How Corporations and the Wealthy Avoid Taxes (and How to Stop Them)
- 6 years ago
How Corporations and the Wealthy Avoid Taxes (and How to Stop Them)
Google Ireland Holdings then created another Irish subsidiary, Google Ireland Limited,
and granted it a license to use the technology now owned by the Irish parent company.
In 2015, $15.5 billion in profits made their way to Google Ireland Holdings in Bermuda even though Google employs only a handful of people there.
Say Google’s parent company Alphabet makes $100 billion in profits globally,
and 50 percent of its sales in the United States (a relatively similar scenario to the first quarter of this year, in which that figure was 48 percent).
According to the latest available figures, 63 percent of all the profits made outside of the United States by American multinationals
are now reported in six low- or zero-tax countries: the Netherlands, Bermuda, Luxembourg, Ireland, Singapore and Switzerland.
By GABRIEL ZUCMAN
The United States loses, according to my estimates, close to $70 billion a year in tax revenue due to the shifting of corporate profits to tax havens.
By paying for fictitious consulting, Michael fraudulently reduces the taxable profits
of Michael & Company, and thus the amount of corporate income tax he pays.
Finally, Michael & Company buys fictitious services from the Cayman shell company (“consulting,” for example) ...
… and, to pay for these services, wires money to the shell company’s Cyprus account.
Google Ireland Holdings then created another Irish subsidiary, Google Ireland Limited,
and granted it a license to use the technology now owned by the Irish parent company.
In 2015, $15.5 billion in profits made their way to Google Ireland Holdings in Bermuda even though Google employs only a handful of people there.
Say Google’s parent company Alphabet makes $100 billion in profits globally,
and 50 percent of its sales in the United States (a relatively similar scenario to the first quarter of this year, in which that figure was 48 percent).
According to the latest available figures, 63 percent of all the profits made outside of the United States by American multinationals
are now reported in six low- or zero-tax countries: the Netherlands, Bermuda, Luxembourg, Ireland, Singapore and Switzerland.
By GABRIEL ZUCMAN
The United States loses, according to my estimates, close to $70 billion a year in tax revenue due to the shifting of corporate profits to tax havens.
By paying for fictitious consulting, Michael fraudulently reduces the taxable profits
of Michael & Company, and thus the amount of corporate income tax he pays.
Finally, Michael & Company buys fictitious services from the Cayman shell company (“consulting,” for example) ...
… and, to pay for these services, wires money to the shell company’s Cyprus account.