Skip to comments.The Tax Man Takes Aim At The World's Wealthy
Posted on 01/06/2013 12:10:23 PM PST by Theoria
As 2013 begins with wealthy Americans in line for bigger tax bills, they're not alone. Tax fairness takes the spotlight worldwide this year, as cash-strapped governments look to impose more of the burden on well-heeled companies, individuals and institutions, and to catch and punish tax cheaters.
This week, as the U.S. Congress averted a plunge off the fiscal precipice, British Prime Minister David Cameron sent a letter to leaders of the Group of Eight countries that make up about half of the world's economic output.
Cameron is incoming president of the G-8 and says corporate tax evasion is on his top 3 list of goals for the year.
"I do believe we all have a common interest in being able to tell our taxpayers who work hard and pay their fair share of taxes that we will make sure others do the same," he wrote in an open letter to the G-8, promoting a coordinated approach to discourage tax evaders.
Multinational corporations have defended themselves by pointing out that they're only taking advantage of international laws that allow them to look for "optimal" tax structures.
Google, for example, avoided about $2 billion in worldwide income taxes in 2011 by shifting $9.8 billion in revenue into a Bermuda shell company, Bloomberg recently reported.
"We did it based on the incentives that the governments offered us," Google Chairman Eric Schmidt told Bloomberg. Of course his company is going to take advantage of big tax savings, he said, "it's called capitalism."
But the global economic crisis has created enormous pressure for new revenue, and governments throughout Europe and other parts of the world are reconsidering sometimes century-old tax laws that haven't kept up with global economic changes. For example, officials in France, the U.K, Italy and Australia are investigating some of the largest multinational corporations' tax avoidance strategies, looking for ways to make them pay more.
European lawmakers howled at the end of last year, after Starbucks disclosed that it generated 398 million euros in sales in Britain in 2011, but paid no corporate tax for the third consecutive year.
When the company pointed out that its tax strategies were all within the law, government officials were not placated. Instead, they escalated their rhetorical indignation, calling them "immoral" business practices. Starbucks backpedaled and subsequently said that for the next two years, it would stop claiming deductions that helped bring its tax bill to zero for the past three years.
The Vatican also took aim at business practices that have exacerbated global conflict. In his New Year's Day address, the pope blamed a "selfish and individualistic mindset, which also finds expression in an unregulated financial capitalism" for tension and conflict caused by growing inequality between rich and poor.
But the issues of taxes also loom over the Holy See. Although the Catholic Church has largely been considered an untouchable institution in some parts of Europe, the economic crisis is changing that. The Vatican's finances and tax obligations are also under international scrutiny.
On Wednesday, Italy's central bank suspended credit and debit card payments and cash withdrawals in Vatican City, reportedly because the Vatican doesn't comply with international money-laundering rules, a Bank of Italy official told Bloomberg. That means thousands of pilgrims and tourists are forced to use cash only in museums and shops until the matter is cleared up.
Some of the subsidy deals struck generations ago between the Catholic church and governments in predominantly Catholic countries are also being reviewed and, in some cases, changed.
At the end of 2012, Italian Prime Minister Mario Monti won EU approval to strip the Catholic Church of its exemption from local taxes on real estate it owns that is used for commercial purposes.
In Spain, officials in one town outside Madrid are poised to send the Catholic Church a property tax bill for the first time. A city councilman told the The Washington Post, "We want to make a statement that the costs of the crisis should be borne equally by every person and institution."
The prospect of having to pay taxes when it never has before has enormous financial implications for the church, which has most of its assets tied up in property and art, has drained its cash reserves for hundreds of millions of dollars in clergy abuse settlements, and is seeing less money being dropped onto collection plates. On top of that, governments are looking to pull state funding.
In Ireland, the government has halved grants to poor families to help them cover the costs of their first Communions. More than half the city councils in Britain cut subsidies for transportation to faith-based schools.
The international focus on taxes is also turning on public officials. In Greece, as Joanna Kakissis tells NPR's Weekend Edition Saturday, investigators have reportedly found evidence confirming that many of the more than 2,200 prominent Greek business people and politicians may have hidden billions in Swiss bank accounts.
This could be explosive, as protestors haven taken to the streets from Athens to small towns, decrying new rounds of austerity measures.
Since the economic crisis began, Greeks have seen salaries and pensions slashed by up to 40 percent, taxes hiked and more than a million people have lost their jobs.
Global financial institutions are not immune. Worldwide, dozens have been charged with helping wealthy Americans evade taxes.
Last week, the oldest bank in Switzerland was in Manhattan federal court to plead guilty to widespread tax evasion by U.S. citizens using its offshore accounts.
Wegelin was founded in 1741 and specialized in private banking and financial-management services for high-wealth individuals. It agreed to pay $57.8 million in fines and restitution and will shut down after it does.
Saved by depedency exemption! LOL!
This isn’t about the wealthy. They are already exempt.
Good one :) In the current edition, maybe they’re hard on Superman because he’s gringo and that he should “share” his flying powers with people who could not fly..
I might point out that socialism is most responsible for the “unfair” way Fat Cats avoid taxes. I also might point out that the easiest way to say you’re gonna reform taxes is to hunt those elusive loopholes everyone professes to hate but no one can eliminate. I’d say they never go away because, ultimately, no one wants them to. Not anyone who matters, anyway. Certainly not socialists, who whether they know it or not are trying to build an entire economy of loopholes, with government deciding instead of the ones who earned and built it where capital ends up.
Anyway, while true particular companies and particular individuals get off not paying their “fair share,” this is highly misleading. We all know the rich bear the burden of unhidden taxes. It’s no damnable secret. You can play tiddlywinks about the apples and oranges of capital gains and income tax, or selectively compare Warren Buffet to his secretary, of all people, who no doubt is rich herself. But you can’t get blood from a stone. You oughtta know you aren’t going to pay off government debt with the wealth of the 1,2,3...%. Firstly, they’re already carrying most of the load. More importantly, they don’t make enough.
You may have noticed I said “unhidden” taxes. Ah, but that leaves the other ones; the ones no one talks about. The ones without which we wouldn’t have gone on this wild ride of world wars and welfare states. Middle class and poor people pay those. It is out of them that the government will be able to limp along after rich tax dodgers have been pauperized.
I would have like that cartoon better if he had thrown Rupert Brand into space.
"The rich alone use imported articles, and on these alone the whole taxes of the General Government are levied (emphasis added). Our revenues liberated by the discharge of the public debt, and its surplus applied to canals, roads, schools, etc., the farmer will see his government supported, his children educated, and the face of his country made a paradise by the contributions of the rich alone, without his being called on to spend a cent from his earnings." --Thomas Jefferson to Thaddeus Kosciusko, 1811.
In fact, note that since most of the delegates who drafted and signed the Constitution were wealthy, George Washington being the Bill Gates of his time, that the delegates were evidently willing to commit themeselves and their rich friends to pay for the federal government to operate.
In Jefferson's day, Justice John Marshall had also clarified that Congress cannot lay taxes in the name of state power issues, issues like healthcare, retirement, public schools, etc., which Congress cannot justify under Section 8 of Article I of the Constitution.
"Congress is not empowered to tax for those purposes which are within the exclusive province of the States." --Justice John Marshall, Gibbons v. Ogden, 1824.So imagine rich federal lawmaker Nancy Pelosi being the first to complain that Congress is taxing and spending way beyond its constitutional Article I, Section 8-limited powers if the rich were to once again uniquely bear the burden for paying all taxes necessary to run the federal government. And I think that the rich would make excellent watch dogs concerning putting a stop to federal taxes that Congress cannot justify under Section 8.
As this comic shows, it’s an ill wind that blows no good. Perhaps if many of the other countries are raising taxes on the rich and corporations, some of them will decide to bring their business/manufacturing back to the US which will improve our economy.
There is one problem, with all that income, Superman would not be able to claim his exemptions!
Of course the get the wealthy only means to take out the producers who earn an income. Those who have their assets tied up in trusts, assets and the like, never get nicked. Our dumbed down star enthrolled culture does not and cannot distinguish between income and wealth. Income allows one to accumulate wealth.
This could be a time we could make the case for a flat tax.
eliminate all the freebees for sitting on your ass and the governmenrt doesn’t need any more money!!!
Every person make their own way in this world or quit taking up space on the planet!!!
In his New Year's Day address, the pope blamed a "selfish and individualistic mindset, which also finds expression in an unregulated financial capitalism
I would challenge his Holiness to point to any country in the world that has unregulated financial capitalism. Any country. The Pope needs to stick to matters of worship and stay out of these economic discussions. He is clearly lacking in knowledge on this subject and does himself and his faith no favors making statements like this.
People doing the ‘flying’, that Superman won’t do?
The tax rate on Mars is zero.
You mean there’s hope?
What is wrong with these writers?
The wealthy are not being taxed. Those with high incomes are being taxed.
Wealth is not income. Journalism students really should learn the difference.
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