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1/ THREAD: The Biden administration is trying to tackle corporate profit shifting -- the way US multinationals avoid taxes by pushing their profits into offshore havens. I thought it would be useful to post some pieces that show how we got here:
2/ Back in 2003, Reed College economist @kclausing, (now high up in the Biden Treasury Dept.), examined international trade data and found much evidence of tax-motivated profit shifting offshore: https://www.sciencedirect.com/science/article/abs/pii/S0047272702000154?via%3Dihub">https://www.sciencedirect.com/science/a...
3/ Economist @M_SullivanTax dug through SEC filings for dozens of drug companies, Here he found Pfizer had not reported a dollar in US profit to investors for five years (but nearly $70 billion abroad) keeping its taxes low: http://www.taxhistory.org/www/features.nsf/Articles/8A8A34FCBD7C3C3F85257BA200497696?OpenDocument">https://www.taxhistory.org/www/featu...
4/ In 2010, I discovered that Google avoided billions in taxes using the “Double Irish” and “Dutch Sandwich,” attributing profits to a Bermuda mailbox, and reporting a 2.4% tax rate abroad: https://www.bloomberg.com/news/articles/2010-10-21/google-2-4-rate-shows-how-60-billion-u-s-revenue-lost-to-tax-loopholes">https://www.bloomberg.com/news/arti...
5/ In 2012, @tombergin_News found Starbucks had generated billions in revenue in the UK, but consistently told UK tax authorities that it never turned a profit and thus owed no income taxes: https://www.reuters.com/article/us-britain-starbucks-tax/special-report-how-starbucks-avoids-uk-taxes-idINBRE89E0EX20121015">https://www.reuters.com/article/u...
6/ In 2013, the @OECD announced a project aimed at offshore profit shifting. Until then, it had been a part of the problem, plagued by a revolving door with the law firms advising companies on these very practices: https://www.bloomberg.com/news/articles/2013-03-18/oecd-enables-companies-to-avoid-100-billion-in-taxes">https://www.bloomberg.com/news/arti...
7/ For years, Ireland was key to all of this. Here’s a piece on the Irish accountant behind the tax shelters used by Google, Linkedin, Facebook, and others: https://www.bloomberg.com/news/articles/2013-10-28/man-making-ireland-tax-avoidance-hub-globally-proves-local-hero">https://www.bloomberg.com/news/arti...
8/ The Netherlands is also key, helping numerous companies dodge taxes, including Yahoo and Dell: https://www.bloomberg.com/news/articles/2013-01-23/yahoo-dell-swell-netherlands-13-trillion-tax-haven">https://www.bloomberg.com/news/arti...
9/ In 2014, @ICIJ broke #LuxLeaks -- looking at how Luxembourg enabled companies like Pepsi and IKEA to avoid taxes around the world: https://www.icij.org/investigations/luxembourg-leaks/your-head-spinning-5-tips-understand-lux-leaks-files/">https://www.icij.org/investiga...
10/ Here is a piece by @zachmider on inversions -- US companies claiming they are really based overseas -- possibly the most entertaining tax story ever written (edited by @DanLGolden) https://www.bloomberg.com/news/features/2014-12-18/i-hear-america-singing-never-pay-taxes-the-inversion-operetta">https://www.bloomberg.com/news/feat...
11/ In 2014, @gabriel_zucman discovered US companies booked 20% of their profits in a handful of tax havens: https://gabriel-zucman.eu/files/Zucman2014JEP.pdf">https://gabriel-zucman.eu/files/Zuc... They now claim the majority of their overseas profits were earned in havens: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3655850">https://papers.ssrn.com/sol3/pape...
12/ The great @rbrooks45 of @privateeyenews has written so much in this area. Here’s his book: https://oneworld-publications.com/the-great-tax-robbery.html">https://oneworld-publications.com/the-great...
13/ In 2017, @sbowers00 of @icij and I wrote about Apple’s latest tax avoidance arrangement, as disclosed in the Paradise Papers: https://www.nytimes.com/2017/11/06/world/apple-taxes-jersey.html">https://www.nytimes.com/2017/11/0...
14/ Before he passed away last year, tax law professor Ed Kleinbard of USC wrote several influential papers, and coined the term “stateless income.” Here is one: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1791783">https://papers.ssrn.com/sol3/pape...
15/ A few days ago, I wrote about Bristol Myers Squibb’s allegedly “abusive” offshore profit shifting arrangements: https://www.nytimes.com/2021/04/01/business/bristol-myers-taxes-irs.html">https://www.nytimes.com/2021/04/0... Or listen: https://www.nytimes.com/2021/04/07/podcasts/the-daily/tax-scheme-bristol-myers-irs-janet-yellen.html?smid=tw-share">https://www.nytimes.com/2021/04/0...
16/ If you have other stories or pieces of research that you think will help add to the understanding of this issue, please add them below.
17/ One important add: many big US companies have moved IP from offshore back into the US after the 2017 TCJA. Theoretically, this means that an offshore minimum tax will raise less than before 2017. So previous estimates, like @KClausing& #39;s $100 billion should be less.
18/ If anyone has seen research on this particular aspect, I& #39;d be eager to read. cc @M_SullivanTax @stevertax
