May 20, 2013
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As global capital becomes ever more powerful, giant corporations are
holding governments and citizens up for ransom — eliciting subsidies and
tax breaks from countries concerned about their nation’s
“competitiveness” — while sheltering their profits in the lowest-tax
jurisdictions they can find. Major advanced countries — and their
citizens — need a comprehensive tax agreement that won’t allow global
corporations to get away with this.
Google, Amazon, Starbucks, every other major corporation, and every
big Wall Street bank, are sheltering as much of their U.S. profits
abroad as they can, while telling Washington that lower corporate taxes
are necessary in order to keep the U.S. “competitive.”
Baloney. The fact is, global corporations have no allegiance to any
country; their only objective is to make as much money as possible — and
play off one country against another to keep their taxes down and
subsidies up, thereby shifting more of the tax burden to ordinary people
whose wages are already shrinking because companies are playing workers
off against each other.
I’m in London for a few days, and all the talk here is about how
Goldman Sachs just negotiated a sweetheart deal to settle a tax dispute
with the British government; Google is manipulating its British sales to
pay almost no taxes here by using its low-tax Ireland subsidiary (the
chair of the Parliamentary committee investigating this has just called
the do-no-evil firm “devious, calculating, and unethical”); Amazon has
been found to route its British sales through a subsidiary in low-tax
Luxembourg, and now receives more in subsidies from the British
government than it pays here in taxes; Starbucks’ tax-avoidance strategy
was so blatant British consumers began boycotting the firm until it
reversed course.
Meanwhile, At a time when you’d expect nations to band together to
gain bargaining power against global capital, the opposite is occurring:
Xenophobia is breaking out all over.
Here in Britain, the UK Independence Party — which wants to get out
of the European Union — is rapidly gaining ground, becoming the third
most popular party in the country, according to a new poll for The
Independent on Sunday. Almost one in five people plan to vote for it in
the next general election. Ukip’s overall ratings have risen four points
to 19 per cent in the past month, despite Prime Minister David
Cameron’s efforts to wrest back control of the crucial debate over
Britain’s relationship with the European Union.
Right-wing nationalist parties are gaining ground elsewhere in Europe
as well. In the U.S., not only are Republicans sounding more
nationalistic of late (anti-immigrant, anti-trade), but they continue to
push “states rights” — as states increasingly battle against one
another to give global companies ever larger tax breaks and subsidies.
Nothing could strengthen the hand of global capital more than such breakups.
Robert B. Reich has served in
three national administrations, most recently as secretary of labor
under President Bill Clinton. He also served on President Obama's
transition advisory board. His latest book is Aftershock: The Next
Economy and America's Future. His homepage is
www.robertreich.org.
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