after OC snitch scandal, no charges filed against sheriffs deputies M10 8:57PM

California police agencies violate Brown Act (open meetings) M02 8:31PM

Insane Company Wants To Send Nuke Plant Waste To New Mexico A29 11:47PM

Change Links May 2018 A27 8:40AM

Worker-Owned Car Wash on Vermont Closed A27 5:37AM


lausd whistle blower A11 6:58AM

Website Upgrade A10 10:02AM

Help KCET and UCLA identify 60s-70s Chicano images A04 8:02PM

UCLA Luskin: Casting Youth Justice in a Different Light A02 6:58PM

Change Links April 2018 A01 6:27PM

More Local News...

Other/Breaking News

Addendum: Benjamin Tucker American Mutualist: Tucker Did Not Advocate Voting in Businesses S25 11:45PM

OUR HOUSE Grief Support Center Celebrates 25 Years with the House of Hope Gala S24 7:10PM

Against the Rent Madness and For a Nonprofit Orientation! S24 11:56AM

Cybermonde, cyberguerre, cyberespace, cyberterrorisme S24 6:35AM

Paraphysique de psychosomatique S22 6:58AM

Chuck Grassley: Women Abusing, Animal Murdering, Illegal War Supporting Criminal S22 2:58AM

Finance Capitalism and the Digital Economy S21 4:45PM

Muselières syndicales, muselières patronales S21 7:19AM

Jeff Bezos, Amazon, The Washington Post, Whole Foods, Etc S21 2:50AM

Why Choose Nut Milk Over Cows' Milk S21 1:01AM

Antrhopocène, le grand effondrement S19 9:53AM

Abolir l'économie S18 11:18AM

The Dictatorship of Corporations S17 5:26PM

18 Lethal Consequences Of Hunting S17 3:13PM

Paraphysique de l'outplacement déontologue S15 6:51AM

Shopping du bashing S14 8:42AM

After Lehman Brothers, Experts Say Global Financial Crisis Can Happen Again S13 8:28PM

“Animaniacs in Concert!” Starring Voice Legend Rob Paulsen S12 9:30PM

Probabilités de fin d'humanité S12 6:49AM

Florida Area of Migrant Farmworkers Denied Right to Construct Health Clinic near NaplesCIW S11 2:57AM

Steer clear of work morality! S09 12:10PM

The Shortwave Report 09/07/18 Listen Globally! S06 11:23PM

August 2018 Honduras Coup update S06 12:28PM

Brett Kavanaugh Filled The 5th Circuit With Execution Judges S06 6:14AM

Augusta Georgia Woman Gets 5 Year Prison Sentence for Writing About Russians Crime Acts S05 8:29AM

Paraphysique de contextualité S05 8:29AM

Crisis Regulation in Global Capitalism S03 3:39PM

Ex-voto de réification S03 10:24AM

More Breaking News...
© 2000-2018 Los Angeles Independent Media Center. Unless otherwise stated by the author, all content is free for non-commercial reuse, reprint, and rebroadcast, on the net and elsewhere. Opinions are those of the contributors and are not necessarily endorsed by the Los Angeles Independent Media Center. Running sf-active v0.9.4 Disclaimer | Privacy