Like a lot of slackers out there, I JUST paid my taxes this weekend (3 days before the deadline, for those of you outside the US, or for those of you engaged in an adrenaline-pumping game of chicken with the IRS). While I’m all for paying my fair share, it’s nevertheless a hard pill to swallow when you see in black and white just how much money you fork over every year to the government. What a pleasant surprise it was then for me to find out that G.E.’s effective US corporate tax rate was -9% percent from 2008-2013 (yes, that's NEGATIVE). And they’re not alone. Multinational corporations benefit from all sorts of tax loopholes that allow them to whittle down their tax obligations to fractions of what they should be paying and what the average American citizen and business is paying (closer to 35%).
When corporations don’t pay their fair share of taxes it affects all of us. Our governments are robbed of funds which could be spent on health and education, and tax receipts that could go to foreign aid budgets are afraction of what they should be. Honestly, this infuriates me. The largest, richest companies, the ones paying out million-dollar salaries and bonuses, get to pay lower tax rates than the cleaning staff sweeping up after-hours.
Not to mention the fact that domestic companies, in particular small and medium-sized enterprises (SMEs) are held accountable for their fair share of tax, and thus are automatically at an unfair competitive disadvantage relative to their scaled-up peers. This imbalance truly hurts our global economy, as SMEs are the primary engine of job creation globally, and represent the vast majority of employment in developing countries.
Tax cooperation is the best value for money you can get today. Developing countries in total lose $100 billion USD a year to corporate tax dodging, money that could be spent on infrastructure such as school and hospitals that are vital in lifting communities out of extreme poverty.
The bottom line is the goal is to increase the tax base to fund development, but that shouldn't mean increasing the tax rate because that hurts consumption, employment, and business. Basically, the world just need multinationals to actually pay their taxes!
The unfortunate reality is that the world’s wealthiest countries and companies are the ones that influence the tax rules. Out of the top 100 global economies, 51 are companies. It’s no surprise that these parties have molded the global tax system into a giant loophole that favors them over the rest, in particular it disadvantages the poorest of the poor.
Which is why global citizens are calling for a World Tax Summit to be part of the negotiations at the Financing for Development meeting in Addis Ababa to ensure that all countries have an equal say in creating a fair global tax system. Go to the TAKE ACTION NOW and sign the petition to call on finance ministers to attend a World Tax Summit at the UN Financing for Development conference. It’s time to make tax fair!