The corporate world is plagued by a drive to “gigantism” that is a veiled form of monopolistic and oligopolistic trends dominating all other trends of globalization (some of them beneficial). This drive to gigantism is nothing new; it started with the Industrial Revolution of the XIX century, but its development has become overwhelming and crushing with the forming of blocs of firms, holding companies, and conglomerates that are amassing even greater resources. In addition, globalization has given way to the proliferation of mergers. These consolidations exhibit the same disregard for restraint and employ similarly disruptive means of expansion as those in stock market manipulations and hostile merge/takeover, among other strategies giving way to the formation of powerful cartels (oligopolies) and monopolies. Joseph Stiglitz offers us in the article that follows a partial remedy, so that these large conglomerates cannot evade their fiscal responsibilities.
How Can We Tax Footloose Multinationals?
Apple, Google, Starbucks, and companies like them all claim to be socially responsible, but the first element of social responsibility should be paying your fair share of tax. Instead, globalization has enabled multinationals to encourage a race to the bottom, threatening the revenues that governments need to function properly.
New York, Feb.13.– In the last few years, globalization has come under renewed attack. Some of the criticisms may be misplaced, but one is spot on: globalization has enabled large multinationals, like Apple, Google, and Starbucks, to avoid paying tax.
Apple has become the poster child for corporate tax avoidance, with its legal claim that a few hundred people working in Ireland were the real source of its profits, and then striking a deal with that country’s government that resulted in its paying a tax amounting to .005% of its profit. Apple, Google, Starbucks, and companies like them all claim to be socially responsible, but the first element of social responsibility should be paying your fair share of tax. If everyone avoided and evaded taxes like these companies, society could not function, much less make the public investments that led to the Internet, on which Apple and Google depend.
For years, multinational corporations have encouraged a race to the bottom, telling each country that it must lower its taxes below that of its competitors. US President Donald Trump’s 2017 tax cut culminated that race. A year later, we can see the results: the sugar high it brought to the US economy is quickly fading, leaving behind a mountain of debt (which increased by more than $1 trillion dollars last year).
Spurred on by the threat that the digital economy will deprive governments of the revenues to fund function (as well as distorting the economy away from traditional ways of selling), the international community is at long last recognizing that something is wrong ...
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