Latest post on Left Futures

Tax returns of all major companies and super-rich individuals should be published

Progress is being made bit by bit in the fight against tax avoidance/evasion, as revealed today in the decision of the Swiss government to loosen its tight bank secrecy laws so that its banks can under US pressure, which forced one Swiss bank to close, reach settlements with the US regarding their involvement in enabling US citizens avoid/evade tax.

However, these and similar agreements are limited measures which are specific and localised in their effects, and often still hedged around with conditional qualifications. The best weapon to name and shame tax cheats is transparency, and the most widespread and effective means of achieving transparency is by establishing the principle of published tax returns. Nor is this such a radical policy as it may initially sound since UK wills are already public documents and Norway, Finland, and Sweden among others already operate this principle.

Privacy at present acts a cheat’s charter while inequality thrives on secrecy since it’s difficult to contest unknown and unfair pay structures. If extreme privilege is to be challenged, much more information needs to be readily available on a standard basis. If citizens all knew about one another’s tax bills, they might be motivated to fill out their taxes correctly. Disclosure could be an automatic enforcement device.

It has been used for that purpose in several countries over the last century. In the US for example in 1923-4 individual and corporate taxpayers had to make public their tax payments, though not their entire returns. The New York Times revealed on 24 October 1924 that Hohn D. Rockefeller Jr. paid more than $7 million in tax in 1923, while JP Morgan Jr. made a tax payment of $98,600.

As a further development in the US it was required that ‘pink slips’ should be attached to tax returns which would become part of the public record. The slip disclosed a person’s or corporation’s name, address, gross income, amount of deductions, net income and tax liability.

There is certainly strong public pressure for full disclosure by all major companies, the vast majority of which use tax havens. Of the FTSE-100, 98 have a subsidiary in a tax haven. It can certainly be argued that public disclosure of corporate tax returns should enhance financial market efficiency, provide regulators and researchers with important data, and increase tax compliance and pressure for tax reform.

In the US today the pay of top executives at public companies is routinely disclosed in public filings, and since the 1970s presidential candidates have generally released their tax returns. The same process is beginning to happen in the UK, not only in the latest contest for Mayor of London but also in challenges to the Chancellor and the Cabinet over how far they may have benefited from budget tax changes. But instead of being used for isolated political attacks, it should be routine. It would be by far the most effective weapon against tax dodging.

Comments are closed.

© 2023 Left Futures | Powered by WordPress | theme originated from PrimePress by Ravi Varma