Data Estel·lar copipeganti Dijous 20211111
The Missing Profits of Nations
Thomas Tørsløv (University of Copenhagen)
Ludvig Wier (UC Berkeley)
Gabriel Zucman (UC Berkeley and NBER)
20200422
TAX HAVEN = PARAÍSO FISCAL. "such as Ireland, Luxembourg, the Netherlands, and Switzerland".
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This source covers all OECD countries (which includes prominent corporate tax havens: Ireland, Luxembourg, Netherlands, Belgium, and Switzerland) and a number of large developing non-OECD countries (Brazil, China, Colombia, Costa Rica, India, Russia, and South Africa). We extend the OECD database to non-OECD tax havens (such as Singapore, Hong Kong, and Puerto Rico) by manually collecting the official national accounts published by tax havens’ statistical institutes and central banks. We include all the tax havens listed by Hines and Rice (1994) in our database
Abstract
By exploiting new macroeconomic data known as foreign affiliates statistics, we show
that affiliates of foreign multinational firms are an order of magnitude more profitable than
local firms in low-tax countries. By contrast, affiliates of foreign multinationals are less
profitable than local firms in high-tax countries. Leveraging this differential profitability,
we estimate that close to 40% of multinational profits are shifted to tax havens globally.
We analyze how the location of corporate profits would change if all countries adopted the
same effective corporate tax rate, keeping global profits and investment constant. Profits
would increase by about 15% in high-tax European Union countries, 10% in the United
States, while they would fall by 60% in today’s tax havens.
1 Introduction
Perhaps the most striking development in tax policy throughout the world over the last few
decades has been the decline in corporate income tax rates. Between 1985 and 2018, the global
average statutory corporate tax rate has fallen by about half, from 49% to 24%. In 2018, the
United States cut its rate from 35% to 21%.
One reason for this decline is international tax competition. By cutting their tax rates,
countries can attract capital and profits from abroad.
(...) How do tax havens manage to collect so much tax revenue? As shown by the bottom panel
of Figure 10, most of their revenue derive from taxes collected on foreign firms. With source
taxation [fuentes tributarias] and no international coordination, tax havens can generate sizable revenue by taxing the huge foreign profits they attract at low but positive rates. The havens that collect the largest amount of revenue appear to be those that impose the lowest tax rate on foreign profits: the
revenue-maximizing tax rate appears to be very low, less than 5%. The low revenue-maximizing
rate of tax havens can explain the rise of the supply of tax avoidance schemes documented in
the literature—such a favorable tax rulings granted to specific multinationals—and in turn the
rise of profit shifting [traslado de beneficios] since the 1980s.(...)
Copio la conclusión:
For wages to rise, factors of production that complement labor need to increase, which can happen fast if tangible capital flows from abroad, less so if it is mostly paper profits that move across borders. Second, profit shifting raises challenges in a number of policy areas. It reduces the effective rates paid by multinationals compared to local firms, which could adversely affect competition. It reduces the taxes paid by the wealthy—as ownership of these firms is concentrated—which might call for offsetting changes in individual income taxation, or changes in the way multinational companies are taxed.
We stress that our estimates of the amount of profits shifted by multinationals globally is conservative. Our investigation has uncovered statistical gaps that limit our ability to monitor global economic activity and constrain tax enforcement. Statistical improvements are necessary. To solve the asymmetries in bilateral foreign affiliates and direct investment statistics (in particular between the United States and European tax havens), national statistical authorities need to be authorized to exchange micro-data. The foreign affiliates statistics that we exploited in this paper need to be compiled by more countries and expanded to include more information, such as interest payments, corporate income taxes paid, and capital stocks (as the United States, for example, already does). A number of Caribbean tax havens do not currently publish comprehensive enough national accounts. Last and maybe most importantly, many countries— including the United States and a number of tax havens—could improve their public corporate registries so that all firms are included and profit information is made publicly available at the subsidiary level. Altogether, these improvements would significantly improve our ability to study globalization and its distributional effects.
Our analysis has focused on how tax competition redistributes tax bases across countries.
In future research, it would be good to introduce the inequality dimension in the analysis, i.e., to quantify how much the various income and wealth groups in each country have gained or lost from tax competition. According to our estimates, about half of the globally shifted profits accrue to the shareholders of U.S. multinationals (a majority of which, but not all, are Americans). Because equity ownership is concentrated (see e.g., Saez and Zucman, 2016, for evidence on equity wealth concentration in the United States), profit shifting tends, everything else equal, to reduce the effective tax rate of the wealthy, which may contribute to increasing inequality. A quantitative analysis of these redistributive effects across income and wealth groups would make it possible to make progress towards a full-fledged macro-distributional analysis of globalization. This raises major conceptual and empirical challenges for future research.
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