THE MISSING WEALTH OF NATIONS Zucman, Gabriel
The Quarterly journal of economics,
08/2013, Letnik:
128, Številka:
3
Journal Article
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This article shows that official statistics substantially underestimate the net foreign asset positions of rich countries because they fail to capture most of the assets held by households in ...offshore tax havens. Drawing on a unique Swiss data set and exploiting systematic anomalies in countries’ portfolio investment positions, I find that around 8% of the global financial wealth of households is held in tax havens, three-quarters of which goes unrecorded. On the basis of plausible assumptions, accounting for unrecorded assets turns the eurozone, officially the world’s second largest net debtor, into a net creditor. It also reduces the U.S. net debt significantly. The results shed new light on global imbalances and challenge the widespread view that after a decade of poor-to-rich capital flows, external assets are now in poor countries and debts in rich countries. I provide concrete proposals to improve international statistics.
Family firms have been associated with an enhanced propensity for corporate social responsibility (CSR), but does this imply that family firms have a reduced propensity for corporate social ...irresponsibility (CSI)? Drawing on the behavioural agency model (BAM) and socio‐emotional wealth (SEW) perspectives, our study explores the ‘dark side’ of family firm internationalization, by focusing specifically on the use of tax havens. We theorize that decision trade‐offs to internationalize to tax haven locations tend to be tempered by SEW considerations in family firms, which subsequently decreases the propensity of family firms to engage in this form of CSI, when compared to non‐family firms. We explore how family firm heterogeneity, such as relationships with tax advisors and generational involvement in the family business, influence their propensity for tax haven internationalization. Our analysis examines 1,024 US family and non‐family firms between 2010 and 2018, and confirms the effects of SEW and family firm heterogeneity on tax haven internationalization.
ABSTRACT We investigate the relation between tax avoidance and tax uncertainty, where tax uncertainty is the amount of unrecognized tax benefits recorded over the same time period as the tax ...avoidance. On average, we find that tax avoiders, i.e., firms with relatively low cash effective tax rates, bear significantly greater tax uncertainty than firms that have higher cash effective tax rates. We find that the relation between tax avoidance and tax uncertainty is stronger for firms with frequent patent filings and tax haven subsidiaries, proxies for intangible-related transfer pricing strategies. The findings have implications for several puzzling results in the literature.
Both academic research and public policy debate around tax havens and offshore finance typically suffer from a lack of definitional consistency. Unsurprisingly then, there is little agreement about ...which jurisdictions ought to be considered as tax havens-or which policy measures would result in their not being so considered. In this article we explore and make operational an alternative concept, that of a secrecy jurisdiction and present the findings of the resulting Financial Secrecy Index (FSI). The FSI ranks countries and jurisdictions according to their contribution to opacity in global financial flows, revealing a quite different geography of financial secrecy from the image of small island tax havens that may still dominate popular perceptions and some of the literature on offshore finance. Some major (secrecy-supplying) economies now come into focus. Instead of a binary division between tax havens and others, the results show a secrecy spectrum, on which all jurisdictions can be situated, and that adjustment for the scale of business is necessary in order to compare impact propensity. This approach has the potential to support more precise and granular research findings and policy recommendations.
Despite the recent attention in the media and focus in the academic literature on tax havens and tax mitigation strategies, we know very little about how the use of tax havens relates to a firm’s ...internationalisation strategy. In this paper, we develop a conceptual model that explains how FDI into tax havens relates to the standard FDI motives identified in the literature. We subsequently use a novel dataset that allows us to empirically investigate how these motives impact upon tax haven FDI in the South Korean context, which has experienced very rapid economic development over the last few decades and is now considered an advanced economy. We find that tax haven FDI is strongly linked to market-seeking and efficiency-seeking FDI, whereas its link with resources-seeking FDI is only found with respect to the most secretive tax haven locations. Furthermore, we find no relationship between technology seeking FDI and tax haven use. We argue that as tax haven use increases over time, the economic proceeds of outward FDI leak out and remain offshore.
Using a unique sample of 171 listed firms in the Caribbean region, this paper explores the influence of post-entry ownership of foreign MNEs on the board composition of subsidiaries. Our findings ...reveal higher ownership is a means of enhancing the security of property rights while simultaneously creating a liability of foreignness. This causes subsidiaries to externally contract for resources, leading to the hiring of more lawyers and fewer accountants. The opposite is true for progressively lower levels of foreign MNE ownership. Firms' adoption of shareholder rights governance amplifies these findings, while state formal institutional quality reverses them.
En este artículo reflexivo, se examina el fenómeno de la evasión fiscal, destacando el uso cada vez más sofisticado de estrategias por parte de quienes buscan evadir impuestos y defraudar al Estado. ...Su objetivo es analizar cómo estas prácticas socavan el contrato social al obstaculizar la capacidad estatal de proveer adecuadamente bienes y servicios públicos, redistribuir el ingreso y estabilizar la economía. Para lograrlo, se parte de un análisis documental sobre el contrato social, la obligación tributaria, la evasión fiscal y los paraísos fiscales, lo cual conduce a la conclusión de que la evasión fiscal ha evolucionado hacia una industria transnacional que concentra la riqueza y genera altos niveles de desigualdad y pobreza. De acuerdo con este contexto, resulta preocupante que la evasión fiscal se haya convertido en una actividad altamente protegida y difícil de combatir, desafiando la autoridad y la fuerza de la ley. Por tanto, es indispensable implementar medidas más efectivas y sólidas para abordar este problema y garantizar un sistema fiscal más justo y equitativo. La contribución de esta reflexión es la caracterización de las conductas evasoras en relación con el contrato social y la forma de contrarrestarlas.
KNOCKING ON TAX HAVEN’S DOOR Davies, Ronald B.; Martin, Julien; Parenti, Mathieu ...
The review of economics and statistics,
03/2018, Letnik:
100, Številka:
1
Journal Article
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This paper analyzes the transfer pricing of multinational firms. Intrafirm prices may systematically deviate from arm’s-length prices for two motives: pricing to market and tax avoidance. Using ...French firm-level data on arm’s-length and intrafirm export prices, we find that the sensitivity of intrafirm prices to foreign taxes is reinforced once we control for pricing-to-market determinants. Most important, we find no evidence of tax avoidance if we disregard tax haven destinations. Tax avoidance through transfer pricing is economically sizable. The bulk of this loss is driven by the exports of 450 firms to ten tax havens.
We study the short-term effect of the first global multilateral standard for the automatic exchange of information (AEOI), the so-called Common Reporting Standard (CRS), on cross-border tax evasion. ...Employing newly available bilateral data on cross-border deposits, we find that the CRS induced a reduction of 11.5% in cross-border deposits parked in tax havens. However, despite the 4000 bilateral information exchange relations created under the CRS, deposit relocation is still an option for secrecy-seeker. We find that the United States, which did not commit to the CRS, emerges as an attractive location for cross-border deposits.
•Increasing the information exchange between countries represents a key policy tool to fight cross-border tax evasion•We study the short-term effect of the Common Reporting Standard (CRS)•The CRS is the first global multilateral standard for the automatic exchange of information.•We show a drop in cross-border deposits held through traditional tax havens after the passage of the CRS laws•We document an increase of cross-border deposits held in the United States around the time when the CRS took effect
In this paper, we investigate the use of intellectual property (IP) in multinationals’ tax-avoidance strategies. Income arising from intangible property is generally taxed in the location in which ...such income is received. Many multinationals (MNCs) therefore use tax havens as a base for IP ownership. We leverage a universe of global patent applications and transactions, combined with financial and ownership information, to investigate whether firms locate their patents in tax havens. We find evidence of disproportionate use of havens for both new patent applications and purchase of existing patents. Tax havens such as the Cayman Islands and Liechtenstein have substantially more patents per inhabitant than the largest patenting nations, such as China and the United States. Some 5% of patents in the European markets are held in tax havens, and 30% of global cross-border patent transactions within MNCs have buyers located in tax havens. MNCs that meet the size threshold requirements for the proposed Global Minimum Tax are particularly active in developing patents: they constitute 2.6% of affiliates but are responsible for 42% of all patent applications and 45% of tax haven ones. The Global Minimum Tax could therefore have an important impact on incentives to locate patents in low-tax jurisdictions.
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