Oligopolies and monopolies are very important ways of obtaining income without providing a productive service. They produce goods, a productive service. However, they receive additional income by raising prices, and their oligopoly/monopoly profits are distinguished by economists from normal profits and other expenses, which are the returns to productive activity. There are other harmful aspects to concentration and large firms as well, including restriction of innovation, using patents to defend market position, non-compete requirements for their employees, and substantial political power. Also see Obtaining income from the government as both are often involved. Tax havens are another way in which taxes can be minimized and income from corruption can be laundered.
Who killed the Knapp family?Nicholas Kristof and Sheryl WuDunnNew York Times January 9, 2020 Across America, working-class people — including many of our friends — are dying of despair. And we’re still blaming the wrong people.
Corporate tax avoidance in the first year of the Trump tax lawInstitute of Taxation and Economic Policy December 16, 2019 When drafting the tax law, lawmakers could have eliminated special breaks and loopholes in the corporate tax to offset the cost of reducing the statutory rate. Instead, the new law introduced many new breaks and loopholes, though it eliminated some old ones. The unsurprising result: Profitable American corporations in 2018 collectively paid an average effective federal income tax rate of 11.3 percent on their 2018 income, barely more than half the 21 percent statutory tax rate.
Tackling tax havensNicholas ShaxsonFinance and Development September 2019 Tax havens collectively cost governments between $500 billion and $600 billion a year in lost corporate tax revenue … through legal and not-so-legal means. Of that lost revenue, low-income economies account for some $200 billion—a larger hit as a percentage of GDP than advanced economies and more than the $150 billion or so they receive each year in foreign development assistance. American Fortune 500 companies alone held an estimated $2.6 trillion offshore in 2017, though a small portion of that has been repatriated following US tax reforms in 2018. And individuals have stashed $8.7 trillion in tax havens.
The rise of phantom investmentsJannick Damgaard, Thomas Elkjaer, and Niels JohannesenInternational Monetary Fund September 2019 Some worthwhile and interesting (even astounding) points in this article including:
Luxembourg has as much Foreign Direct Investment (FDI) as the United States, and more than China.
In practice, FDI is defined as cross-border financial investments between firms belonging to the same multinational group, and much of it is phantom in nature—investments that pass through empty corporate shells.
Total world FDI is $40 trillion. Phantom investments are $15 trillion or 30 percent of FDI, a percentage which has increased in recent years in spite of efforts to crack down on tax avoidance.
A few well-known tax havens host the vast majority of the world’s phantom FDI. Luxembourg and the Netherlands host nearly half. And adding Hong Kong SAR, the British Virgin Islands, Bermuda, Singapore, the Cayman Islands, Switzerland, Ireland, and Mauritius to the list, these 10 economies host more than 85 percent of all phantom investments.
The firms, individuals and others who set up these empty corporate shells abroad receive substantial investments from such entities, with averages across all income groups exceeding 25 percent of total FDI.
Corporate Tax Haven Index 2019 Tax Justice Network May 28, 2019 The Corporate Tax Haven Index ranks the world’s most important tax havens for multinational corporations, according to how aggressively and how extensively each jurisdiction contributes to helping the world’s multinational enterprises escape paying tax, and erodes the tax revenues of other countries around the world. It also indicates how much each place contributes to a global ”race to the bottom” on corporate taxes. The top three tax havens were the British Virgin Islands, Bermuda and the Cayman Islands, which are either a British overseas territory or crown dependency. If Britain’s network were assessed together, it would be at the top.