Thursday, April 28, 2016

Taxing Times: Panama Papers and Morality

Australian Taxation Office assistant deputy commissioner Michael O'Neill said that while the anti-avoidance powers cannot be used in some cases, there are a range of other powers including transfer pricing laws that it can draw on. He did not say what extra powers the Tax Office could be given to combat tax avoidance, but said these were under discussion with Treasury.

  “The International Consortium of Investigative Journalists will release on May 9, 2016 a searchable database with information on more than 200,000 offshore entities that are part of the Panama Papers investigation. The database will likely be the largest ever release of secret offshore companies and the people behind them. The data comes from the Panamanian law firm Mossack Fonseca, one of the top players in the offshore world, and includes information about companies, trusts, foundations and funds incorporated in 21 tax havens, from Hong Kong to Nevada in the United States. It links to people in more than 200 countries and territories. When the data is released, users will be able to search through the data and visualize the networks around thousands of offshore entities, including, when possible, Mossack Fonseca’s internal records of the company’s true owners. The interactive database will also include information about more than 100,000 additional companies that were part of the 2013 ICIJ Offshore Leaks investigation.

While the database opens up a world that has never been revealed on such a massive scale, the application will not be a “data dump” of the original documents – it will be a careful release of basic corporate information. ICIJ won’t release personal data en masse; the database will not include records of bank accounts and financial transactions, emails and other correspondence, passports and telephone numbers. The selected and limited information is being published in the public interest. Meanwhile ICIJ, the German newspaper Süddeutsche Zeitung which received the leak, and other global media partners, including several new outlets in countries where ICIJ has not been able to report, will continue to investigate and publish stories in the weeks and months to come. The Panama Papers investigation revealed the secret offshore dealings of world leaders and other politicians as well as criminals and celebrities. It exposed the role of big banks in facilitating secrecy and tax evasion and avoidance. And it showed how companies and individuals blacklisted in the U.S. and elsewhere for their links to terrorism, drug trafficking and other crimes were able to do business through offshore jurisdictions…” 
Anti-avoidance powers to hunt multinationals 'ineffective': ATO 

Jane Gravelle (Congressional Research Service) presents Policy Options to Address Corporate Profit Shifting: Carrots or Sticks? at NYU today as part of its Tax Policy Colloquium Series hosted by Daniel Shaviro and Chris Sanchirico

Hong Kong cabinet heavyweight caught up in Panama Papers row agrees on need for more transparency South China Morning Post

 The Taxcast, Edition 52, April 2016 - (YouTube/podcast) Tax Justice Network

The Panama Papers and Tax Morality, by Usman W. Chohan (University of New South Wales)

"In a stinging rebuke to Tax Commissioner Chris Jordan, the Federal Court has denied being in special talks about fast-tracking multinational tax avoidance cases.
A court spokesman said no private discussions about the timing of cases had occurred with the Australian Tax Office, contradicting comments made by Mr Jordan to a parliamentary inquiry. "There is no 'deal' being struck between the Court and the ATO about listing of cases, or any other matter," the spokesman said. "The Court is not, and has not been, in any private discussions with any party, including the ATO, about their cases." Fast tracking Justice Federal Court chides Tax Commissioner

Thin capitalisation and profit alienation were fingered by a UTS study last weekas the primary tools the foreign multinationals used to slash their Australian tax bills Multinational tax avoidance crackdown flagged by ATO

standing cubs links

Thanks to Delaware’s strict corporate secrecy laws, more than 285,000 companies are registered, for tax reasons, at a two-story building in Wilmington—more than any other address in the world. Among them are holding companies belonging toHillary Clinton and Donald Trump.
Alex Tabarrok: "The Number of Publicly Traded Firms Has Halved

He observes that:
In the past twenty years [the] U.S. has lost almost 50% of its publicly traded firms [from 6,797 in 1997 to 3,485 in 2013, AT]. This decline has been so dramatic, that the number of firms these days is lower than it has been in the early 1970s, when the real gross domestic product in the U.S. was one third of what it is today. This phenomenon has been a general pattern that has affected over 90% of U.S. industries.
A rather stunning finding from Grullon, Larkin and Michaely.
The total number of firms has dropped far less than the number of publicly traded firms, so in part this is probably due to laws affecting publicly traded firms in particular such as Sarbanes-Oxley. But there has also been a small drop in the total number of firms (depending on year measured) and concentration ratios have increased which suggests that competition might have fallen. (I wish the authors had looked more closely at the entire size distribution). Have international firms risen to offset the decline of publicly-trade firms? The authors discuss but discount the role of globalization. I don’t see, however, how their findings of small effects on output competition are consistent with big labor market effects. Nevertheless the bottom line is that as concentration rates have increased so have profits, as a recent CEA report also argues.
Is this all the after-effects of the Great Recession? I hope so but the decline in the number of publicly traded firms is also consistent with the research on long-run declining dynamism (including my own research on regulation and dynamism) which shows that startup and reallocation rates have been trending down for thirty years

Chad: Tax Filing: IRS Needs a Comprehensive Customer Service Strategy and Needs to Better Combat Identity Theft Refund Fraud and Protect Taxpayer Data, GAO-16-578T

Specifically, OI investigates misconduct by IRS employees which manifests itself in many ways,” said Timothy Camus, a Deputy Inspector General with TIGTA.
Insider tax ID theft: Those IRS staff transgressions include, among other things, unauthorized access to taxpayer information and the use of that improperly obtained info to commit identity theft.
“Unfortunately, tax refund fraud and identity theft is not limited to unscrupulous individuals operating from outside of the IRS,” Camus told House Ways and Means Oversight Subcommittee members at an April 19 hearing. “There is also an insider threat posed by IRS employees who use their official positions and access to IRS information in furtherance of these schemes.
Camus cited “one of the most significant recent cases” in which an IRS employee stole the tax agency’s information on hundreds of taxpayers, and then used it to try to get between $550,000 and $1.5 million in fraudulent refunds.
That now former-IRS employee was able to successfully steal over $438,000 in fraudulent refunds.
This is a perfect example of why regulating preparers isn’t going to stop fraud. IRS employees are much more heavily regulated than preparers ever will be, and the IRS still can’t keep them from stealing identities.

One more scandal in the European Parliament the unbalanced evolution of homo sapiens 

Tax benefits for top earners cost $11 billion  Surgeons, lawyers and finance managers the main beneficiaries of decision to leave negative gearing
Robert Wood, Startling Report Of IRS Tax Refund Frauds — Including Inside Jobs

Revealed: the tax haven firms cashing in on Scotland's PFI scandal  
 EU to draw up tax haven blacklist  
   Anti-tax evasion measures approved by EU finance ministers  
      EU Finance Ministers Urge Caution on Planned Tax Rules for Multinationals  
         New tax rules for large European funds  
          Australia Senate tax avoidance report missing vital reforms, says Tax Justice Network 
             More countries sign up to anti-corruption code  
UK 1000 wealthiest individuals and families now have a combined fortune of just over £547 billion 
  Don't be fooled by the 'super rich' falling on hard times – inequality in the UK is getting worse
      German finance minister objects to tax transparency proposals  
         Australian state hikes taxes for foreign property buyers  
           Tourist tax introduced to conserve popular Spanish islands  
               The case for a global tax body