Wednesday, September 25, 2019

Mapping the Off-Shore Tax Scam

Nearly 10% of the world’s wealth is hidden in offshore tax havens by a few individuals. Multinational companies hide nearly 40% of their profits in these same tax havens. You can find out how much each country around the world is losing in corporate tax revenue on the Missing Profits interactive map. Losses that you and I have to pay for in our own tax bills.

Researchers from the University of California and the University of Copenhagen have estimated the amount of money hidden in tax havens by multinational companies and how much each country loses in tax revenue from this tax avoidance. Countries on the Missing Profits interactive map are colored to show the percentage of tax revenue lost because of money hidden in tax havens.

The United States loses 17% of corporate tax revenue. If you click on a country on a map you can find out in which offshore tax havens the corporate tax revenue loss ends up. The interactive map also shows the locations of these offshore tax havens around the world.

One result of this massive tax avoidance racket by mutational companies is that countries around the world are in a race to the bottom. In order to persuade multinationals not to shift profits to tax havens individual countries have been slashing their corporate tax rates. Between 1985 and 2018, the global
average statutory corporate tax rate has fallen by more than half, from 49% to 24%. In 2018 the United States cut its rate from 35% to 21%. So the corporations have effectively been rewarded for their larceny and the rest of us have to pay even more for the subsequent loss in tax revenue.

In 2015 the leak of the Panama Papers revealed information on 214,488 offshore shell companies created to avoid paying tax. The papers provided an unprecedented insight into how individuals use off-shore tax havens in order to avoid paying tax.

An Esri UK map, the Panama Papers: Mapped, uses scaled circle markers to show the number of companies in each country mentioned in the Panama Papers database. You can click on a country's marker on the map to view the number of clients, beneficiaries, and shareholders mentioned in the papers from the selected country.

One thing that the map clearly reveals is the large role that the three UK Crown dependencies of Jersey, Guernsey and the Isle of Man play in offshore tax evasion.

Brian Kilmartin's map (which I think was the first map of the Panama Papers) is very similar to the Esri UK map. It also uses scaled markers to visualize the number of companies in each country mentioned in the database. The Panama Papers: Where the Money is Hiding map also reveals the number of clients, beneficiaries, and shareholders mentioned in each country.

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