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12 Nov, 2018 14:50

US kleptocrats & multinationals rip off taxpayers by parking billions offshore – economist to RT

US kleptocrats & multinationals rip off taxpayers by parking billions offshore – economist to RT

Tax havens are used as an instrument to increase the profitability of US multinationals at the expense of the public, according to investigative economist and lawyer James Henry.

He told RT that there’s a tiny group of the world’s elite professionals, banks, law firms, and accounting firms that make a nice living from the global tax haven industry. Multinational companies, and their shareholders to some extent, have benefitted from the fact that they were able to park US profits offshore and avoid paying US corporate income tax.

“The rest of us who have to pay for the taxes that corporations are not paying, are seeing the race to the bottom, we’re seeing many countries around the world slashing corporate taxes and putting more of the costs of the government on ordinary taxpayers,” said Henry, a senior advisor at the Tax Justice Network.

He explained that America’s wealthy kleptocrats, tax-dodgers, and particularly multinational companies have been massively parking money offshore. By 2017, US multinationals have “accumulated about $2.6 trillion offshore while they didn’t have to pay the 35 percent US corporate tax,” the economist said.

Henry points out that the Trump administration has slashed that tax to about 15 percent and now they have eight years to pay it while not even being required to repatriate the money hoarded offshore.

“The new tax bill was a disaster but it did benefit the major companies by allowing them to get their $2.6 trillion back home tax free,” Henry said.

The senior fellow at Yale noted that bringing the tax rate back to less than five percent from the current fifteen, would mean “a $600 – 800 billion gift to the wealthiest companies on the planet.” Ninety percent of corporate shares are owned by the top one percent, he said.

Tax havens are used as an instrument to increase the role of profitability of the US multinationals and the oil companies all use tax havens aggressively to reduce taxation, according to Henry.

In general, since the financial crisis the world has increased its debt levels to an unprecedented proportion. So, the countries tended to borrow to fill the gap. “It would go a long way over time toward chipping away from the massive debt burden that we have.”

READ MORE: America's richest 1% owns 40% of country's wealth - study

The US has actually become a safe haven of its own, Henry said, adding that there’s no beneficial ownership reporting, no country by country reporting. “The US has some of the most aggressive enablers on the planet – accounting firms and law firms that are enabling this activity. A lot of multinationals that have been exploiting the tax haven system are US companies like Apple, Google, and Microsoft.”

While historically the US has always been a proponent of a progressive taxation lately that’s been lagging, he stressed.

For more stories on economy & finance visit RT's business section