G-20 Cracks Down on Corporate Tax Evasion; We Can Too

There are many cynics who believe that things never get better, that the world would never act together to tackle the big problems that faced us all.  Well, those cynics might have some egg on their face today.

The cause is that a few weeks ago the G-20, a group of the world’s richest countries, came to an agreement to start limiting tax avoidance strategies used by large multi-national corporations to escape from paying their societal obligations.  Besides promising to exchange tax information to assess what multinationals were being taxed globally to ensure that everyone was paying what's due, the G-20 also agreed to 15 tax principles proposed by the Organization for Economic Cooperation and Development (OECD).     

Some of these principles include limiting corporations’ ability to move profits between countries where they are earned to where they are taxed, and their ability to disguise these payments between subsidiaries as “royalties” or “internal corporate payments” to skirt tax laws.  Others strictly defining where companies are permanently headquartered for taxation (with “nowhere” not being an option).

While this is still years away from being implemented and would not prevent countries from competing to have lower taxes, it would prevent them from acting as tax havens, enabling corporations to avoid paying taxes anywhere.  Yes, that's happening.

This is a much needed corrective to the hypocritical tendencies among some of our economic elites.  Far too many proclaim the value of “personal responsibility” and “added value” while stripping assets from the country and sending them abroad.  Far too many solemnly declare that “hard work” was the means of their success while they expend extraordinary effort not on production, but on hiring teams of lawyers to game the system in their favor.  What else can you say when huge corporations like GE refer to their tax department as a “profit center” and use lobbying to get rebates, rather than pay taxes.  How else do companies like Google, Amazon, Apple and Starbucks pay less than 2% tax on hundreds of billions in sales, when regular citizens pay far higher rates?

One can only hope that this long overdue action by the G-20 would also spur conservatives to reject all elements of crony capitalism and the corruption and decay it brings. If they want to improve economic growth, this means regulating banks that profit from rigging national and global financial systems and enabling people and corporations to essentially rob the country. It means rejecting the argument that American corporations’ only obligations are to their shareholders, not to their workers or the country at large that helped them become great. IBM did this under CEO Samuel Palmisano to great success.    

It means acknowledging that there are values and principles that exist beyond commerce, and that unadulterated greed conflicts with living a life of integrity, honesty and hard work.

Our great country needs both parties working towards outcome for the Common Good.  That will mean calling out unacceptable behavior for what it is, if our system of democratic government is to survive. The G20, acting as a larger world community, did something crucial last month by working for more economic fairness, prosperity and stability for people around the globe.  Let's be inspired by that, and do the same and keep the legislative ball moving forward here at home.  The cynics were wrong, saying that the G20 Group of Nations would never happen.  Let's make more progress, and prove them wrong again.