Multinational Tax Evation: Waiting for Godot: tackling multinationals’ tax avoidance – by Francesco Saraceno and Tommaso Faccio

The Netherlands’ insistence that everyone ‘go Dutch’ on mushrooming coronavirus deficits in the European Union has (given its complicity) revived the debate on tax havens within the EU. In an ideal world, action on joint debt issuance should go hand in hand with tax harmonisation and brakes on fiscal dumping.

But, given the current standstill in Europe, it is more likely that national solutions to avoid tax-base erosion will be sought, at least in the near future. Enforcing transparency and leveraging on company reputations could be enacted more effectively than the bans and regulations currently considered.

Note EU Digest:  The Netherlands Government of  Mark Rutte is one of the major EU culprits in facilitating these Multi- National Corporations (Mainly US companies) to dodge paying their local country taxes, by registering them as "special status" Dutch corporations.

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Waiting for Godot: tackling multinationals’ tax avoidance – Francesco Saraceno and Tommaso Faccio

Eurozone eases restrictions on Spain, France and the Netherlands

Holland will be given an extra year to reduce its deficit to 3%, while France and Spain will be given an extra two years. Italy will also be granted absolution from ‘intensive fiscal monitoring’ – despite a decision by its new prime minister to reverse a series of tax increases brought in by his predecessor.

But the EC is adamant it isn’t entirely abandoning is hard line on austerity: the report will criticize ‘several governments’ for their inability to take the necessary steps to bring about fiscal reform, including France, Spain, Belgium and even the UK – although its position outside the eurozone means we will avoid the lion’s share of the EC’s wrath.

Some economies could even face sanctions under new ‘macroeconomic imbalances’ rules granted to the EC earlier this year, which give it the power to override governments and impose its own economic reforms. If they don’t co-operate, it will hand them a substantial fine instead. Slovenia could be the first country to come under the EC’s spotlight – although there’s a good chance it will get off with a warning.

Needless to say, European markets have reacted with all the enthusiasm of a Frenchman at a British chippie. The FTSE 100 has dropped by 1.13%, while Germany’s Dax is down 0.97% and the French Cac is down 1.01%.

That probably hasn’t been helped by a series of depressing International growth forecasts. The International Monetary Fund kicked things off this morning by cutting its Chinese growth forecast from 8% to 7.75% - after which the OECD trimmed its forecast for global growth to 3.1% for this year and 4% next year – down from its November forecasts 

Read more: Eurozone eases restrictions on Spain, France and the Netherlands

The Netherlands: There's a gaping hole in the Mark Rutte national budget

Very bad news for the Netherlands Government of Mark Rutte and his PVV ( Geert Wilders) supporters - there's a gaping hole in the budget and how Rutte will fix it remains a mystery.

€ 9,000,000,000 or €15,000,000,000? the NRC newspaper heads an analysis of macro economic advisory agency CPB’s gloomy budgetary forecast. The government will have to find €9b if the Netherlands is going to conform to the 3 percent budget deficit rule imposed by Brussels. The paper writes that the amount may well climb to €15b because of the costs involved in cutting back.

This may well spell trouble for the Rutte cabinet, writes the paper. The prime minister needs political space in order to keep Wilders on his side. And so the Netherlands, instead of demanding that other European countries to watch their budgets, will have to go to Brussels themselves to beg, cap in hand: ‘Please help us, just this once, we are  not able to meet the new European rules?’

A €15b cutback would mean more expensive health care, a zero increase of civil servants salaries and benefits and that still wouldn’t cover it, the NRC writes.

EU-Digest

No one watches out for taxpayers - by Christine P. Ries

Proposals for tax reform are sweeping the US and Europe. In the US top down and bottom up, tax reform is one of the few issues that could win bipartisan support in the Congress. A growing list of nations and states are pursuing reform by cutting spending and trying to grow their way out of their deficit dilemmas — cut government spending to reduce the draw of resources out of the private sector and restructure the way you tax in order to "incentivize" the growth of existing business and attraction or creation of new businesses.

The US in particular is in this fix because of their deficits. Special-interest groups have captured both political parties; the system in Washington ( and in some cases Europe) rewards those who trade in “special interests.”

U.S. corporate income tax rates are highest in the world after decades of excess spending and raising taxes in attempts to reduce deficits by raising tax rates, especially on corporations. Germany (30 percent), Taiwan (17 percent) and South Korea (25 percent) have already led the way. When Japan cuts its rate this year, the U.S. moves to the number one spot (39.2 percent, combined state and federal.)

In the decade leading to 2007, the 10 states with the lowest corporate income tax rates (2.8 percent on average) saw state personal income grow by 82 percent. That’s against 58 percent for the 10 highest taxing states.

Voting with their feet, Americans looking for jobs and opportunity move to the low tax rate states.
Right now no one is watching out for the most special interest group of all — the taxpayer. In America politicians bring home the bacon while the deficit soars.

For more: No one watches out for taxpayers | ajc.com