The issue of tax avoidance by corporations is a hot one.
In the US and in the UK, legislators and pundits seeking "tax justice" have
changed the discussion from one of tax breaks that stimulate "jobs and growth"
to one of tax fairness to provide much needed funds for public works and public
commitments in time of economic hardship.
In December 2012, I wrote in the UK publication Accountancy
on the subject of offshore profit shifting by corporations such as Starbucks,
Google, Amazon, and other US multinationals. The UK is mad as hell and not
going to take it anymore. It seems US multinationals move profits out of
the UK via circuitous supply chain routes leaving no profits, no tax
liability and, therefore, no tax revenue there, for all their hoopla here about
Multinationals are under increasing scrutiny
for income shifting and offshoring profits. Francine McKenna reports
US corporations with activities in relatively high tax UK
avoid tax on profits by moving income to tax havens. Loopholes in the US
tax code allow corporations to do this with impunity. Governments continue
to prioritise a 'competitive tax environment for business' in the
hope corporations will convert profits into economic growth and jobs. Tax
justice and a fair spread of the deficit reduction burden have been ignored.
Multinationals headquartered in the US often reduce
income taxes by shifting profits offshore. Profit shifting erodes the corporate
tax base and reduces overall tax revenues. Lower revenues are squeezing
governments all over the world trying to provide services during a prolonged
period of economic uncertainty and high sovereign debt. There are now
significant differences in the tax burden among corporate taxpayers and an
overall unequal burden on all taxpayers in the US and in the UK.
Here's the PDF of that article from the December 2012 issue of Accountancy.
So it was quite a shock for me to learn that, when the
debate landed in the US, HP paid Ernst & Young, probably the preeminent tax
advisor of the Big Four accounting firms at least for US
multinationals, for testimony before the Senate Subcommittee on
Investigations in September.
Maybe it doesn't seem strange to you to see $2 million in
"Other" fees to the auditor show up on the HP proxy. Maybe you weren't aware
Ernst & Young is already being investigated by the SEC for independence
violations related to tax lobbying. According to Reuters, Ernst & Young provided tax
lobbying services to audit clients.
Read this article in its entirety at the re: The Auditors, a blog
by Francine McKenna.
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