Economics

¿Cómo cobrar impuestos a las elusivas multinacionales?

Feb 13, 2019 Joseph E. Stiglitz

NUEVA YORK – Estos últimos años la globalización ha vuelto a ser blanco de críticas. Algunas tal vez estén erradas, pero hay una muy certera: que ha permitido a grandes multinacionales como Apple, Google y Starbucks eludir el pago de impuestos.

Apple es el mejor ejemplo de elusión fiscal corporativa: tras declarar que unos pocos cientos de empleados en Irlanda eran la fuente real de sus utilidades, llegó a un acuerdo con el gobierno de ese país por el que sólo paga en impuestos un 0,005% de las mismas. Apple, Google, Starbucks y empresas similares se dicen socialmente responsables; pero el primer elemento de la responsabilidad social debería ser pagar la parte de impuestos que a uno le corresponde. Si todos eludieran y evadieran impuestos como estas empresas, la sociedad no podría funcionar, y mucho menos hacer las inversiones públicas que hicieron posible Internet, de la que dependen Apple y Google.

Las corporaciones multinacionales llevan años alentando a los países a competir entre sí por cobrar los impuestos más bajos. La rebaja impositiva promulgada en 2017 por el presidente estadounidense Donald Trump fue la última etapa de esta “carrera a la baja”, y un año después, sus resultados ya son visibles: el estímulo efímero que dio a la economía estadounidense está desapareciendo a toda prisa y dejando tras de sí una montaña de deuda (que el año pasado se incrementó en más de un billón de dólares).

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Joseph E. Stiglitz

Writing for PS since 2001
331 Commentaries

Joseph E. Stiglitz, a Nobel laureate in economics and University Professor at Columbia University, is a former chief economist of the World Bank (1997-2000), chair of the US President’s Council of Economic Advisers, and co-chair of the High-Level Commission on Carbon Prices. He is Co-Chair of the Independent Commission for the Reform of International Corporate Taxation and was lead author of the 1995 IPCC Climate Assessment.

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0 Comments on this paragraph, 28 Comments on this article

Thaomas H Feb 20, 2019

While the proposal would surely help, why should we tax corporations at all? Why not tax the owners with consolidated world-wide profits imputed to shareholders?
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Eduardo L Feb 19, 2019

I do agree with Mr Stiglitz,

These matter are, for a good reason, more and more at our focus. May the trigger has been the Mr Piketty's book Capital in the Twenty-First Century, where he shown that the rich are becoming richer in a pace never seem before. Despite he has been fiercely discredit by a group of economists, he presented a vast research in which it core point is and remain sustainable.
What to say about what we are looking at, for the recent years?
Mr Dani Rodrik's "The Globalization Paradox", later in 2012 advocate that the rules and laws of a single country can, in essence, regulate internal affairs and can do nothing on a globalized world. The old set of international regulations are... old and can't accomplish with the new and inventive ways multinationals doing busines . The world changed, technology allows companies to do things in a far different way. This is natural and it has been all this way, for centuries.
The question is, corporate move itself toward new ways of avoid taxes and growing profit very very faster than the governments in changing the rules.
Nowadays, we are also seeing the growing power of this companies, with stronger lobbies, acting in self interest, to say - growing profits and avoiding taxes - promoting the legislatures to slow moving on change that, or not change at all.
So, if local legislatures are inefficient on change this scenario at home, what to say on collaborate in a agreement among several countries.

But, my thought is, the time is now, (citing Paul Krugman!) revise and update these international rules we must, we should and hopefully we will.
- D. V. Gendre Feb 20, 2019
  
  I do not fear the "power" of companies. They can't rule over me and force me to drink their coffee, use their social media site, use their browser or whatever. At least for now we still live in a free market economy and those companies can not exist without their customers.
  But I do fear the concentration of power that is preached by Stiglitz and his friends into the hands of a few politicians and regulators, because this is an absolute power over me since those morons can legaly use force upon you and me to enforce their regulations! And it's those morons that can decide over weapons of mass destruction and armies. This power is not in the hands of Facebook or Google!
  I'm shocked how many people are in favour of such stupid ideas. But the morons on television do not get tired to tell you that the true men with power are the evil bosses of those multinational companies that can't force you to buy anything from them, whereas indeed the politicians are the one with absolute power, no matter what they say!
  About the lobbying of those "rich" companies": There is always a politician that has to be "bought". So all bashing of lobbyists is a two-sided cooperation of the lobbyist and the politician, which is deliberately concealed. BTW every political party is a lobbyist for those who they represent!
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D. V. Gendre Feb 19, 2019

Hail to the global tyranny!
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Charles Blum Feb 18, 2019

Wouldn't a good first step be for the US to shift a substantial of its tax base away from personal income taxes and onto consumption? Such taxes can be "adjusted" at the border -- applied to imports and rebated on exports. More than 160 countries have done that; the US is the only industrial country holdout. That would end the free ride that multinationals get when importing into the US and level the tax playing field and for the first time create a truly level playing field for international trade4 and investment.
- Janos Nagy Feb 20, 2019
  
  Perfectly correct.
  Hopefully Mr Stiglitz will read this comment.
  Income taxes are distorting the tax components on domestic economic outputs and favoring actually subsidising the imports.
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Julius Klein Feb 18, 2019

Again a misleading paragraph- US tax revenues have INCREASED since US tax reform, the issue is the runaway spending, not the tax cuts per se (of course the writer needed to get the first biased comment in there so why not).
- Patrick Coast Mar 8, 2019
  
  A misleading statistic. Spending has increased in line with inflation and its usual growth rate. Tax revenue growth on the other hand has stalled after tax reform. Revenues have grown, but barely, and by a lot less than would have been expected in the instance there was no tax reform. Of course, this puts more pressure on spending (in the absence of the tax reform being reversed). The next administration will have to sort this out through either increasing taxes or slashing spending, but Trump's time horizon is shorter than that! Really having a fiscal stimulus at this stage of the cycle was beyond crazy and goes against 60-70 years of well established basic economic theory. But that's politics I guess! Reminded of the O'Rourke quote that the Republicans claim that government doesn't work and then get into power and prove it (Bush had a similarly pro-cyclical fiscal policy). Not that the Democrats are great either!
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Douglas Leyendecker Feb 18, 2019

If you are going to blame President Trump for adding $1T to our national debt you need to blame President Obama for adding $9T to our national debt while he was in office. In addition, because President Obama's economic policy was so lacking the Federal Reserve needed to add over $3T to it's balance sheet to keep the economy from going off the rails.

All that debt and QE padded the pocket books of financial investors and speculators, contributing to rising income and wealth inequality. Savers were stripped of their ability to earn a return while speculators were rewarded.

President Trump has inherited an economy now stuck in a Keyensian Trap. Our economic policy has been so bad for so long that we can't operate without adding more and more debt to public balance sheets. That which we inherited from Obama can't be turned around in a short period of time.

I remember when it was "fair" to tax oil companies on their "windfall profits" during the 1980s. Why isn't it fair to do so with today's technology companies? They should at least be paying in something to help alleviate the social costs associated with the numerous jobs they destroy.
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mtcmom222a Loppy Feb 18, 2019

First , Corporations do not pay taxes..they transfer the tax to employees and consumers, regardless of the taxing mechanism, only people pay taxes. Second the last thing any Western government needs is " more revenue", especially taking from the productive private sector to government non productive sector....give Government a 10% increase it will spend 15%..in USA, democrats on social welfare, the republicans on defense welfare...
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jhuynen Feb 17, 2019

Such a move would surely restore some amount of credibility the EU wasted over the last ten years...
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David Hanson Feb 17, 2019

I agree with the main thrust of the article. It would be a good 1st step to see the US and the EU take the joint initiative on this. The multinationals know that this free ride is not going to last forever but they will ride the wave until it hits the beach. Unfortunately I don't think national governments can act as one on this issue as they can't on most issues but ultimately enough of them will have their hands forced as they run out of money to pay for state due to falling tax receipts and social unrest erupts as public services are eroded and ultimately withdrawn, social welfare and care collapses and wages and employment rights are decimated ever further. All to serve the multinationals God of profit before everything.
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Thaomas H Feb 17, 2019

Isn't the basic problem that we should not be trying to "firms'" incomes but their owners' incomes? Not that would not require consolidated world-wide accounts and other controls to avoid finagles, but it wold be the correct starting point.
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Michael Reason Feb 16, 2019

Besides what Stiglitz says about reform of transfer pricing, there is also need to reform the oecd model double tax agreement and how it is implemented.

if not international capital flows will continue to favour the former colonial hard currency multinational headquarter states and their tax haven networks. the minimal tax collected by developing states will not be sufficient to enable development spending required to transition away from fosil fuel and feed and house growing populations.

the oecd model favours the capital investor state over the investee state with only a thin withholding tax on returns from passive investment such as dividends, interest and royalties.

such a model also favours the tax havens which enable trade mark and ip owning subsidiaries to act as though they were investing their own capital and allow multinationals to extract profits in the form of royalties to low tax ip holding subs.

there is even a zero rate of w/h tax on royalties paid between the uk and the Netherlands and zero tax routes for dividends out of the Netherlands. the uk can afford to compete in this tax arbitrage but developing countries cant.

The uk allows inward investment by way of virtually unlimited debt so an investee subsidiary's profits may be extracted by way of interest payments to low tax debt holding "treasury" subsidiaries and zero withholding tax on such approved bonds.

the new green deal might nationalise banks who support tax avoidance.
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Stefano Esposito Feb 15, 2019

The threat of moving to other countries is a key issue here that hinders political action. I don't see how single states can fix this, concerted action is needed, ideally at international level e.g. UN, EU, etc. People say "this is too ambitious", but my question is: do we have example of similar decisions taken, for instance in the WTO, that we can use as an example showing that it is indeed feasible?
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Jan-Pieter van Niekerk Feb 15, 2019

Is it a coincidence that most of these companies are US based or groups with a very significant US presence? Does this issue have anything to do with US tax law (pre- or post Trump reform)? Most EU State Aid challenges also involve US based groups!
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Per Kurowski Feb 14, 2019

“If the goal is genuine inclusiveness, the top priority must be the wellbeing of the more than six billion people living in developing countries and emerging markets.”

Are you suggesting Professor Stiglitz we should, by means of an unconditional universal basic income, share out all these tax revenues to all people in the entire world, or are you suggesting we should leave this task in hands of some expert distributors?
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Sergio BULIAN Feb 14, 2019

I agree with her, but I am increasingly convinced that we are a minority who want it. I think that only a strong economic crisis could change things as happened last century. Greetings
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bernd harzog Feb 14, 2019

Incentives matter. Elasticity applies to tax rates just as it applies to prices. Which means that all other things being equal, economic activity will migrate to where it is taxed the least.

In practice this means that the optimal tax rate on corporations should be zero. Simply tax the incomes of their employees, and the returns paid to their investors (dividends and capital gains). By the way, if the corporate income tax were eliminated you could make the case for treating income from dividends and capital gains the same way that earned income is treated.
- Paul Friesen Feb 15, 2019
  
  But then tax rates on individuals would need to be higher, making rich individuals even more likely to try to shift their incomes to lower tax rate places. We still need international rules to prevent a race to the bottom. Your proposal would not solve the problem.
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James McRitchie Feb 14, 2019

How about drafting a model shareholder proposal? I file about 40 a year, happy to file one or two on this.
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Freedom protocol Feb 14, 2019

Paying Fair Share? What about you?
You got huge amount of government grant and Million dollars of salary from IMF&WB.
And now you talk about Inequality problem
Have you ever donated your own money?
If you truly care about poor, you pay first.
Simple but this is the hypocrisy of Left.
you are an economist but not talking facts.
In US, Top 10% earners already pay 70%.
Half of workers dont even pay taxes.
We do not have VAT (Nordics have 25%)
You want fairness? Yeah simple just cut it.
- Mauricio Aguilar Feb 14, 2019
  
  Ms Protocol,
  First, as you say, it's ridiculous that UN salaries aren't subject to taxation, this should change.
  However, your comment lacks any semblance of logical progression. The article touches on the subject of rightful taxation based on income in order to support infrastructure; donating to the poor is a completely different subject.
  Second, when you say left you aren't very clear, as the origin of this word is meant to oppose monarchy and support revolution. I take it you are meaning something along the lines of Keynesian economics or anarcho-syndicalism. In that sense the article is well aligned with such economic policies, claiming the need for accurate taxation to allow for government spending on infrastructure rather than private companies. The USA hasn't favored "left" policies since the 50s: you don't have healthcare, you don't share ownership with the state, federal development is commissioned to the lowest bidder, etc. Most importantly, corporations shape economic and political development, without liability. A clear proof is the 2008 meltdown and the somewhat weak and delayed response to any future crisis of this nature (see Dodd-Frank act). In this particular case the government borrowed a ton of money to bail banks out without holding anyone accountable, and did not invest towards protecting or employing their own citizens; many lost their homes and livelihood; this could not be further away from "left" policies.
  Third, the USA has a tier based taxing system. And ALL income is taxed, according to its tier. By the way, remember when POTUS declared a negative income to avoid paying taxes for years to come?
  Last, you do have VAT, it's called sales tax and is assigned by region rather than a unified federal percentage as in most developed nations.
  - Freedom protocol Feb 15, 2019
    
    No whatever your latin name is... My comment consists of 100% facts
    if you want credible sources, I will show you. First, Infrastructure?
    You know when that investment went down significantly? :1960's ~ 1970's
    Keynesian was at peak, did not have enough money due to excessive welfare
    and If you study New Public Management, Infrastructure built by government is out of date and inefficient. China made ghost city
    Nowadays it's written in Public Management textbook that Infrastructure is better built by private market with competition such as BLT. Incentives!
    Second, Left means clear when you favor government over free market, material equity over freedom of choice and efficiency.
    Taxes have negative costs of course, when you tax capital, less investment
    or tax income, less saving and consumption.
    True Free market economists did not like Government Bailout of Wall street.
    I agree that was a huge mistake and never again.
    US welfare spending:17% GDP which is average of OECD and enough.
    All income taxed, but think about returns and deductive.
    (https://www.marketwatch.com/story/81-million-americans-wont-pay-any-federal-income-taxes-this-year-heres-why-2018-04-16) "Paying Fair Share?"
    - Oeufs Bruns Feb 17, 2019
      
      Wow. Just, wow.
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Ricardo Oliva Feb 13, 2019

I fully agree with Mr. Stiglitz. Taxes must be paid by all, with a system that places the maximum priority on what's best for the peoples of all countries, and not on maximizing the profits for the top 1%.
Corporations need to be made to pay their fair share of taxes, as their current incentive is to avoid paying them altogether. The current system is broken and normal people that cannot afford to pay the big accounting firms for a ready-made tax evasion scheme are left to pick up the tab for those who don't pay. This translates into a two-tier system that makes fun of any concept of equality with regards to the law. Injustice is followed, sooner or later, by social unrest, violence, and revolution. The bigger the injustice, the quicker the consequences manifest themselves.
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