Monday, February 18, 2013

On Corporate Propaganda and Tax Avoidance

It is the fashion among our corporate overlords and their rabid right-wing courtesans to utter a trite phrase that, because it is repeated so frequently, is taken as truth by many: We don't have a revenue problem, we have a spending problem. Like the magician who relies upon misdirection to perform the seemingly miraculous, the corporate cabal purports to prove, through both its rhetoric and 'studies' done by its think tanks (think The Fraser Institute in Canada, The Cato Institute in the U.S. as examples), that taxes are 'job killers' and that the key to robust economies and solid employment numbers is low taxation.

Of course, the falsity of such assertions has been amply demonstrated, most recently by Bank of Canada Governor Mark Carney, who has weighed in on more than one occasion about the abysmal rate of business investment in new machinery and equipment — considered vital to boosting growth, creating jobs and making the economy perform more efficiently. This sad state despite the fact that Canada has one of the lowest corporate tax regimes in the world.

While there will always be the true believers who subscribe to the myth of the efficacy of marketplace discipline and an ultra-low tax regime, I suspect more and more are starting to realize that the corporate agenda has nothing to do with the betterment of society or the support of democracy, and everything to do with its own self-aggrandizement. As reported last week in The Toronto Star, The OECD (Organization for Economic Cooperation and Development), consisting of 34 countries, issued a report condemning the practice of corporation, including giants such as Google, who are shifting profits to places where they pay little or no tax, places such as the Cayman Islands, Bermuda, and Barbados.

As the report points out, not only is this costing the countries in which these corporations do business billions of dollars in lost revenue, it is also encouraging a perception that the domestic and international rules on the taxation of cross-border profits are now broken and that taxes are only paid by the naive, and if nothing is done about the situation ordinary taxpayers might refuse to pay their share of taxes on the grounds that the system is unfair.

So there you have it: corporations with a patent disdain for the countries who make their businesses both possible and viable, without conscience or concern for the massive damage their schemes do to the social and economic fabric of those countries, beholden only to their own bottom lines and their shareholders.

If such misbehaviour is not an indictment of unfettered capitalism, then I don't know what is.

6 comments:

  1. The democracy we have today is still incomplete, and perhaps will remain that way, until its control can taken away, for good, from those who would be kings. Their economy, the kings economy if you will, like the kings politics before, and religion at present, needs to be fully democratizied.

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    1. As a matter of fact, Anon, the editorial in today's print edition of The Toronto Star quotes the secretary-general of the OECD, Angel Gurris, as saying that the issue of tax avoidance is a threat to the very survival of democracy: "If big corporations fail to pay tax and leave it to small and medium enterprises and income groups, it will undermine democracy.

      Of course, expect the corporations to care not a whit about that warning.

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  2. Great post as always Lorne. Here is something you may find interesting The Great Tax-Cut Experiment

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    1. Thanks, Kev. I'll check it out right away.

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  3. Like a good magician, the corporate elite knows how to create a distraction to make the profits disappear from the places where they are made, Lorne.

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    1. let's hope that people start watching their 'disappearing acts' a little more closely, Owen.

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