Tax Justice Network report defends corporation tax

The organization argues that while countries are competing with ever lower taxes to retain or attract multinational corporations, lobbyists and politicians are trying to persuade the public that the corporation tax is a bad, inefficient and unreasonable tax.

“Yet it is one of the most precious of all taxes,” the Tax Justice Network said in a press release.

John Christensen, director of the Tax Justice Network, said “The corporate income tax is one of the best and most direct ways of taxing capital. On current trends the tax will soon disappear, ushering in an era of unaccountable, untaxed plutocracy and towering inequality in all countries.”

The organization’s report calculates that in OECD countries alone, corporate income taxes have added almost US$7.5 trillion since the financial crisis in 2008.

This would equate to nearly half of all OECD public health spending and about double the amount spent on public tertiary education.

At the same time, corporate income tax is particularly important for developing countries, which rely more heavily on it than rich countries, the report notes.

Although corporate profits have soared since the 1970s, the halving of headline tax rates since the 1980s means that countries are capturing an increasingly smaller share, causing “greater inequality, higher taxes for poorer sections of society, distorted markets and rising fears of plutocracy,” the Tax Justice Network said.

Nicholas Shaxson, the main author of the report, said, ”Corporate profits are soaring, as workers lose political battles with the owners of capital; as multinationals shake off pesky regulations; and as public assets are sold off.

“Yet taxpayers are seeing less and less of this bonanza, as corporations increasingly free-ride off public goods, leaving everyone else to pay the taxes they won’t. The result? Inequality rises, whole economies are thrown out of balance, and democracy and prosperity suffer.”

The report also addresses what it calls “common myths” about corporation tax, including whether taxes are too high, whether the legality of tax avoidance legitimizes it, that corporate directors have a fiduciary duty to minimize tax and that the tax falls most heavily on workers.

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