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    Henri Pirenne tells us in his Economic and Social History of Medieval Europe (1936) that Medieval cities rose from the runaway serfs who could earn their freedom by staying in the cities for one year.   G.G. Coulton in Medieval Village, Manor and Monastery 1925) describes the horrible life of slavery serfs suffered. And  Pirenne tells of how free men in the cities would wear their tax receipts on their chests as proof they were free men.  How far we have fallen in America when now we are ashamed to pay taxes and some are proud to shirk their duty and responsibilities as citizens not only to pay taxes but to vote and attend town meetings.
   It is no surprise that people do not join unions to defend their rights as workers or to ensure they have safe and healthy workplaces.  It is also no surprise to see Americans support measures that have for 30 years consistently shifted the tax burden from the rich to the working person.  World wide the super rich hide their income from taxation and take every measure to avoid paying their share of even the tiny tax they are at present obligated to pay.

    Mr. Richard Waters reports in Monday's Financial Times, "Tax drives US tech groups to tap debt." that tech companies like many US companies operating abroad are holding large sums off-shore to avoid paying taxes.  This kind of tax avoidance is unfortunately considered by many to be legal but it is just an extension of the everyday variety of some citizens inside the USA who try and hide their income in various ways.  In the last analysis, no matter what the excuse, tax avoidance by some raises the tax burden on all the responsible taxpayers. One only has to recall the arrogance of someone like Leona Helmsley who argued that, "Only the 'little people' pay taxes, to under some of the rationalizations behind these efforts.

    As Waters notes, many companies are using their cash hoards tin stock by-backs, dividends or take-overs.  While all these actions may be good for the stockholders they are no reason for shirking tax responsibilities.
 Vannessa Houlder's article, "Trouble to avoid," Financial Times, 7 February, addresses companies' and private citizens' efforts to avoid taxes by registering in low tax nations or in cantons of Switzerland.  It is clear that countries are in a futile pursuit of an ever sophisticated tax avoidance culture.

   Tax avoidance is part of the economics of the past 20 years that has led to increasing wealth inequality.  Questions of the cost of chasing tax money and of uncovering it are bound up in complex issues of national sovereignty.  Efforts to replace lost business tax and income tax hidden abroad are not cost effective.  But there is an answer.  The Unitary Tax System.

     Conflicts in discovering secret accounts between neighboring nations like Germany and Lichtenstein,  the USA and tax havens like the Cayman Islands and Bermuda, Britain and France and the Netherlands and Ireland as well as internal segments like the cantons of Switzerland and some USA states, are in the news and seem to only produce more conflict.  Low-tax countries not only reduce global tax revenues by acting as legal havens, but encourage continued downward pressure on tax revenues.  A related problem is the poor access to income and expenses within global corporations.  Transfer pricing within corporate units are notoriously unreliable as Mark Granovetter demonstrated from a number of studies in the 1970s and 1980s.  This problem has escalated with globalization of commerce and finance as well as the crisis in audit standards as was at the core of the Enron and Worldcom frauds.  Small companies cannot compete with large international corporations who can hide income and avoid taxes.  There must be an equitable solution.

   This problem was discussed two years ago by Raymond Baker (Financial Times 24 April 2009) regarding the levels of “black money” or illicit financial outflows estimated in India.  Partly, as Mr. Baker argues, trade mispricing is also involved to avoid both tax and earnings to either shareholders or creditors.  An answer to this both problems, the race to the bottom of low-tax countries and tax avoidance as well as the problem of transfer pricing and mispricing, could be an international Unitary Tax System.  California had an effective system in place in the 1980s where corporate taxes were levied based on international sales.  International cooperation in audits could hold down tax cheating and maximize tax collection producing a level playing field for all nations and all corporations big and small.  The system could work like sales tax collection among different counties in California with redistribution back to states from an international body made up of representatives of the participating states.  Sampling studies of bar codes and radio labels of various products could act as cost efficient controls on sales monitored by the individual states to check flows of sales.

Niccolo Caldararo, Ph.D.
Dept of Anthropology
San Francisco State University

Originally posted to niccolo caldararo on Tue Feb 08, 2011 at 01:35 PM PST.

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Comment Preferences

  •  Mortgages, Pensions and Credit Cards . . (1+ / 0-)
    Recommended by:

    The Banks and Financial Services Industries have eliminated the threat of general strikes in our nation.  Our workers are all burdened by the weight of financial obligations and our personal financial liabilities such that a general strike is out of the question.  We cannot simply agree to turn out in America's Tahrir Square and demand a return to some level of economic equalibrium that restores a semblance of parity between finance and labor.  A week into any strike America's workers would face the loss of their homes, their cars, their furnishings, their future.

    America's bankers on the other hand can manipulate the market and Washington's wimps (our government) prints another trillion to give to them to hand out as bonuses to their executives.

    The only way to fight the controlling hand of the market is to fight the market with the tools the market has provided.  Instead of organizing and striking, America's workers and middle class will one day have to organize and bankrupt the already corrupt system that the bankers have used to their advantage.

    One of these days, America's middle class will have to declare a day to bankrupt the corrupt class, and every American will simply take their credit cards and extend their credit to the max - emptying the store shelves of all goods, and emptying the financial entities of all their printed paper.

    The government should have used the trillions to reduce the debts of the American people, rather than to enrich the richest of America's plutocracy.  

    Class war will be fought one day in America.  How it is fought is the question that remains to be seen.

    The reality is that Class War may be occurring right now, and we simply have not recognized that we are the victims.

    •  You are (0+ / 0-)

      Probably right.  Americans today are not the same people who " pledge to each other our lives, our fortunes, and our sacred honor." to the cause of liberty. (even though Rush Limbaugh mocked them in his infamous radio speech arguing that they lost everything for an idea and others became rich, one might imagine that such taunting over our history would have angered some but most thought he was being sincere rather than critical)  It is unfortunate that a people, who, as you say, are burdened with debt and have no chance of freeing themselves from the slavery it impresses on their lives and futures would not burst forth and occupy their town centers and demand liberty at the price of failing to make payments on their impossible debt.  While Egyptians are gambling with their future, eating poorly in tents and the open, Americans would likely be so disoriented by the lack of direction they usually get from Fox News they would simply forget why they were angry.

  •  Heads I win tails you lose. (0+ / 0-)

    It's the Murkan way.

    Stop clapping. Stop screaming. Open your mind. Listen.

    by Benintn on Tue Feb 08, 2011 at 02:30:12 PM PST

  •  Very fox news. (0+ / 0-)

    This kind of tax avoidance is unfortunately considered by many to be legal

    "Some say...."  Let's dispense w/ the bullshit "both sides" stuff.  It's legal.  That's a fact.

    •  ???? (0+ / 0-)

      What "sides" are you talking about?  And what do you think is legal, since the very fact that the Bush administration had to have a law passed to allow for the "repatriation" of several trillion in the second Bush administration meant it was against the law to withhold it without paying taxes on it.  The due tax had to be legally "cleansed" so they could "bring it back home" without paying tax or penalties.

      •  "this kind of tax avoidance" is not "considered" (0+ / 0-)

        legal, it is legal.  Full stop.  Companies don't have to dividend overseas profits just because you say so.

        Bush and Congress passed the dividend holiday because companies were legally keeping profits overseas rather than repatriating.

        Finally, they did pay tax on it, just a lower rate.  You're totally out of your depth here.

        •  You (0+ / 0-)

          are just expressing an opinion.  U.S. tax code on income is quite specific concerning earned income for individuals and corporations doing business abroad.  You should read it.

          •  He (0+ / 0-)

            is expressing accurately the basics of the law.  US tax code on income is quite specific regarding earned income for individuals and corporations doing business abroad.  If you read it, you will find the accounting designation of Permanently Reinvested Earnings (PRE) for which a foreign subsidiary of a US corporation does not pay US taxes.  Reader's digest: unless the company transfers the revenue from the subsidiary to the US base, it pays only the foreign income tax rate.

            •  notso (1+ / 0-)
              Recommended by:

              If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude from income up to $91,500 of your foreign earnings. In addition, you can exclude or deduct certain foreign housing amounts. See Foreign Earned Income Exclusion and Foreign Housing Exclusion and Deduction, later.


              Do a little research before you go all out here.

        •  facts (0+ / 0-)

          You should either cite some source or do some reading, here is a start: you can see that the tax law was changed to allow for "repatriating" overseas earnings if it was used to create new investments, companies did not do this, they broke the law and they are also in violation of other provisions of the law now.

        •  facts (0+ / 0-)

          You should either cite some source or do some reading, here is a start: you can see that the tax law was changed to allow for "repatriating" overseas earnings if it was used to create new investments, companies did not do this, they broke the law and they are also in violation of other provisions of the law now.

  •  I see it as both my duty and my right (1+ / 0-)
    Recommended by:
    johnny wurster

    to keep the money I earn out of the hands of the thieves in government.  To do otherwise is stupid.

  •  Good diary, T & R. (0+ / 0-)

         Sorry you attracted the attention of UIDs 297812 & 295587.

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